Other News: Biscuit Industry in India - an overview

The following information on the Biscuit Industry in India is provided by the

Federation of Biscuit Manufacturers of India

1. Biscuit industry in India in the organized sector produces around 60% of the total
production, the balance 40% being contributed by the unorganized bakeries. The
industry consists of two large scale manufacturers, around 50 medium scale
brands and small scale units ranging up to 2500 units in the country, as at 2000-
01. The unorganized sector is estimated to have approximately 30,000 small &
tiny bakeries across the country.

2. The annual turnover of the organized sector of the biscuit manufacturers (as at
2001-02) is Rs. 4,350 crores.

3. In terms of volume biscuit production by the organized segment in 2001-02 is

estimated at 1.30 million tonnes. The major Brands of biscuits are - Brittania,
Parle Bakeman, Priya Gold,Elite,Cremica, Dukes, Anupam, Horlicks, Craze,
Nezone, besides various regional/State brands.

4. Biscuit industry which was till then reserved in the SSI Sector, was unreserved in
1997-98, in accordance with the Govt Policy, based on the recommendations of
the Abid Hussain Committee.

5. The annual production of biscuit in the organized sector, continues to be

predominantly in the small and medium sale sector before and after de-
reservation. The annual production was around 7.4 Lakh tonnes in 1997-98 In
the next five years, biscuit production witnessed an annual growth of 10% to
12%, up to 1999-00.

6. The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100%
hike in Central Excise Duty (from 9% to 16%). Production in the year 2001-02
increased very marginally by 2.75% where in 2002-03 the growth is around 3%.

7. The Union Budget for 2003-04 granted 50% reduction in the rate of Excise Duty
on Biscuit i.e. from 16% to 8%. The Federation's estimate for the current year
indicates a growth of approximately 8% to 9%.

8. However the average utilization of installed capacity by biscuit manufacturers in

the country has been a dismal 60% over the last decade up to 2001-02.

9. Though dereservation resulted in a few MNCs, i.e. Sara Lee, Kellogs SmithKline
Beecham, Heinz etc entering the biscuit industry in India, most of them, with the
exception of SmithKline Beecham (Horlicks Biscuits), have ceased production in
the country.
10. On the other hand, import of biscuits, specially in the high price segment has
started from 1998-99, but however, the quantum of imports has not so far
increased alarmingly and has remained at around 3.75% of the consumption of
biscuits in the country in the year 2001-02. However, recent imports from china
industries cheaper verities of biscuit, needs to be examined with cautions,
especially in the context of the price as the low margin based domestic industry,
which is operating at 60 % of the total installed capital. Exports of biscuits from
India has been to the extent of 5.5% of the total production. Export are expected
to grow only in the year 2003-04 and beyond.

11. Biscuit is a hygienically packaged nutritious snack food available at very

competitive prices, volumes and different tastes. According to the NCAER Study,
biscuit is predominantly consumed by people from the lower strata of society,
particularly children in both rural and urban areas with an average monthly
income of Rs. 750.00.

12. Biscuit can he broadly categorized into the following segments:

(Based on productions of 2000-01)

Glucose 44%
Marie 13%
Cream 10%
Crackers 13%
Milk 12%
Others 8%.

13. In recognition of industry's obligations towards the community, being a part of it,
biscuit manufacturers supply biscuits to the social welfare agencies in all States
for the benefit of school children, senior citizens and other needy sections of the
society. FBMI Members have always responded positively to our appeal as also
by the Government, to rush truck loads of biscuits to the people affected by
earthquakes, floods, famine etc. Our industry has also participated in supplying
biscuits to the people of war ravaged Afghanistan and presently to the Iraqi
people, under the aegis of the UN.

14. As regards the consumption pattern is concerned. surveys and estimates by

industry from time to time indicate the average consumption scenario in the four
Zones have been more or less close to each other, as below:

Northern States: 28%

Southern States: 24%
Western States: 25%
Eastern States: 23%

15. Though India is considered as the third largest producer of Biscuits after USA
and China, the per capita consumption of biscuits in our country is only 2.1 Kg.,
compared to more than 10 kg in the USA, UK and West European countries and
 above 4.25 kg in south cast Asian countries, Le. Singapore, Hong Kong,
Thailand, Indonesia etc. China has a per capita consumption of 1.90 kg, while in
the case of Japan it is estimated at 7.5 kg.

16. In view of the meager per capita consumption even as penetration of biscuits
manufactured by the organised sector, into rural areas in India, has been very
good during the last 10 years, as also in the metro and other cities, small towns
etc. However, in spite of this, the industry has not been able to utilize about half
of their installed capacities.

17. Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass
Consumption Goods ) sector. The commodity is also price sensitive, as a
consequence of which, even when the Excise Duty was doubled on biscuits in
2000-01 biscuit manufacturers, including the major brands, were not able hike
MRPs to the extend of the steep increase in the Duty. Taxation, both Central
Excise Duty as also State Sales Tax, other miscellaneous levies i.e. turnover tax,
local area tax, mandi taxes, purchase tax, octroi etc etc, has been a major
deterrent in the growth of the biscuit industry. The CII Study Report has identified
Biscuit as one of the products that should treated as "Merit Good for the purpose
of liberal tax policy both by the Centre and States.

18. Besides lack of technology upgradation in manufacturing, packaging etc has also
been a factor affecting our industry, along with inadequate financial credit and
support particularly for the medium and small scale biscuit units.

19. On the other hand, the Government of India has identified food processing
industries as a priority area to be encouraged for growth and development and
created the Ministry of Food Processing Industries (which was till then a Dept in
the Ministry of Agriculture), headed by an Ministry of State with Independent
charge.

20. The Food Processing Ministry has been rendering yeomen service to the
industry, of which biscuit manufacturing is an important part. The Ministry, with
the objective of enabling food processing Industries to undertake technology
upgradation diversification. expansion as also to set up new units has formulated
scheme of Grants and Financial Assistance. Please see www.mofpi.nic.in

21. Other areas of concern to industries of food products like Biscuits include
multiplicity of food laws and their enforcing agencies in the Central and State
Governments with overlapping functions & implementation. At the persistent
instance of industry organizations including FBMI the Ministry of FPI took the
initiative in evolving an Integrated Food Act, harmonizing the existing multifarious
legislations enabling better compliance. The Draft Unifled Food Bill 2002 has
been prepared and now awaits approval by the Cabinet and the Parliament,
which will fulfill an important need of the industry and pave way for accelerated
development and growth.
 22. Biscuit manufacturing as well as other bakery products like Bread etc are agro
based industries, with the major inputs - wheat flour/atta sugar, milk
vanaspati/vegetable oil etc all being agriculture produces.

23. Industries such as Biscuit are also languishing as they are not able to achieve
their potentials for higher production, in the absence of the concrete food
Processing Industry Policy. FBMI in close coordination with other organizations
and apex Chambers, initiated to urge the Govt of India to formulate a
comprehensive Policy Document, for smooth growth and harmonious
development of the industry. The Food Processing Industry Policy, which has
been evolved as a result of various workshops, deliberations and representations
by a large cross section of food processing industries, is yet to be finalized. It is
hoped that the Ministry of Food Processing Industries, GOI would initiate action
for implementation of the Policy expeditiously.

24. Biscuit Production

According to the production figures of members available upto the
calendar year 2003, the total production was 625000 tonnes as against
475000 tonnes in the previous year. The production of biscuit for the
last 11 years is as under:
1993 - 167750 1994 - 180526
1995 - 202567 1996 - 222371
1997 - 362000 1998 - 400000
1999 - 425000 2000 - 450000
2001 - 465000 2002 - 475000
2003 - 625000
Note: the production of members of FBMI consist of 50% (approx) of the total
production of biscuit in the organized sector.

FoodBizIntel®

Federation of Biscuit Manufacturers of India

Address: PHD House, 4/2, Siri Institutional Area,August Kranti Marg,New
Delhi- 110016,
Telephone: 011-91-26515137
Fax: 011-91-26855450
Website: http://www.biscuitfederation.org
Email : fbmi@rediffmail.com
About Federation of Biscuit Manufacturers of India
Established in 1950, from gathering of CEOs of small, medium and large
Biscuit manufacturing organizations in the country’s capital city, the
Federation of Biscuit Manufacturers of India, popularly known as FBMI has
come to stay as the premier forum of the organized segment the biscuit
industry in India, by virtue of its effective servicing and result oriented
activities, with the prime objective of protecting and promoting the
interests and development of the Biscuit industry.

During the five and a half decades of post-independent India, the biscuit
industry in the country has achieved a position of pre-eminence as the
third largest producer of Biscuits in the world, after the USA and China.

The FBMI, its members and leadership, have played a pivotal role in the
unprecedented growth, development and reach into all parts of the huge
domestic market in India, as also in exports of biscuits.

The FBMI represents the organized biscuit industry consisting of small

scale, medium and large biscuit manufacturers located in all zones and all
States of the country. As the apex body of the biscuit industry, the
Federation strives to serve its members in particular and the biscuit
industry in general.

As an integral part of the industrial scenario in the country and belonging

to the food processing sector which has been identified as the sunrise
group of industries by the Government of India, biscuits along with similar
packaged food products, have a place of pride.

The FBMI estimates indicate that the proportion of biscuit production in the
country , in the organized and unorganized segments of manufacturing is
60% : 40%. (Please see “Biscuit Industry Profile” for further detailed
data/information).