Profits, growth, investment policy make food industry attractive.

Indian Food Processing Industry Minister has good news for foreign investors. West Bengal offers them "one stop shopping" and other incentives. And can joint ventures satisfy US President Bill Clinton's relish for tandoori chicken?

Food processing is one of the more profitable sectors in

Addressing US companies at the International Exposition for Food Processors (IEFP) in San Francisco, Indian Food Processing Industries Minister Dilip Kumar Ray declared that "opportunities in food processing are far greater and the prospects far more promising" than in the heavy industries now attracting the most investment.

An analysis by McKinsey & Co., Ray told an IEFP seminar, How to do Business in India, revealed that the food industry is the fifth most profitable in the country. More important, it runs ahead of automobiles, aluminum, health care and electrical goods.

Returns for the top food companies in India have generally been higher than for those in most other industries, he said. In sheer size, Ray added, the agriculture and food processing industries are larger than chemicals, basic metals and petroleum put together. But there is still a need for investment of at least $30 billion in basic infrastructure, including the cold chain - refrigerated processing, storage and transportation.

The market for processed foods (exclusive of wheat and rice milling) is expected to reach $35-50 billion by the year 2005, he said. Major opportunities for investment include the fruit, vegetable and poultry sectors. Only two percent of Indian fruits and vegetables are now processed, he said, compared to 70% in the United States. The processed poultry market has been growing 13% a year, and the advent of fast food outlets could increase that.

Opportunities abound for investments that could serve the export market as well as the domestic market in India, Ray declared. "There is an increasing awareness of Indian food in the US," he noted. "I believe that even President Clinton relishes his occasional tandoori chicken! India has the formula to produce it, but most of the skills for mass production, packaging and retailing are here in the US."

Quite aside from developing specialty exports, simply improving crop yields and reducing waste would be a major shot in the arm for the economy and dramatically increase the availability of agricultural products. To that end, the Indian government has stepped up direct expenditures on agriculture, irrigation and related sectors, promoted greater investment in food processing, and provided a conducive environment for the industry.

Approval is now automatic for investments of up to 51% in areas like fruit and vegetable products, meat and poultry products, fish processing and cereal and soy-based products, Ray told the IEFP. The Indian government has also liberalized technology transfer by easing the limits on technology fees and royalty payments for which no prior permission is required. Don't just take his word for it, he urged investors: go to India - and not just New Delhi but the food trade fairs in Chandigarh, Cochin and Madras to make valuable contacts.

Somnath Chatterjee couldn't speak for India as a whole, but as chairman of the West Bengal Industrial Development Corp. (WBIDC) he detailed the state agency's commitment to "creating an ever more conducive environment" for investors.

With a population of more than 70 million, West Bengal is the hub of the economy for Eastern India and has already attracted such multinational industrial companies as Siemens, Philips, ALCOA, Trans-America, Bechtel, Motorola, Matsushita, Rolls Royce and Mitsubishi. Under a policy of rapid industrialization, the state offers new companies incentives like 40% discounts on electric power for the first three years.

But West Bengal is no slouch when it comes to agriculture, either. It has the highest yields for food grains of any state in India, and those yields have been growing at a rate of 6.4% a year. Potato production, at 5.5 million tons, is the highest in the country, and production of vegetables soared from 7.7 million tons in 1993-94 to 9.5 million in 1994-95 as the area under cultivation for vegetables increased from 730,000 to 860,000 hectares.

With five agro-climatic zones, more than any other Indian state, West Bengal offers food companies a broad range of fruits and vegetables - only one percent of which are now being processed. In the Hill region, there are oranges, mandarins, plums, pears and strawberries; in the Terai region, pineapples, jackfruit and melons; in the Alluvial region, mangoes, guava, bananas, cabbage, cauliflower and tomatoes; in the West, sweet oranges, early cabbage and early cauliflower; on the Coast, cashews, coconuts and cucurbit vegetables.

Studies by the WBIDC indicate that there are commercially viable opportunities in pineapples, mangoes, oranges, potatoes and tomatoes. Prospects are bright in seafood, meat and dairy products as well. A "modular food park" is already being established near Calcutta; when completed, it will be the largest food processing center in the region. As with other industries, the WBIDC is working with investors to remove procedural bottlenecks and expedite clearances.