"Setting up agro processing units can make possible maximum utilisation of agricultural resources," said Dr M S Virdi, Project Director and Head, CSIR Polytechnology Transfer Centre, Bhopal. He was speaking at a meet organised by the Vidarbha Agro Cell at Udyog Bhawan, Nagpur.

While speaking about the opportunities in the agro-based sector, Virdi said it has an export capability of about Rs 1000 crore. Agro technological projects have particularly proved successful in adjoining regions of Nagpur such as Tumsar. Elaborating on various projects, which could be taken up in the region, Virdi said that the scope of agro processing units in central India is tremendous and positive efforts are needed to exploit the potential.

Dal mills offer a good business opportunity to entrepreneurs in this belt as they can be set up with low investment. The Ministry of Food offers a subsidy of as much as 50 per cent of the cost amount. The soft loan offered by the government is also a big incentive to interested industrialists. Deep-freezing plant units used for preservations of vegetables and meat is another viable proposition. Such projects generally require an investment of around one crore, Virdi said, citing the example of the Khatau deep freezing plant, which is a success story.

The gravy mix ('ready masala') technology is also a viable option as the entrepreneur requires lesser investment, which is Rs 15 to 20 lakh, for setting up a factory.  This technology requires less consumption of gas and vegetable oil. It has a tremendous export potential.

Osmotic dehydration: Highlighting the use of osmotic dehydration, Virdi said the technology reduces the moisture in vegetables and fruits, thereby safeguarding them against contamination. Its use also preserves the original taste and quality of the fruit or vegetable. As the Vidarbha region is rich in oranges, related industries, like orange juice powder or orange juice concentrate can prove to be a fruitful deal. Orange peel oil, which has good demand, can also be a useful by product. The area is rich in crops and agro-processing units can do well in Vidarbha, Virdi said.

“Bold, innovative initiatives and concrete efforts are needed to spread awareness among people about the various schemes of the Food Processing Ministry. One of the ways of going about it is by arranging more interactive meets between the industry and the entrepreneur,” he opined.

Committee for rural industries: The industries in the interior areas of the country need proper infrastructure and support. With the formation of a committee to suggest measures for strengthening the khadi and village industries sector, it has received the attention it deserves. Deputy Chairman of Planning Commission K C Pant will head the committee which has been given the mandate to review the rebate scheme, marketing of khadi and village industries products, quality control, research and development. It will also work on packaging, working capital requirements of institutions, cluster development scheme, fiscal incentives as well as look into introduction of minimum development assistance on khadi.

According to Virdi, economic liberalisation is here to stay and should be allowed to flourish without succumbing to vested interests. Competition is good for the entrepreneur as well as the consumer and should always be encouraged, he added. Referring to the government’s move to shelve foreign direct investment in the plantation sector, he urged for a reconsideration of the issue.

FDI entry into plantation sector shelved: It has to be noted that despite all the big talk about second generation economic reforms, the government has not been able to muster support for its much talked about bid to allow foreign direct investment in the plantation sector. Owing to strong opposition from various quarters including the powerful plantation lobby in the country, some sections of the government, labour unions and a few political parties, the move has been scuttled. The decision has thrown a wet blanket over expectations of FDI flowing into coffee and tea plantations.

Interestingly, the plantations sector is looked after by Commerce and Industry Minister Murasoli Maran, who also handles FDI policy. Despite this synergy, the government has been unsuccessful in clearing the plan to allow 74 per cent FDI in plantations. The plantation sector covers tea, coffee, rubber and spices, which are among the major export commodities in the country’s export basket. Since the issue involves exports, which the government is keen to boost, it was expected that the revised FDI policy would be cleared.
 

According to the original proposal mooted by the Department of Industrial Policy and Promotion, foreign equity up to 74 per cent was to be allowed in tea and coffee plantations. The Cabinet had discussed the proposal but decided to send it back to DIPP for more consultations following opposition from some sections of the government including the labour ministry. According to government sources, the proposal is now in cold storage.

The official line is that the plan is pending and no decision has been taken yet. The reality, however, is that the door has been shut on FDIs in plantations for the time being. The labour ministry opposed the proposal, arguing that this would lead to large-scale unemployment in the plantation sector since the foreign partners would go for mechanisation in tea plucking and processing.

Virdi felt the view that entry of foreign companies would signal the end of the road for domestic industries is  blinkered. Takeovers are never a one-way street. For every Uncle Chipps bought out by a Frito-Lay, a SIEL by a Honda Motor Company or a Hindustan Motors by General Motors, there is a Wipro buying out an Acer, an HCL buying out an HP, a Tata Telecom buying out some of the stake of Bell-Canada.

There’s also an Infosys, a Wipro or a Silverline buying up companies abroad. The list is long and growing. And while it is true that at the moment there are more MNCs buying out Indian companies/joint venture partners than the other way round, that is of no great import. In the globalising world, the old-world distinction between Indian and foreign companies is quite meaningless. The so-called foreign companies are, in truth, owned by large institutional investors - mutual funds, pension funds and the like which really have no nationality - and whose only commitment is to deliver value to their shareholders, wherever they may be, he said.