Govt Support and Regulatory Frameworks: Catalysts for Organic FMCG Growth and Startup in India

The demand for organic and chemical-free foods is at its peak in India. What started as a lifestyle choice a few years ago is slowly becoming a way of life for many end users. This shift is because of the rise in awareness about the benefits of organic foods and ingredients. Until a few years ago, only a handful of people from the urban areas of the country would choose organic food over its counterpart.

However, last couple of years, the demand for chemical-free foods has risen manifold and even customers from rural and semi-urban areas are also shifting to organic lifestyles. While players in the organic foods sector have endured teething troubles, the Government’s shift of focus towards the sector and introduction of supportive policies has raised hopes for the growth of the organic foods sector in the country.

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Policy Groundwork for Growth of Organic FMCG Ready

According to the National Investment Promotion and Facilitation Agency, Invest India, the FMCG sector in the country is one of the largest that contributes to the economy. According to the overview taken into consideration by the agency, consumption in the country keeps growing at a record pace, increasing demand for FMCG products. It is acknowledged as one of the key sectors for the investors. The Government of India has allowed 100% Foreign Direct Investment (FDI) in the Single Brand Retail Trade (SBRT) via the cash-and-carry models.

With the consistently growing demand for organic products in the country, and the Government’s intention to promote the FMCG sector, it is expected to witness unprecedented growth. While domestic companies are coming up with organic-themed FMCG products, the above schemes offer an open gateway for foreign companies to venture into the sector. As the demand for organic and chemical-free products is on the rise, the FMCG map in the country is set to change and witness exponential growth.

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Focus on Regional Organic Foods And Exports

The northeastern region of the country is known for its vibrant resource offerings. The Government has identified this untapped opportunity in the region and Mission Organic Value Chain Development for North Eastern Region (MOVCDNER). The scheme aims to promote third-party certified organic farming in the region, with a special focus on exports. Under this scheme, the farmers are extended an assistance of Rs 25000 per hectare of land, for three years, for organic inputs. This also includes the provision of organic manure, biofertilizers and several other inputs.

Besides, the Government also supports in formation of Farmer Producer Organizations (FPOs), post-harvest infrastructure to the tune of Rs 2 crore and capacity-building. Although, the scheme is specific to the northeastern region of the country, but has far-reaching impacts on the organic food segment of the country. Specific foods and ingredients grown in the region can be made available for organic processed food units spread across the country. This would allow more players to include a wider variety of country-grown organic ingredients and introduce more options in the category.

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Promoting the Use of Organic Manures

Schemes like Paramparagat Krishi Vikas Yojana (PKVY), Capital Investment Subsidy Scheme (CISS) under the Soil Health Management Scheme, National Mission on Oilseeds and Oil Palm (NMOOP) and National Food Security Mission (NFSM) encourage the farmers to use bio-manures and get a better yield of organic produce. The intention of introducing such schemes is to encourage farmers to shift to organic farming and reduce their risk.

Farmers across the country are also realizing that there is a rise in demand for organic products in the country. They just need some assistance to make the major shift. The government provides handholding with the above schemes, so the farmers can understand the benefits of organic farming, use bio-manures, utilize the waste as manures, procure the produce and eventually maintain the health of the soil. The overall ecosystem as promoted by these schemes is beneficial for the organic food and ingredients landscape of the country.

The primary reason why farmers were earlier wary of shifting to organic produce was the rise in the cost of produce, eventually raising the price of the final product. In the past few years, this trend has changed. Farmers, who have shifted to organic crops, now have gone through the stage of cost-benefit analysis and are more confident of getting the optimum price for their produce. With more entrants in the organic FMCG segment, the demand is set to increase, motivating more farmers to choose organic crops. With an array of support schemes by the Government for the industry as well as the farmers, organic foods and ingredients are set to witness greater growth.

By Ajeet Godara, Co-founder, Natureland Organics

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