Government to jointly develop Food Parks with Foreign Countries, SMEs to Benefit

Food Processing Industries minister Subodh Kant Sahai has said that government has signed a MoU (Memorandum of Understanding) with Italy and France to set up joint food parks. Mr Kant also stressed that this joint food park model will immensely help the food processing industry and will also be prove to be future model for food processing industry in India.

In an interview Mr Kant said that government was in opinion that country needed to develop its food processing industry with help of those who had most of the experience. Thus, government went in favour of aligning with countries like France and Italy which have vast experience in food processing industry.

He said that the foreign expertise will bring in both large investments and new technology to the food processing industry in India and will help the nation in developing mega food processing parks with the help of foreign capital and technology. The Food Processing Ministry has demanded ECB (external commercial borrowing) facility being extended for bringing equipment to the mega food processing parks by the companies involved in its development.

Highlighting the lack of capital financing in the food processing industry and reluctance by the financial institutions and the banks to fund SMEs in the food processing industry, he also stressed for the need of venture capital fund to inject growth into this sector, while mentioning the Rs 10 bn funding provided by the apex body NABARD.

Venture Capital Investment Grows Two-fold during Q2-2008 in India

India still far behind China

Venture Capital (VC) funds continued to show confidence in the economy and companies in India as VC investment doubled during the second quarter of 2008. The latest Quarterly India Venture Capital Report by Dow Jones VentureSource puts VC investments in Indian economy during the second quarter at $238 mn across 17 deals compared with $108 mn across 12 deals during the same period last year. The VC investments rose 120% y-o-y.

Category wise breakup of the investments showed that advertising start-ups got the biggest share of VC funds in the second quarter at $89 mn, and it accounted for nearly 37% of the total investments in the period. Second in terms of investment was the IT industry, which recorded three deals worth $33 mn during the second quarter, it was however a 55% decline from the $73 mn invested during the same period last year.

In terms of development stage, companies with active revenue streams attracted the most capital in the second quarter of 2008, as nearly $151 mn went to 10 deals for companies that were shipping products and another $4 mn went toward a deal for a profitable company. Just six deals, worth $83 mn, were for companies presently developing products. Another important aspect of the report is that the confidence shown by these VC funds in re-investing, there were as many as seven second-round investments out of the total deals. Among the companies invested, Laqshya Media, a Mumbai-based provider of out-of-home media advertising services attracted the largest VC investment of $70 mn during the quarter.

The VC investment in India looks paltry if compared with China, where the second quarter of 2008 saw venture investment in Mainland China surge to its highest level in five years at $1.37 bn into 71 deals, more than double the $662 mn invested in 69 deals during the same period last year. However one deal, an investment of $430 mn in Beijing-based Oak Pacific Interactive, which provides an Internet platform for Web 2.0 communities accounted for 31% of the country's investment total.