As consumer awareness of foreign cuisines increases, Italian food, and pasta in particular is becoming extremely popular in India. The growing market offers significant opportunities for foreign manufacturers through the import route primarily because there are few domestic producers with quality products. An overview indicates the market growth in volume and value as well as the largest trading partners. The report explains how changing tastes among the urban elite and upper middle class is impacting the industry. In contrast, government regulations and inconsistent supplies are challenges that the market needs to overcome in addition to growing awareness in a fairly large target demographic. For foreign manufacturers, the two market entry options are explained, indicating the preferred route and rationale behind it. Additionally, the duty and tax structure along with estimated margins using for pasta imports give an indicator on price inflation. Further, applicable rules and packaging requirements are also given in brief.

1. Pasta Import - India
December 2008

2. Executive Summary
Estimated worth USD XX mn in 2008
Unorganized sector has a monopoly over domestic production
Market
Largest exporter is A
B and C are the most popular brands
LE
Drivers: Consumers developing tastes for international cuisines, strong growth in organized retail,
Drivers & and government policy towards boosting the industry
Challenges
P
Challenges: Lack of widespread consumer awareness, duty and tax structure, inconsistent
supplies, and competition from unorganized sector
M
Entry Route SA
Two possible approaches
– Importing though agents
– Setting up local operations
Importing through agents is the preferred route for foreign brands
Developing manufacturing unit locally is economically unjustified
Pasta imports attract specific import duties and local taxes
Rules and Food safety norms set by the government need to be followed
Regulations The law requires specific information to be displayed on the packaged good
PASTA IMPORT – INDIA.PPT 2

3. •Market Overview
•Drivers & Challenges
•Entry Route
•Rules and Regulations
PASTA IMPORT – INDIA.PPT 3

4. Italian is a popular cuisine in India and is driving growth in pasta
imports
Overview Size and Growth
•Food imports are increasing by a% p.a. USD mn ‘000 kg
Volume
•Italian food and especially pasta is one of the 10
Value a%
1,200
most popular foreign cuisines, predominantly 8 1,000
in urban areas 800
LE
6
•Domestic production exists with unorganized 600
4
P
sector accounting for b% of the market 400
2 200
M
•However, there is a healthy demand for
0 0
A
imported pasta, which has grown: 2004 2005 2006 2007 2008
u% p.a. by value
v% p.a. by volume
S
Uncooked pasta accounts for the bulk of imports
although other types (except uncooked or stuffed)
Largest Exporting Countries (2003-2008)
Others
u%
category is growing extremely fast
•X and Y are two popular imported brands Country 2
w%
v%
Country 1
Source:
PASTA IMPORT – INDIA.PPT 4

5. Drivers & Challenges
Challenges
Creating Awareness
Government rules and regulations
Inconsistent supplies
Drivers
Demand generated due to changing Competition from unorganized sector
tastes and attitude
Growth in organized retail industry
Government Initiatives
PASTA IMPORT – INDIA.PPT 5

6. Import of pasta is subject to duties and taxes, food safety rules
and mandatory packaging information
Rules and regulations Duties, taxes and estimated margins
•Duties and taxes: Import Duty
Basic import duty, additional duty, education cess, Basic Import Duty a%
Octroi, central sales tax, and VAT
Additional Duty b%
•Various food safety rules also need to be
LE
Spl. Additional Duty c%
adhered to such as Prevention Of Food Excise cess d%
P
Adulteration Act Custom cess e%
•Packaging must display the following:
M
Education cess f% of total duty
Name of company and address of manufacturer
A
Domestic Taxes
S
Green or red sticker indicating vegetarian or non- VAT (state level) x%
vegetarian product
Central Sales Tax (inter-state sales) y%
Name and contact details of importer
Octroi (variable; municipality/district level) z% (Mumbai)
MRP, Month of import, Shelf life
Ingredients used as per PFA Estimated Margins
Importer (% of landed cost) u%
Distributor (% of Distributor Cost Price) v%
Retailer (% of retailer cost) w%
Source:
PASTA IMPORT – INDIA.PPT 6

7. Thank you for the attention
The Pasta Import report is a part of Research on India’s Food & Beverage Industry Series.
For more detailed information or customized research requirements please contact:
Gagan Uppal Gaurav Kumar
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PASTA IMPORT – INDIA.PPT 7