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NEWS UPDATES 20 August 2009

Philippine food producers urged to tap Indian market

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Exporters of processed food and furniture in the Philippines should tap the opportunities presented by India’s booming retail market, the Manila Times quoted the country’s commercial attaché to India as saying in a forum on Wednesday.

“Retail accounts for about 35 percent of India’s gross domestic product and the country’s total retail market size is about $205 billion,” Vichael Angelo Roaring of the Philippine Embassy in New Delhi’ Philippine Trade and Investment Center (PTIC) told exporters.

Roaring said India is the world’s largest retail market based on A.T. Kearney’s 2009 Global Development Retail Development Index.

He added that think-tank Technopak projected that retail opportunity in India will rise by about $200 billion in five years.

The Indian population has a “brand-new obsession” for modern retail trade centers, such as malls, department stores, specialty shops, convenience stores, mini-marts, supermarkets and hypermarkets.

Its middle class is rising and almost two-thirds are young and under 35 years old, Roaring said.

With that, the Philippine processed food and furniture have “great untapped potentials” in the subcontinent, he said.

“The Philippines is currently exporting to India semiconductors, vehicle parts, among others, so it’s high time we also look at opportunities in the retail sector,” he said.

Food and beverage now account for 74 percent of consumer spending in India valued at $231 billion and Filipino processed food exporters should get a slice of this market. Only $1.1 billion of this is comprised of imported food and beverage, the PTIC official said.

Baby foods, biscuits, cakes and pastries, confectionery, dried fruits, health drinks, ice cream, jams, juices, mustard sauce, noodles, packaged meats, packaged rice, packaged wheat flour, pasta, snacks, soft drinks, spices, sprouts and tomato sauce are among the Indians’ most popular processed food purchases.

Roaring said ready-to-eat and ready-to-cook meals are now a hit in the subcontinent. However, fresh produce from the Philippines have difficulty in entering the Indian market since the country is bent on protecting its domestic agriculture sector, he said.

Demand for furniture—especially those made from wood—is also increasing. In 2007, India imported about $252-million worth of furniture, 60 percent of which came from China and Malaysia.

Filipino furniture manufacturers, who are much known for churning out products of good quality with creative designs, can tap the mid-priced segment of India’s furniture market.

However, the high average tariffs on food products and furniture—which stand at 30 percent to 40 percent, and 34 percent, respectively—may discourage exporters.

“But the high duties should not deter Filipino exporters. How come a lot of foreign products are coming into India?” he said, adding that imported goods from the US, Europe and Australia are already fast filling up the shelves of India’s retail stores.

Roaring said positioning products properly and finding able distributors are keys to penetrating the Indian market. Furniture manufacturers are encouraged to help the Bureau of Export Trade Promotion to come up with a consolidated product catalogue and profiles of local furniture companies that PTIC in New Delhi can use in promoting the sector.

PTIC will then help organize trade missions to India, facilitate for the participation of Filipino furniture makers at trade fairs there, and look for potential buyers and distribution channels, he said.

According to the Trade department, the country’s two-way trade with India reached $808.52 million, $193.35 million of which is comprised of Philippine merchandise exports.


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