Enhanced enforcement, govt help can help propel Indian organic food industry

Bengaluru: Organic is the new buzzword in the food industry with rising awareness about the hazards of pesticides and fertilisers. Driven by conscious consumerism, demand for organic food produce is only increasing. From stand-alone brands to quick commerce apps providing organic options, companies are looking to capitalise on the booming sector.

As per data by market research firm IMARC, the organic sector in India is expected to grow by a compound annual growth rate (CAGR) of 21.2% to $ 8.9 million by 2032. However, several underlying issues remain, executives and experts told DH, adding that unless these challenges are addressed, the organic food market in India will not reach its full potential.

“The industry faces challenges like high certification costs, limited availability of organic produce, lack of customer literacy, inadequate infrastructure and supply chain – which translates into higher prices for consumers,” said Shashi Kumar, Co-Founder and Chief Executive Officer, Akshayakalpa Organic.

“There are not enough farmers or primary level stakeholders contributing to the sector. The food infrastructure for organic food products is also not at par which puts the pressure to bring down costs at all levels and make it more accessible,” said Gaurav Manchanda, Founder & Managing Director, The Organic World.

Stakeholders like Manchanda and Kumar are of the unanimous opinion that in a bid to bring the costs down, the supply chain needs to be improved and expanded upon.

Moreover, there is a growing scrutiny for organic and natural labels, fueled by violation of standards by conventional products in certain countries, including India. However, sectoral experts believe that while the regulations are strong, enforcement is where the issue lies.

India has a robust certification process (with verification, defined farm requirements etc) for organic products, governed by the National Programme for Organic Production (NPOP) and the Agricultural and Processed Food Products Export Development Authority (APEDA). This certification is also in adherence to the international standards like USDA Organic and EU Organic. 

“We do have significant and strong regulations in place with the availability of NPOP, PSG, Jaivik Bharat and FSSAI certifications. There has to be a shared responsibility at all levels from production to manufacturing, retail and the consumer,” Manchanda said.

The way to obtain certification is easier for mid or large scale producers, compared to smaller companies and producers in the space said Nikhil Sethi, Partner and National Head – Consumer Goods, KPMG India. 

The small scale stakeholders “find it difficult to obtain certificates and loopholes in certification may allow for the inclusion of additives that compromise the integrity of organic products,” Sethi added. 

Globally, the organic food and beverages market stands at a sizable value of $253.9 billion as of 2024. It is expected to grow at a CAGR of nearly 15% to $643.6 billion by 2033, according to a report by Custom Market Insights. 

“India’s organic food products are huge on exports and rise in that segment can help improve the image of this sector,” said Anand Ramanathan, Partner and Consumer Products & Retail Leader, Deloitte India.

Rishi Agrawal, Co-founder and CEO at TeamLease Regtech believes that the government cannot be involved in everything and that it’s only essential to create an ecosystem which lets private players take the game ahead.

“Moreover, the government can assist in increasing the productivity of the farmers by coupling it with crops/products which would attract more exports,” Agrawal said. 

The total volume of organic produce exports from India during 2023-24 stood at 2.6 lakh metric tonnes, valued at around Rs 4,007.91 crore. Indian organic products are exported to the United States, European Union, Canada, Great Britain, Sri Lanka, Switzerland, Vietnam, Australia, Thailand, Japan,  etc, as per government data.