December 11, 2018 3 min read

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India’s GDP growth of 6.5per cent in 2017 was strong despite challenges like the implementation of GST. The forecast for GDP growth in FY2019 is predicted to be more than 7per cent. This will certainly improve the performance of different industries like Organic Foods, Pharmaceuticals and FMCG.

According to TechSci Research report, Global organic food market stood at $ 110.25 billion in 2016 and is projected to grow at a CAGR of 16.15per cent, in value terms, during 2017 – 2022, to reach $ 262.85 billion by 2022.

With Indian Organic Food industry growing in double-digit during 2013-2017, it would not be wrong to say that the industry will perform well in 2019. There are many factors that have contributed to this growth until now.

Firstly, growth in e-commerce sector has acted like a facilitator for the organic food industry to reach out to the potential consumers in Tier II and Tier III cities. Secondly, with free/low-cost access to the Internet, more and more people are getting to learn about the benefits of organic food. Therefore, the demand has gone up during 2018. Lastly, the industry landscape is becoming competitive with more and more players entering the industry.

Going by the trend in 2018, the organic food industry in 2019 will grow at a good pace. Here are a few factors that will accelerate the growth of the organic food industry:

The Rise in Demand for Organic Food

As the digital literacy rate in India is growing, the demand for organic food in India will see good growth. People are becoming aware of the harmful effects of chemicals and fertilizers used during farming in India. There is a great rise in awareness of organic farming methods, making the food more healthy and nutritious.

Higher Spending Capacity of the Middle Class

According to a research by the India Brand Equity Foundation, the spending capacity of the Indian middle class is anticipated to double by 2025. With the rise in disposable income and access to credit, the Indian middle class will have a high spending capacity on organic food.

Government Regulations

The government of India is promoting Organic Farming in the country. Hon’ble Prime Minister, Mr.Narendra Modi introduced Paramparagat Krishi VikasYojana (PKVY), under which 2 lakh hectares has been made suitable for organic farming thereby benefitting 5 lakh farmers. This step will further boost organic farming in India in 2019.

The Rise in the Export of Indian Organic Food

According to the Agricultural and Processed Food Products Export Development Authority (APEDA), the demand for Indian organic food products is on the constant increase worldwide as India exported organic products worth $515 million in the financial year 2017-18, from $370 million in 2016-17. This trend will further accelerate in 2019.

Supply Chain Enhancement

One of the major issues in the organic food market is the mismanagement in the supply chain of organic fruits and vegetables. The main challenge is related to the cost and logistics which are included in the moving of locally or regionally produced organic produce. In the case of organic supplies, the time of reaching the fruits and vegetables from the time of the production to the end consumers matters the most due to its less shelf life. But since the demand of the organic products is rising, the need for solving the problems in the supply chain management is going to arise and the enhancement in the supply chain is expected in 2019.

As per the above trends, the organic food market is expected to boom in 2019. Since the organic market in India is still on an emerging stage, the space for growth is tremendous.