Voluntary Report – Voluntary - Public Distribution Date: June 15,2020

Report Number: IN2020-0064

Report Name: Indian Organic Foods Market Report

Country: India

Post: New Delhi

Report Category: Special Certification - Organic/Kosher/Halal, Agricultural Situation, Product Brief

Prepared By: Ankit Chandra and Mark Rosmann

Approved By: Jeanne Bailey

Report Highlights:

India’s organic food and beverage consumption has grown in recent years due to its advanced demographic
dividend, improved purchasing power and increased interest for the perceived health and wellness benefits of
certain organic products. In market year (MY) 2019, organic food and beverage retail sales reached $69
million and is estimated to further rise by 12 percent to $77 million in MY 2020. Further propelled by a surge
of demand in the wake of the COVID-19 pandemic, India continues to be an emerging market for organic food
and beverages with robust prospects. With predicted favorable weather patterns, monsoons and a strong focus
by the Indian government towards exports to fill U.S., European Union (EU) and South Asia demand, India’s
certified organic cropland will likely increase.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT
NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY
Market Summary

India is home to 30 percent of total certified organic producers in the world, but accounts for just 3.3 percent
(1.9 million hectares) of total organic cultivated area at 57.8 million hectares. A burgeoning middle class with
higher disposable incomes, rapid urbanization, elevated concerns for the safety and quality of food and a
growing niche of consumers embracing wholesome or naturalistic lifestyles are all factors driving domestic
organic food consumption. India’s organic food sector is expected to grow at a compound annual growth rate
(CAGR) of 10 percent in the MY 2016-2021 period from US $386.32 million in 2015 and reach US $10.75
billion mark by 2025. In the last few years, contribution to the growth in the Indian organic foods landscape
has included various national level schemes to encourage organic farming, initiating new exports from the
remote North East region, and improved market linkages of producer clusters with agribusiness,
phytochemical, organized retail and e-commerce firms.

However, the Indian organic food industry is curtailed by multiple challenges including reduced farm
production per hectare, a general apprehension among farmers to forego the use of chemical fertilizers and
pesticides and higher storage and transportation costs due to the lack of preservatives required for long-term
storage. These complexities all result in higher food prices for consumers, thereby attracting only a niche
segment of customers. Another prominent factor exacerbating the challenge of Indian organic agriculture is
waste due to ample supply, demand that is confined from largely urban centers and often inaccessible for many
producers and other supply chain inefficiencies.

Organic Farm Production

India’s MY 2018-19 organic area accounted for 1.08 percent of total agricultural land and reached 1.93 million
hectares, an 8.8 percent increase from 2017 (Figure 1). This excludes 1.49 million hectares for wild harvest
collection. The states of Madhya Pradesh, Rajasthan, Maharashtra and Uttar Pradesh have the largest area with
organic certification. Furthermore, Sikkim, a north-eastern province in India declared itself the first “organic
state” of the world, as all its farmland (76,000 hectares) has been certified organic since 2015. Primary crops
grown in the state are fruits (Sikkim mandarin, pear, guava and kiwi); spices (ginger, turmeric and cherry
pepper), flowers (cymbidium orchids, anthurium and rose) and mushrooms.

In MY 2019, 453,622 farmers were practicing organic farming under the Participatory Guarantee System (PGS
India) and 1.14 million farmers were registered under third party organic certification. With predictions of a
normal monsoon at 96 percent of the long period average from the Indian Meteorological Department, and a
lower probability of deficient rainfall both indicate that India’s reservoirs and ground water levels will rebound
(IMD Press Release April 15, 2020). This will likely result in improved production and farmers will see
opportunities to transition to organic and reduce the use of pesticides or other non-organic fertilizers.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT
NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY
Figure 1: Organic Area Farmland in India
ORGANIC AREA (FARMLAND) [HA]
2500000

2000000

1500000

1000000

500000

0
2008 2010 2012 2014 2016 2018 2020

Source: FiBL (2020)

Organic Crop Production

Per the latest data available with the Agricultural and Processed Food Products Export Development Authority
(APEDA), MY 2018-19 certified organic production for all crop categories stood at 2.6 million metric tons
(MT). Sugar crops (sugarcane), oilseeds, cereals and millets, fiber crops, pulses, medicinal, herbal and
aromatic plants, and spices/condiments are the highest produced organic commodities in India. (Table 1) The
largest producer for organic food was Madhya Pradesh, followed by Maharashtra, Uttar Pradesh and Rajasthan.
(Table 2)

Page 3 of 12
Table 1: Organic Crop Production MY 2018-19 by Crop Category
India: Category wise Production MY 2018-19
Farm (Cultivated area) production (MT)
Crop Category Organic In Conversion Total
Sugar crops 984730 6910 991640
Oil Seeds 727148 8 727156
Fibre Crops 312945 888 313833
Cereals & Millets 269547 187 269734
Pulses 71875 0 71875
Plantation Crops (tea/coffee/coconut) 61321 224 61544
Spices and Condiments 56208 45 56253
Medicinal/Herbal/Aromatic Plants 48424 1 48425
Fruits 35813 2 35815
Flowers 11016 0 11016
Dry fruits 8834 30 8864
Vegetables 7134 1 7135
Miscellaneous 1964 0 1964
Fodder seeds/Crops 1851 0 1851
Tuber crop 289 0 289
Total Certified production 2599099 8297 2607396
Source- APEDA

Table 2: India- Top Organic Producing States (MT)

Top Organic Production States (MT) MY 2018-19
State Organic Production In Conversion
Maharashtra 858735 2241
Madhya Pradesh 738878 8
Karnataka 365848 4729
Uttar Pradesh 142512 0
Rajasthan 134611 2
Odisha 88948 1
Gujarat 66106 0
Assam 38457 0
Jammu & Kashmir 33879 19
Uttarakhand 29602 0
Others 101514 1297
Total 2599089 8296
Source- APEDA

Page 4 of 12
Organic Market Size and Trends

For MY 2020, total market size for organic packaged food and beverages in India is estimated at $77 million,
making it the 30th largest market in the world by value. The market landscape of organic foods and beverage is
fragmented, where the top companies by sales include Sresta Natural Bioproducts, with a market share of 26.8
percent, followed by Organic India (15.1 percent) and Chamong Tea Exports. (7.8 percent). However, in recent
years, these leading companies have lost market share to fairly smaller enterprises.

Table 3: Organic Products Consumption in India (USD million)

Organic Products Consumption In India (USD million)
CAGR (2017-
2015 2016 2017 2018 2019 2020*
Category 2020)
Health & wellness products
consumption 10678 12279 14200 15526 16848 18158 8.50%
Organic packaged food and
beverages consumption 38.6 46.3 54.6 61.6 69.0 77.0 12%
Organic packaged food consumption 6.7 7.8 9.2 10.2 11.1 11.8 9%
Organic beverages consumption 32.0 38.5 45.3 51.4 57.9 65.1 13%
Note - Estimates for 2020
Source: Global Organic Trade

A growing demographic of young, educated individuals that are increasingly concerned about chemicals and
pesticide residue in food products will further grow demand and domestic consumption of organic products.
Modern retail outlets like supermarkets, convenience stores, or hypermarkets like Nature’s Basket, Foodhall,
FabIndia, 24Seven, Star Bazaar, More, Organic India etc. remain the most visible distribution channels for
certified organic products, and the retail industry has been providing increased shelf space for the organic
category to fuel demand.

Relatively newer trends in organic retailing, such as the emergence of specialty organic stores catering to high
income neighborhoods in metropolitan cities, specially curated artisan organic menus in select hotels and
restaurants will continue to be a strong demand driver. Another emerging trend for marketing organic products
has been through social media channels via influencers, brand engagements and unique product placements (on
Instagram, Facebook, etc.) which have been effective in promoting awareness on organic products to target
audiences. E-commerce companies like Big-basket, Amazon India, Jaivik Haat and Nourish Organics, among
others, are emerging as alternate channels for creating brand awareness and increasing sales of organic
products.

Organic foods are priced at a premium and often target high-income urban populations in metropolitan cities.
The segment has its own niche and has high growth potential, owing to an increasing number of health-

Page 5 of 12
conscious individuals due to perceived benefits of the ‘purity’ or ‘quality’ of the organic ingredients used like
herbs and spices. Organic tea tops the list among organic beverage categories. Organic fruit/vegetable juice is
projected to have the highest growth rate within the organic beverage category.

During the national lockdown, select media reports and industry sources indicated that India witnessed an
unprecedented surge in retail sales of organic food products from mid-March onward, due to the perceived
benefits around immunity, overall food quality and easy availability through online/e-commerce channels.
(Source: Pureecoindia)

Agricultural Policy and Domestic Support

National Programme for Organic Production (NPOP) has been modelled after the IFOAM Basic Standards for
Organic Production and Processing; EU regulations as well as that of the Codex Alimentarius for maximum
residue levels. The EU’s recognition of India is limited to unprocessed plant products (not including seaweed)
and vegetative propagating material for seeds for cultivation. Market access exists for unprocessed plant
products in the EU and Switzerland and through a conformity assessment by the USDA National Organic
Program (NOP). (Equivalence Tracker: India)

The Government of India mandates the NPOP. Established in 2002, NPOP serves as the central system
responsible for organic agriculture regulations which encompass the National Standards for Organic
Production (NSOP), which are based on the International Federation Of Organic Agriculture Movements
(IFOAM) basic standards. NPOP also includes rules for the accreditation of certification authorities and
certification schemes and guidelines for the certification of growers/grower groups and the rules for the use of
the India Organic label. The NPOP falls under APEDA, located within the Ministry of Commerce and Industry
(GOI).

The GOI maintains the voluntary national logo “India Organic,” which is used by exporters, processors and
manufacturers (Figure 2. left-side icon). The certification is carried out by a third-party inspection agency
under the NSOP. There are no organisations representing the private organic sector in India. The list of
accredited certification bodies under NPOP is given here.

Figure 2: India’s National Organic Labels

Page 6 of 12
To safeguard the interests of small and marginal farmers who traditionally have minimal access to finance for
their organic certification, India employs the Participatory Guarantee System (PGS), created in 2011 as a
locally focused quality assurance system, where farmers living in a similar geographical area (neighboring
towns or villages) inspect and verify each other’s process and production methods, and confirm the adoption of
standards. Being participatory in nature, PGS does not require a third-party certification. According to the
Indian Government, PGS-India is a locally focused, affordable organic certification system ideally suited for
the domestic market, which is regulated within the Department of Agriculture and Cooperation under the
National Project on Organic Farming. PGS-India standards are the same as the NSOP, where any amendment
or modification of standards in the latter is applicable to the former. It should be noted however that price
premiums are better with NPOP certification, as it allows for greater export opportunities. Another concern is
traceability, although PGS is fairly organized as farmers groups are arranged under regional and zonal councils
which make the operating structure institutional. PGS ensures traceability only until it is in the custody of PGS
group. Once the product leaves the custody of PGS group, there is no control of PGS on its product integrity.
Therefore, PGS is ideal for local direct sales/direct trade between producers and consumers, and direct trade of
packed finished products with a PGS logo (Figure 2. right-side icon) between the PGS group and
traders/retailers.

Furthermore, Food Safety and Standards Authority of India (FSSAI) has the mandate to regulate manufacture,
imports, distribution or sale of organic foods as per the notifications under Food Safety and Standards (Organic
Foods) Regulations, 2017.

The Government of India has introduced multiple schemes to encourage the adoption of organic farming.
(Table 4)

Table 4: Government schemes promoting organic farming in India

Government Schemes Highlights and Specifics
Paramparagat Krishi Vikas  In MY 2018-19, budgetary allocations of $11.12 billion (revised
Yojana (PKVY) estimates)
 INR 20,000 ($278) will be given to farmers up to three years for
performing organic cultivation
 Procuring packaging material, preparation of labels, holograms,
printing and branding of organic produce at INR 2,500/acre
($35/acre)
 For transportation of organic produce to marketplaces, financial
assistance up to INR 120,000 ($1667) for one cluster of 50 acres
is also provided for producer groups (Please note that the land
holdings in India are highly fragmented)
 To motivate and support marketing facilities, financial assistance
is given at INR36330 ($504) per cluster for organizing an organic

Page 7 of 12
 fair to meet the expenses of arranging stalls, rent and labor
charges, publicity material and management of the event
National Project on Organic  25-30 percent annual financial outlay
Farming (NPOF)  INR 40-60 lakh ($55600-$83400)aid by National Bank for
Agriculture and Rural Development (NABARD) for setting up
biofertilizer units
 Promoting integrated use of chemical and organic manure,
including biofertilizers
National Mission for Sustainable  INR 20,000/hectare, to a maximum of INR 40,000/hectare ($265-
Agriculture (NMSA) $555/hectare) for adoption of organic farming under PGS
certification
 100 percent financial assistance for setting up biofertilizer and
biopesticide manufacturing units
 100 percent financial assistance by the state government for
setting up mechanization of fruit/ vegetable waste
 Promotion of organic inputs (manure, vermi-compost, liquid/solid
biofertilizers, waste composts, herbal extracts, etc.)
 INR 10 lakhs ($13,000) per village for integrated manure
management and biological nitrogen harvesting
 INR 85 lakh ($118,056) in assistance for setting up biofertilizer
testing quality control laboratories
Rashtriya Krishi Vikas  Promoting zero-budget natural farming for agricultural inputs
Yojana (RKVY)  Organic farming/natural farming project components considered
by respective state level sanctioning committee (SLSC) according
to their priorities
National Food Security Mission  Under its Accelerated Pulses Production Programme (A3P), use
(NFSM) of rhizobium culture and phosphate solubilizing bacteria is
encouraged
National Horticulture Mission  INR 30,000/beneficiary ($417/beneficiary) for adopting organic
(NHM) and Horticulture Mission farming
for North East and Himalayan  50 percent subsidy for a vermicomposting unit
State  INR 5 lakh ($6,944) for farmer groups covering an area of 50
hectares under organic production
Note: 1 USD= INR 72

Trade in Organic Products

The latest official data available from APEDA indicates total exports at $757.4 million in MY 2018-19 (Table
5). India remains a net exporter of organic products and exported $692 million in MY 2019, according to
industry sources. The United States was the biggest importer of Indian organic products, with the total value

Page 8 of 12
estimated at $359 million in MY 2019. Other prominent export destinations in MY 2019 included the EU,
Canada and Switzerland. The top organic products exported by value were oilseeds (47.6 percent), cereals and
millets (10.4 percent), tea and coffee (8.96 percent), dried fruits (8.88 percent) and spices and condiments (7.76
percent).

Table 5: India Exports by Market Destination MY 2018-19

Country Wise Export during 2018-19 (MT)
Country Exported Volume Total Value (USD)
United States 334113 429705430
European Union 155255 223117745
Canada 101943 68602268
Switzerland 6199 9888235
Australia 2131 7468130
Japan 751 2397738
New Zealand 1978 2125925
Israel 3070 1865450
Vietnam 3186 1679401
Lebanon 681 1633755
Rest of World 4783 9014585
Total 614089 757498662
Note: 1 USD=INR 68
Source- APEDA

Currently, no regulations or agreements exist for the import of organic products from foreign countries to
India. International organic standards are not formally recognized as equivalent by India, but there is a
conformity assessment with the USDA NOP standard and the Indian NPOP standard.

Presently, only organic products certified according to the U.S. organic standards (i.e. NOP standards) can be
imported to India for the purpose of re-export to the United States (for example, ingredients used in a
processed product). Certified organic products imported to India for the purpose of re-export need a re-
certification according to NPOP. For that purpose, the accredited certification bodies are required to apply to
APEDA for re-certification of imported organic products.

Note - Organic food exports to India under bilateral or multilateral agreements on the basis of the equivalence
of standards between NPOP and the organic standards of the exporting countries shall not be required to re-
certify on import. All organic food consignments should be accompanied by a Transaction Certification (TC)
issued by an accredited certification body covered under the terms of equivalence agreement. Since July 1,
2018, food business operators in India are required to follow the Food Safety and Standards (Organic Foods)
Regulations, 2017, which mandates the use of an FSSAI organic logo on the primary label of all certified

Page 9 of 12
organic products entering India. On August 21, 2018, FSSAI issued an order announcing that use of a non-
detachable sticker to display FSSAI’s organic logo would be permissible until December 31, 2018.

Table 6: India- Year-on-Year Agricultural Imports by Country (USD Million)

India Agricultural Imports (USD millions)
Country of Import 2016-17 2017-18 2018-19
Indonesia 4,808.58 5,745.44 4,067.45
Ukraine 2,170.27 2,073.38 1,966.64
Argentina 2,353.63 2,120.33 1,785.71
USA 1,455.69 1,833.87 1,659.40
Malasia 1,987.68 1,643.43 1,643.35
Brazil 1,454.45 1,382.66 950.04
Singapore 55.43 57.95 638.18
UAE 362.53 362.53 636.20
Vietnam 382.88 419.10 470.48
Cote D'Ivore 393.03 353.82 434.42
Others 9,615.50 8,311.34 6,098.89
Total Import of Agricultural Products 25,039.64 24,303.84 20,350.76
Source - PIB

Prospects for Organic Foods in India

The Indian domestic organic food sector is still at an emerging stage yet rapidly developing due to increased
consumer demand. This growth is attributed to new consumer-oriented products, a wider availability of
products in the market, and the development of new brands selling packaged organic products. In recent years,
multiple certification systems has enabled the entry of many smaller sized companies (private labels or new
entrepreneurs) thereby increasing price competition. Organic products are however still priced at a premium as
mentioned earlier. Indians are price conscious, discount seeking consumers. Post analysis suggests bundling
two or more complimenting products at an attractive price could be an effective strategy to push sales in
organized retail formats, as is conventional in consumer-packaged goods

Products with the biggest prospects for U.S. organic exports in the short term include apples, vinegar and
substitutes, pears and coffee. However, there has been a significant drop in U.S. agricultural exports to India
since 2018 due to the retaliatory import tariffs imposed by India, which has also hampered trade prospects in
the organic sector (Source: USTR and USDA report).

Nevertheless, Post recommends India as a long-term trade destination with seemingly attractive prospects
characterized by its demographic dividend.

Page 10 of 12
Table 7: U.S. Organic Exports to India
2017 2018 2019 2019/18 YoY Change
Product Value Qty Value Qty Value Qty % Change in Value % Change in Qty
Organic Apples Fresh 2806 2899067 2403 2732256 1004 1014919 -58% -63%
Organic Vinegar and Substitutes 0 0 704 1085881 648 1005318 -8% -7%
Organic Pears Fresh 90 72425 0 0 38 34398 - -
Organic Coffee Roast Not Decaf 5 408 0 0 30 4239 - -
Organic Strawberries Fresh 0 0 24 4390 24 4537 0% 3%
Organic Peach/Nectarin Fresh 0 0 0 0 12 2189 - -
Organic Cauliflower Fr/Ch 0 0 0 0 8 16232 - -
Organic Milk 0 0 0 0 4 5091 - -
Organic Potatoes Fr/Ch Xsd Oth 8 25200 0 0 0 0 - -
Organic Cherry Tomato Fr/Ch 8 6303 0 0 0 0 - -
Organic Lettuce Not Head Fr/Ch 0 0 0 0 0 0 - -
Organic Carrots Fr/Ch 0 0 67 66908 0 0 -100% -100%
Organic Oranges Fr/Dr 0 0 0 0 0 0 - -
Organic Grapes Fresh 33 6430 0 0 0 0 - -
Organic Cherries Fresh 0 0 0 0 0 0 - -
Organic Tomato Sauce Ex Ketchp 40 42015 0 0 0 0 - -
Organic Peas Fr/Ch 167 208199 21 9966 0 0 -100% -100%
Note - Cumulative to date, quantities/values in thousands of dollars
Source: GATS and U.S. Census Bureau Trade Data

Advantages for U.S. Exporters to India’s Market:

 Growing middle class segment, often characterized by aspirational consumption traits in Tier-1 cities
like Mumbai, New Delhi, Bangalore, Hyderabad, Pune, Chennai and Kolkata. Higher purchasing power
and more disposable income among Indian consumers drive organic food sales, especially among urban
and higher income demographics;
 Increasing Indian consumer awareness and desire of organic products grown using sustainable and
ecologically friendly methods;
 Presence of some select groups of imported organic products on the shelves of organized retail outlets
and ‘mom & pop’ stores in affluent residential neighborhoods, like processed organic foods, vinegar,
fresh fruits and vegetables etc.;
 Growing hotel, restaurant and institutional (HRI) sector, especially the emergence of health and
wellness cafes, established hotels developing special curated menus to cater to changing consumer
tastes; and
 Developing distribution channels, expanding sales possibilities and service quality.

Challenges for U.S. Exporters in Market Access to India:

 Strong competition from the South East Asian and African countries;
 Price sensitivity a main factor in organic food purchases for most Indians;

Page 11 of 12
  Lack of specialized organic distribution channels for meeting demand;
 High share of “fresh/green food,” competing by much lower prices in the unorganized retail sector;
 Lack of consumer education and information on certified organic products, which should be included
as an Indian market access strategy. Local consumers usually do not see a difference between certified
organic products and food marketed as so called healthy “fresh/green food;”
 Organic products sector is still in a nascent growth stage, which increases the level of market
uncertainty; and
 Market demand capacity is limited to metropolitan and select Tier-1 cities.

Appendix

Office of Agricultural Affairs

Foreign Agricultural Service
Embassy of the United States of America
Chanakyapuri, New Delhi – 110 021
Ph: (91-11) 2419-8000, Fax: (91-11) 2419-8530
E-Mail: [email protected]

Agricultural & Processed Food Products Export Development Authority

Ministry of Commerce & Industry, Govt. of India
NCUI Building 3, Siri Institutional Area,
August Kranti Marg, New Delhi - 110 016
Telephone: 91-11-26513204, 26514572, 26534186
Fax: 91-11-26526187
Email: [email protected]

Food Safety and Standards Authority of India (Ministry of Health & Family Welfare, Govt. of India)
Kotla Road, New Delhi - 110002
Telephone: 011-23236975, Fax: 011-23220994
E-mail: [email protected]; [email protected]

National Project on Organic Farming (Ministry of Agriculture and Farmers Welfare, Govt. of India)
Sector 19, Hapur Road, Kamla Nehru Nagar,
Ghaziabad - 201 002 (UP).
Telephone: 0120-2764906, 2764212;
Fax: 0120-2764901
Email: [email protected]

Attachments:

No Attachments.

Page 12 of 12