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Potato farmers in Gujarat, India are considering setting up their own French fries manufacturing unit to capitalize on the region’s reputation for producing the best processing varieties of potatoes. With zero rated duty for ASEAN countries and export incentives from the Government of India, the market for processed potato products is growing rapidly, with French fries being among the most popular. The global market for frozen French fries is projected to reach US$27.8 billion by 2027. This article explores the development and potential consequences of establishing a French fries manufacturing unit in Gujarat, India.
Development: Potato farmers in Gujarat, India, currently engage in contract farming for various French fries manufacturers. They are considering setting up their own manufacturing unit, leveraging their own potato farming and onboarding their relatives for contract farming. Gujarat is renowned for producing the best processing varieties of potatoes, making it an ideal location for setting up a French fries manufacturing unit. Major companies have already set up their plants in Gujarat, thanks to its convenient location, major ports like Mundra and Pipavav, and lower shipping costs to Gulf and East Asian countries compared to Europe.
Moreover, under the ASEAN-India Free Trade Agreement (AIFTA), there is zero rated duty for ASEAN countries that import from India, including Thailand, Vietnam, Indonesia, Philippines, Singapore, Malaysia, Laos, Cambodia, Myanmar, and Brunei. The Indian government also offers export incentives of 1.4% for processed potato products, including French fries, which are highly saleable and come in various varieties.
The global market for frozen French fries was estimated at US$20.6 billion in 2020, with a projected revision to reach US$27.8 billion by 2027. This represents a growth rate of 4.5% per annum. French fries, wedges, and potato flakes are high-value products with high growth rates and demand in the domestic and international markets. Dehydrated potato products like flakes, granules, and powder are also used in larger quantities as substitutes for fresh potatoes in many products like Bhujia, Tikki, thickener, fabricated chips, patties, and premixes used for other products.
Consequences: Establishing a French fries manufacturing unit in Gujarat, India, would open up new opportunities for potato farmers to diversify their income streams and increase profits. The availability of raw materials and the region’s reputation for producing the best processing varieties of potatoes would reduce sourcing issues. With zero rated duty for ASEAN countries and export incentives from the Government of India, the unit can tap into the growing market for processed potato products, particularly French fries, which have high demand in the domestic and international markets.
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