Ramdev's Patanjali expanding in mega food parks biz, bags biggest contract

A file photo of Ramdev
Ramdev’s Patanjali group is – slowly, but surely – expanding its footprint in the processed food sector across India, suggests information obtained by Business Standard under the Right to Information (RTI) Act.

On January 15, 2018, the Modi government gave an in-principle approval to Patanjali Food & Herbal Park Noida Private Limited for setting up a Mega Food Park in Gautam Buddh Nagar (Noida). The cost of the envisaged Noida project is Rs 2.6 billion – the highest for any individual mega food park developer over the past decade. According to the information provided by the Union Ministry of Food Processing, Patanjali Food & Herbal Park in Noida is “in the process of meeting the conditions for final approval”. It is the only contract for mega food parks given this year by the Modi government.

RTI information shows that Patanjali Vanijya Enterprises, another subsidiary of the Rs 100-billion Patanjali group, has bagged 8.28 acres of land in Jharkhand for setting up a unit inside a mega food park being operated by Jharkhand Mega Food Park Primate Limited. The land was allotted in January 2017 in the food park located in Ranchi. With the Noida contract and the Jharkhand unit, the Patanjali group has become the biggest player in the mega food parks segment. It already operates a food park in Haridwar in the Himalayan state of Uttarakhand. This project had received its final approvals in 2009 and was built for an investment of Rs 980 million, with the Manmohan Singh-led United Progressive Alliance government during its second term providing Rs 500 million in grants for the project. The Patanjali group has operational units spread over 38 acres in its Haridwar park at the moment.

The Mega Food Parks scheme was introduced in 2008 to provide “modern infrastructure facilities for food processing along the value chain from farm to market.” In 2017-18, the Narendra Modi government subsumed the mega food parks programme under another central sector scheme, Pradhan Mantri Kisan Sampada Yojana. Patanjali’s Noida project is one of the four food marks awaiting a final approval. To date, 42 mega food parks have been sanctioned across India.

But despite the high rate of sanctions, most of the food parks that aim to benefit farmers in the states where they operate remain incomplete after being a work in progress for several years.

According to rules, these mega food parks need to be completed within 30 months from the date of the issue of the final approval letter. A mega food park is deemed complete if, among other things, 75 per cent of the leasable area inside the park has been allotted and 25 per cent of the units within the park have begun operations.

An analysis of the information provided by the ministry shows that only seven mega food parks across the country are 'operational' while four of them have been 'completed’.More than half of all mega food parks sanctioned in the country are ‘under implementation’. The most delayed project is the Sikaria Mega Food Park in the northeastern state of Tripura, where the Bharatiya Janata Party (BJP) upstaged the Communist Party of India (Marxist) rule earlier this year. This project, located in western Tripura, was sanctioned in 2011 at a cost of Rs 875 million. In most of the mega food parks under implementation, the central government has approved a grant of Rs 500 million, of which the bulk has been released for the projects.

Information provided by the ministry shows that much of the government grants to such projects have shown a jump since the Modi government came to power in 2014. During the UPA-II tenure from 2009 to 2014, the central government had spent Rs 3.6 billion by providing grants to these mega food parks. From 2014 to 2017, the Modi government spent almost Rs 8 billion – double the amount given in grants by the previous government. In 2017-18, the government spent Rs 3 billion on mega food parks. And the budgeted expenditure on these parks for 2018-19 is Rs 3.9 billion.

Under the rules of assistance to mega food park developers, the government has promised to provide at least 50 per cent of the eligible project cost. The government has said that it expects a collective investment of Rs 2.5 billion in such food parks providing employment to 5,000 people and benefitting over 25,000 farmers.

Patanjali’s push in the mega food parks ecosystem seems to have hit the target when it comes to meeting the Modi government’s expectations in terms of investments. Meanwhile, time will tell if it can come to its rescue on the fronts of employment and the farmer issues – two areas that the Modi government has been accused of acutely neglecting.

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