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CP adding feed plants in India

Bangkok Post | 12 July 2008

CP adding feed plants in India

Big middle class holds huge potential


The Charoen Pokphand Group, Thailand’s largest agribusiness conglomerate, is preparing to expand in India by establishing two more animal feed plants. The new plants would be located in areas where raw materials are widely available, said Pinij Kungvankij, CP’s senior vice-president and also a vice-president of CP Aquaculture (India).

The first plant, with an initial investment of $10 million, would be constructed in Assam starting late this year or early in 2009. The facility is expected to be completed within one year.

Another plant, which would produce shrimp feed, would be located in Gujarat. The exact location and investment cost have yet to finalised, he said.

So far, CP has invested $60 million in India in two feed plants that employ more than 400 people, said Mr Pinij.

Given its large population of more than one billion, Mr Pinij said India provided a huge opportunity for Thai companies.

’’Indians have been changing their lifestyles with many more people starting to prefer dining out. Ready-to-eat food and consumer electronics such as televisions and washing machines are now in high demand,’’ he said.

’’There is a huge number of young Indians, 40% of whom are middle-class consumers who have high purchasing power.’’

However, he said, impediments remain for businesses in the form of time-consuming customs clearance and regulations, while trucking and port labour strikes happen occasionally.

As the caste system still exerts a powerful hold on Indian society, Mr Pinij said that Thai businesses needed to be careful about cultural differences, adding that state governments might have different rules and viewpoints from the federal government.

Bilateral trade between Thai and India last year was worth $4.7 billion, compared with $1.5 billion before the two countries’ free-trade agreement (FTA) took effect four years ago, according to figures from the Commerce Ministry’s Trade Negotiation Department.

So far, only 82 items are covered under the FTA with import tariffs cut to zero.

’’Negotiations to bring almost 6,000 additional items to be under the FTA are about to conclude, hopefully by October,’’ said Chana Kararatanadilok, the department’s deputy director-general. ’’We expect the extension of the Thailand-India FTA to take effect by July 2009 at the soonest.’’

However, sectors such as agriculture, textiles and garment, and automobiles were completely excluded from the FTA, Mr Chana said. As a result, Thai companies in these sectors would be better advised to invest in India to reach the vast market directly.

Thai Summit, Thailand’s largest automotive parts producer, is currently building its fourth factory in India, he added.

Chirasak Thanesnant, the Thai ambassador in Delhi, said that Thailand, India and Burma had also agreed to construct a road running from India to Thailand via Burma.

Construction has been started on the Thai and Indian sides but the Burmese military government is still finalising the route in that country as it seeks to avoid politically sensitive areas.

’’Once the road is finished, it would help facilitate trade and investment between Thailand and India,’’ Mr Chirasak said.

CPF shares closed yesterday on the the Stock Exchange of Thailand at 3.54 baht, unchanged, in trade worth 21.18 million baht.

 source: Bangkok Post