Antecedents of Export Performance of Food and Beverages MSMEs in India

Abstract

The Food and Beverages (F&B) sector has evolved as a sunrise sector of India. It is gearing-up its business at a rapid rate after the pandemic shocks. India is one of the largest foods producing nation in the world but due to its perishable nature the surplus food articles are converted to processed food and beverages products and exported to other countries. Even though the sector has good prospects to grow and attract foreign investment but most of the enterprises are micro, small, and medium. However, MSMEs are performing better in food and beverages exports. The present study has empirically investigated the export antecedents of India’s F&B MSMEs by using Random Effects Tobit Model in a firm level dataset. The study also analyzed the region-wise F&B export performance. The findings reveal that F&B industry is highly labour-intensive which requires more capital investment in physical assets like plant and machinery, cold storage facilities, warehousing, packing and packaging centers and so on. To stimulate the export performance, the F&B firms require to enhance the labour productivity by investing on the employees’ welfare and training activities as well as create awareness among them about the rules and regulations of WTO and FAO like food standard and safety regulations and packing and packaging standards etc. The region-wise analysis indicates that in F&B exports the Northern and Eastern regions have performed better whereas the North-Eastern region is more oriented towards the domestic market rather than the export market.