How nutra industry is driving Indian GDP forward

The nutraceutical industry has emerged out of its ‘shell’ because of the COVID-19 pandemic. India has been one of the worst-off nations globally in terms of the economic devastation caused by COVID-19; not to mention the medical side of it as well, as the country’s fragile public healthcare system stood ruthlessly exposed.

The Indian middle-class, which is the backbone of almost every business success story in the country (read Tatas, Reliance), was convinced (not that it needed much of a convincing) that it
cannot rely on government-run hospitals. It also realised that prolonged hospitalisation in private institutes will result in middle-class families falling into the medical poverty trap.

The safest, and cheapest way out, was to strengthen one’s immunity using natural ingredients. Triphala (basically anything that has amla in it), honey products, broccoli, celery, papaya seeds, quinoa, blueberries… you name an immunity booster and you’ll find at least a few of these in most Indian homes.

Such has been the resurgence in the Indian nutraceutical market that the world has taken note of. According to the US-based International Trade Administration, India’s nutraceutical industry is expected to hold at least 3.5 per cent of the global market share by as early as 2023.

The report said that the dietary supplements segment in India constitutes over 65 per cent of the nutraceutical market, and is already growing at a phenomenal rate of 17 per cent.

The growth is likely to be even higher, at 22 per cent per year, especially when preventive health has become the focus for all in the current pandemic.

“Currently, the Indian market imports $2.7 billion worth of nutraceuticals. This sector also has opened significantly to attract foreign investments. The government of India has opened 100 per cent FDI in this manufacturing sector under the automatic route, and such entities can sell their products through wholesale, retail, or e-commerce platform. The Foreign Direct Investment (FDI) has increased from $131.4 million in 2012 to $584.7 million in 2019,” the International Trade Administration report said (https://www.trade.gov/market-intelligence/india-nutraceuticals-industry).

Not a paper tiger

The fourth quarter of 2020-21 recorded a growth of 1.6 per cent in GDP, the second quarter of positive growth after the country had entered a technical recession in the first half of the year. The Gross Value added recorded 3.7 per cent growth in Q4, compared to one per cent in Q3.

Alongside the pharma industry, the nutra market, driven by the supplements sector, played a significant role in this recovery.

According to the government of India’s announcement last year, the export of Ayurveda products recorded a 45 per cent increase in September 2020, as compared to the same period in the previous year, following the official adoption of AYUSH (Ayurveda, Yoga, Naturopathy, Unani, Siddha, Sowa-Rigpa and Homoeopathy) practices by the Centre as a means to manage and boost immunity against COVID-19.

In FY 2018-19, the total export value of ayurvedic products and herbal remedies amounted to $446 million. Amid the COVID-19 crisis, India has been advocating the use of AYUSH products around the world, prompting the Centre to budget over $285 million for FY 2020-21 to modernise AYUSH formulations while building new institutions to expand capacity.

The trend will continue

In FY 2020, pharma export from India stood at $16.3 billion. A chunk of this included AYUSH and herbal products. A look at consumer behaviour in the country will reaffirm that the upward trend will continue. Already, the nutra market has seen a mammoth growth through the pandemic, not just in the metro cities, but also in tier-II cities such as Chandigarh, Ahmedabad and Pune.

Market trends have established that the Indian middle-class and upper-middle-class consumers are shifting their focus to nutritious and healthy food items that help in preventing lifestyle diseases. The emphasis on preventive care, rather than tackling an ailment after its onset, has led to a huge jump in the demand for nutraceuticals across age groups.

Then, there’s the matter of pricing. The Indian nutra manufacturers are a fortunate lot because of the abundance of raw materials available in the country. The fact that we have always been a nation of traditional medicines, as prescribed in Ayurveda, has ensured a treasure trove of knowledge, ancient and modern, which is available to us. Further, India’s climate helps in growing almost all natural ingredients. All of these contribute towards high-quality natural products at competitive rates.

So, one can safely say, it’s a win-win way forward for the Indian nutraceutical industry and the nation’s economy, as the COVID-19 bite reduces and the economy picks up.