India: Halal market is a rage now

Shafeeq Rahman says pure Muslim products are a huge chunk of the Indian economy

Photo: Tim Tim Rose

WHILE THERE an emerging market worldwide, specifically developed in cosmopolitan societies of Europe and Southeast Asian countries to provide niche services and products in compliance with the Shariah’s dietary and other related norms that are strictly followed by most of Muslim population. The word Halal originally comes from the Arabic language and is used for every lawful object and action in the view of Islamic laws. In its literally broad meaning, it applies to all spheres of life activities including food, cloth, finance, personal care, etc. But in common terminology, its meanings are narrowed down for food and meat products. Products that are free from pork and alcohol, and meat products made according to Muslim law are called Halal. Halal markets have grown from Halal food to new areas like Halal cosmetics, Halal logistics, Halal fashion and Muslim-friendly tour and travel services. Islamic finance, relatively a mature interest-free market that caters to the Muslim consumer, has estimated the total assets of Shariah-compliant products across the world around $951 billion at the end of 2008, up 25 per cent from $758 billion in 2007. It was merely about $150 billion in the mid 1990s.

India is home to more than 175 million Muslims and has the third-largest community of Muslim consumers in the world after Indonesia and Pakistan. But its market in regard to the choices of Halal-endorsed products among mainstream brands is still highly untapped. According to estimates by the Pew Research group, Muslim population in India is projected to increase from 177.3 million in 2010 to 236.2 million in 2030. And the share of Muslims in India’s population is expected to increase from 14.6% in 2010 to 15.9% in 2030.

More than one in ten of the world’s Muslims, 10.8%, will live in India in 2030, about the same as in 2010. Most Muslim households have middle-level expenditure abilities. Compared to rural Muslims, counterparts in urban areas have better economic conditions. But the masses live in rural areas. The percentage-wise distribution of urban Muslims annual per capita expenditure is 25 per cent for below Rs 5,280, 47 per cent between Rs 5,281 and Rs 10,320, 22 per cent between Rs 10,321 and Rs 19,560 and 6 per cent above Rs 19,561 in 2004-05. For the same period, the annual per capita expenditure for rural Muslims was below Rs 4,110 for 23 per cent, Rs 4,111 to Rs 5,790 for 32 per cent, Rs 5,791 to Rs 9,480 for 36 per cent and above Rs 9,481 for 9 per cent.

The majority of Muslims prefer to buy only Halal-certified products. Further, an increased awareness in recent years among Muslim consumers about what they see as religious obligations has expanded the demand for Halal items. Indian Muslims have 15 per cent share in the consumer market, going by their population. But keeping the constraints of their economic conditions, it is assumed that Muslim consumers have only 10 per cent share of the overall private consumption expenditure of India. Based on the share of Muslims, the estimated consumption is shown in the accompanying table.

BESIDES THE domestic market, India is a major hub for export of meat and processed products to Muslim countries. Malaysia, Egypt, Saudi Arabia, Kuwait, UAE, Jordan and Oman are among the top ten importers of Indian meat while the UAE was a major destination for processed food from India in the year 2009-10. Halal-tagged products would attract Muslim consumers in overseas markets especially the Middle East and Arab regions, which are major trade partners with India.

Muslims are permitted to use products with vegetarian logos from India by default since these do not contain Haram, the opposite of Halal, elements. To certify that products are authentic Halal, it is necessary to regard the processed and contaminated products where the ambiguity of Haram ingredients is high due to change in shape. It is pertinent to note that introduction of the Halal tag with conventional products is not an identity campaign for Muslims but only intends to include Muslim consumers who might have been left out due to religious limitations.

Despite all this, there are no serious investors and promoters for Halal-endorsed products in India. Al Kabeer, Allanasons, Alhind and Vinkeys are major players in Halal meat processing in India with a variety of products under their respective brands. Now, Intertek, a global leader in quality and safety solutions serving a wide range of industries, is extending its food certification expertise to include Halal certification in India. It is the first initiative by a multinational company to introduce Halal business in India.

Apart from the Halal food market, Islamic finance is another highly discussed sector in India for Halal financial services. Indian Muslims are reluctant to participate in banking and financial activities due to prohibition of interest-based transactions in Islam. The Bombay Stock Exchange has launched a first of its kind index for Shariah- compliant companies with the intention to increase investments from Indian Muslims. After the non-banking financial company Al Baraka Financial Services Ltd., by the Kerala government, this is the second sincere effort by a government department to introduce the Shariah compliance option among mainstream financial institutions. However, several private broker companies are also offering Shariah-compliant investment portfolios in India.

Shafeeq Rahman is a professional researcher on India-centric socioeconomic and political databases.