The Food Processing Sector in India is a rapidly growing field. With the support of various government initiatives, this sector has taken significant strides towards economic success. It is regarded as the Priority Sector Lending (PSL) and is regulated by the Food Safety and Standards Authority of India (FSSAI). However, only a small percentage of the produce is processed, despite India being the world’s second-largest producer of fruits and vegetables, and possessing the world’s largest livestock population.
The Concept of Food Processing
Food processing is a manufacturing strategy where raw materials are converted into food products using scientific knowledge and technology. This process involves transforming bulky, perishable, and sometimes inedible food resources into easier to manage, shelf-stable, and palatable meals or beverages. The ultimate aim is to improve storability, portability, palatability, and the convenience of the end product.
Significance and Status of Food Processing Sector in India
Ranking fifth in terms of scale, the Indian food sector contributes almost 6% to the GDP. It accounts for 13% of Indian exports and 6% of overall industrial investment in the country. Despite being the world’s second-leading producer of fruits and vegetables, only 2% of these crops get processed. While India has a vast livestock population, consisting of 50% of buffaloes and 20% of cattle in the world, only about 1% of the entire meat population is transformed into value-added goods.
Policy Measures Taken By The Government
As part of their intervention, the Government has included food & agro-based processing units and cold chain under Priority Sector Lending (PSL) norms. In 2016, the Food Safety and Standards Authority of India (FSSAI) shifted from product-by-product approval to an ingredient and additive-based approval process, easing business operations.
The government has also granted 100% Foreign Direct Investment (FDI) approval under the automatic route for the food processing sector. In addition, a Special Food Processing Fund of Rs. 2000 crore was established with the National Bank for Agriculture and Rural Development (NABARD) for investments in setting up Mega Food Parks (MFPs) and for units in the MFPs.
Recently, in 2019, the coverage of funds extended to setting up Agro-Processing Clusters and individual manufacturing units. A Designated Food Parks (DFPs) scheme was introduced to provide affordable credits from special funds with NABARD in different states.
The Way Forward
Currently, less than 10% of India’s agricultural output gets processed which signals an immense opportunity to boost processing levels and attract investments in this sector. It is anticipated that the growth of the food processing sector will be driven by retail demand and the rise of health-conscious consumers. Therefore, establishing a robust crop value chain with adequate funding and technology applications is essential. This can enhance the food processing sector through the Micro, Small, and Medium Enterprises (MSME) sector.
Mega Food Parks: An Initiative
The Government of India is promoting the concept of “Mega Food Parks” to provide good infrastructure facilities for the food processing industry, to increase the processing of perishable items and reduce wastage, and to offer emerging and eco-friendly food processing technologies for entrepreneurs. The Scheme of Mega Food Park aims at connecting agricultural production to the market by bringing together farmers, processors, and retailers to maximize value addition, minimize waste, increase farmers’ income and create employment opportunities, particularly in the rural sector.
