Food Processing Industry (FPI) in India is a sunrise sector that has gained prominence in the recent years. Easy availability of raw materials, changing lifestyles and favourable fiscal policies has given a considerable push to the industry’s growth.
India being one of the biggest food producers of the world is in very advantageous position to become a hub of food processing industry. Food processing is an important element of Indian manufacturing industry as it can further boost the Make in India program.
PM Modi recently inaugurated World Food India 2017 at Vigyan Bhavan, New Delhi. India also launched Pradhan Mantri Kisan Sampada Yojana to create world class food processing infrastructure.
Location of food processing industries in India:
Coastal states: AP, Maharashtra, Karnataka, Kerala, Gujarat, WB
Non-coastal States: UP, Punjab
Observe majorities of the food processing factories are concentrated in the coastal states.
Processes in a food processing industry:
- Manufacturing: Raw materials => Food.
- Value Addition: Increase shelf life and value of a manufactured food.
- Ministry of Food Processing Industries (MOFPI)
- Agricultural and Processed Food Products Export Development Authority (APEDA)
- Department of Animal Husbandry, Draying & Fisheries
- National Horticultural Board (NHB) under – Ministry of Agriculture
- National Institute of Food Technology and Entrepreneurial Management (NIFTEM).
- Indian Grape Processing Board (IGPB).
- Indian Institute of Crop Processing Technology (IICPT).
- National Meat and Poultry Processing Board (NMPPB).
Conditions that favor Food Processing Industry in India:
- 25 billion population => large consumer base.
- Agricultural economy with readily available and cheap raw materials.
- Ready availability of both skilled and unskilled workforce.
- High growth potential because of untapped resources at every stage.
- The sector is not yet fully liberalized. The market is still wide open for new players.
- Can easily attract investments as the industry is still in nascent stage.
Importance of food processing industry:
-> Food processing industry provides plenty of direct and indirect employment opportunities, because it acts as bridge between Agriculture and Manufacturing.
-> Food processing plants when setup near agro/rural regions reduce: Poverty among villagers, disguised unemployment, exploitation of farmers, rural-urban migration, unplanned urbanization, social problems in cities like slums, hygiene etc.
-> Well-developed food industry along with compact supply chain reduces food inflation via, disintermediation (meaning no middlemen) and less wastage of perishable products.
-> Food processing increases shelf life (eg. Milk vs Butter) thereby increases the value of the product.
-> Strong demand growth – Demand growth for processed food has been rising with growing disposable income, urbanisation, a young population and nuclear families. Household consumption is set to double by 2020.
-> Some other benefits are –
- Greater value addition to farm produce.
- Control inflation and price volatility
- Advanced technologies that foreign investors would bring.
- FPI will encourage contract farming. Read more on Contract Farming – https://ydsedu.com/2018/01/12/contract-farming-in-india-issues-suggestions/
Challenges faced by food processing industry in India:
-> India just has 2.2% of exports out of total global exports in food processing.
-> Technical Barriers to Trade (TBT) and Sanitary & Phyto-Sanitary (SPS) barriers impact Indian export significantly.
-> Poor warehousing and storage capacity, upgrading agri infrastructure, and lack of facility by a dedicated agency to the farmers also account to crisis in development of this sector.
-> Since Food Safety and Standards Authority of India (FSSAI) facilitates post production, there is a lot of issues to be addressed for pre-harvest.
-> Lots of inorganic chemicals are also used in India for agricultural production which needs to be shifted to organic ones. There are ~67 pesticides found in Indian food processing products by SPS.
-> Gross capital investment in agriculture infrastructure is also very meagre.
-> Meat is also affected much and lots of cattle mandies are getting abandoned due to socio-political problems. This affects export of canned meat which is having vast opportunity for India in global markets.
-> The small domestic players are not regulated with respect to global standards, rules and regulations which is potentially hindering the growth in exports.
-> Change in Global food consumption pattern has influenced a change in local also.
-> Food processing industries are mostly confined to coastal areas rather than internal areas with good food produce. Thus increasing the final cost as result of increasing transport cost.
-> The public investment in agriculture is another issue that needs to be addressed.
-> Presently, India has to focus on development of agricultural infrastructure by enhancing public investments in agriculture sector.
-> India is an agrarian economy with lots of laborious farmers and skilled entrepreneur that can tap the benefit from the food processing industry.
-> Focus on connecting the farms with the mandis, linking them with good warehouses and increasing the storage capacities should be considered.
-> Productivity of the farm sector is also to be increased by using modern agricultural practices and technologies.
-> There is a need of broad policy framework with regards to the exports of the processed vegetarian and non-vegetarian food from grass root level.
-> Food processing food park concept can be replicated across the country as it offers an alternative to farmers.
-> There is a need to promote big investments through big brands globally like nestle, pepsi, etc.
-> The rules must be rigorously imposed and must be stood by the entire domestic and international companies and deliver the quality products.
-> Need of the hour is to change the farm patterns and diversify the crops production.
-> There must be focus on organic ever green revolution that will focus on traditional and new food items and increase productivity.
-> There is a need of adopting the good practices from best producing states and also from around the world.
-> There should be more awareness towards the education of food processing and more institutes must be opened up.
-> New technologies can be brought in to be used which can also improve the skills of the students and entrepreneurs.
-> Food processing can be a new avenue for the students to get trained to be an entrepreneur in this sector.
-> There is also a need to strengthen the university industry linkage for food processing sector which will increase the awareness and productivity that will lead to better exports globally.
Initiatives taken by government:
-> FDI in food processing – 100% FDI is permitted in the automatic route for most food products except for items reserved for micro and small enterprises.
-> Mega Food Park – based on ‘cluster approach’. Scheme aims to strengthen such clusters by providing world class infrastructure facilities. This will result in smoothening of supply chain – ‘Farm to Market’. The execution, ownership and management of the Mega Food Park are vested with a Special Purpose Vehicle (SPV).
-> Hub and spoke model is adopted, as per which there will be a strong Central Processing Unit, which will cater needs of surrounding areas.
-> Program Management Agency is appointed by the Ministry to provide management, capacity building, coordination and monitoring support.
-> Special Fund with a corpus of Rs. 2000 Crore in NABARD for providing direct term loans to establish infrastructure in the Mega Food Parks as also to the individual processing units to be set up in the designated Food Parks, at affordable rate of interest of around 10% p.a.
-> Scheme of Cold Chain, Value Addition and Preservation Infrastructure (Cold chain facility).
-> Modernization of Abattoirs (slaughterhouse) – This is a comprehensive scheme, which includes establishment of modern abattoirs and modernization of existing abattoirs.
-> Agri Export Zones – To give thrust to export of agro products. Entire effort is centered on the cluster approach of identifying the potential products. APEDA has been nominated as the Nodal Agency to coordinate the efforts on the part of Central Govt. negotiations.
-> R&D, QA, Codex and Promotion – Scheme for Quality Assurance, Codex, R&D and Other Promotional Activities is being implemented to create infrastructure
-> Other initiatives by government –
- National Food Processing Policy – Target 2025 – increase food processing to 25% of agro produce.
- Food Processing is recognized as a priority sector for Bank lending.
-> Food processing sector can help government’s mission to double the farmers income, but it cannot come just by giving them higher prices of their produce as it will lead to inflation.
-> A strong domestic market is needed to make India a supply chain hub and attract investment.
-> The Indian dishes have made its way abroad for instance national dish of Britain Chicken Tikka Masala is from India. Hence blending Indian skills with international technology can take India far away in this sector.
-> Now at the time when agriculture in India is about to take a big leap it is to be ensured that the farmers’ produce get the good market at fair price to keep up the agricultural productivity.
-> It is not only the consumption of main cereals that matters, the surplus has also to be converted in to snacks for consumption in India and abroad.
-> The system as a whole must encourage the Indian producers to better package and brand them.
-> There is a change in the lifestyle of the people towards the ready food to consume but what matters is maintaining quality and hygiene and its strict enforcement.
-> Substituting the import scenario in this sector will provide lots of opportunities to entrepreneurs to manufacture and export to other markets.
Revolutions related to Food Production and Food Processing:
- Pink Revolution – Meat and Poultry Production.
- Red Revolution – Meat & Tomato Production.
- Round Revolution – Potato Revolution.
- Silver Fiber Revolution – Cotton Revolution.
- Silver Revolution – Egg/Poultry Production.
- White Revolution – Milk/Dairy production (Operation Flood).
- Yellow Revolution – Oil Seeds production.
- Evergreen Revolution – Overall development of Agriculture.
- Blue Revolution – Fish Production.
- Brown Revolution – Leather /Cocoa production.
- Golden Fibre Revolution – Jute Production.
- Golden Revolution – Overall Horticulture development/Honey Production.
- Green Revolution – Agriculture in general.