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Status of the Food Processing Sector in India


In Mumbai, during the 17th edition of ANUTEC – International FoodTec India, influential leaders from both industry and government revealed a hopeful outlook for India’s food processing sector. This sector is currently on an impressive growth path and is primed to play a pivotal role in propelling the nation’s economy forward.


GS III: Food Processing

Dimensions of the Article:

  1. Status of the Food Processing Sector in India
  2. Government Initiatives in the Food Processing Sector
  3. Challenges in the Food Processing Sector
  4. The Way Forward

Status of the Food Processing Sector in India:

Crucial Component of the Food Supply Chain:
  • The food processing sector plays a vital role in the food supply chain.
  • It involves converting raw agricultural and livestock products into processed, value-added food products suitable for consumption.
  • This sector encompasses various activities, technologies, and processes to improve food safety, convenience, shelf life, flavor, and nutritional value.
Economic Contribution:
  • Contributes significantly to India’s economy, accounting for 13% of exports and 6% of industrial investment.
  • Attracted substantial foreign direct investments (FDI), with USD 4.18 billion invested from 2014 to 2020, reflecting confidence in its future.
  • Expected to create 9 million jobs by 2024.
  • By 2030, India is projected to become the world’s fifth-largest consumer of food and food technology due to a fourfold increase in household consumption, highlighting its substantial growth potential.

Government Initiatives in the Food Processing Sector:

Inclusion in Priority Sector Lending (PSL) Norms:

  • In April 2015, food and agro-based processing units and cold chains were included in the PSL norms, enhancing access to financial support for the sector.

Streamlined Approval Process by FSSAI:

  • In 2016, the Food Safety and Standards Authority of India (FSSAI) transitioned from product-specific approval to an ingredient and additive-based approval process, promoting ease of doing business in the sector.

FDI Approval:

  • 100% Foreign Direct Investment (FDI) is permitted under the automatic route for the food processing sector, encouraging foreign investment.

Special Food Processing Fund:

  • Establishment of a Special Food Processing Fund of Rs. 2000 crore in collaboration with the National Bank for Agriculture and Rural Development (NABARD) to facilitate sector growth and development.

Challenges in the Food Processing Sector:

Inadequate Cold Storage and Transportation:

  • Lack of proper cold storage and transportation facilities leads to significant post-harvest losses of perishable goods, impacting both food quality and farmers’ income.

Fragmented Supply Chain:

  • India’s fragmented supply chain results in inefficiencies and increased costs.
  • Poor road and rail infrastructure can cause delays and losses during transportation.

Regulatory Complexities:

  • The food processing industry faces a complex web of regulations, licenses, and permits, posing challenges for businesses.

Inconsistent Regulation Enforcement:

  • Inconsistent enforcement of regulations can lead to unfair competition and quality issues within the sector.

Food Safety and Quality:

  • Ensuring food safety and quality standards across the supply chain remains a significant challenge.
  • Contaminated or adulterated food products can harm public health and the industry’s reputation.

Limited R&D Investment:

  • Limited investment in research and development inhibits innovation and the development of new, value-added products.
  • India’s low R&D expenditure-GDP ratio is a concern compared to major economies and the world average.

The Way Forward:

Smart Food Processing Hubs:

  • Establish smart food processing hubs with advanced technologies such as IoT, AI, and blockchain to monitor the entire food supply chain for quality, traceability, and efficiency.

Functional and Nutraceutical Foods:

  • Develop a variety of functional and nutraceutical foods tailored to specific health needs, including fortified foods with essential nutrients, probiotics, and bioactive compounds.

Zero-Waste Processing:

  • Implement zero-waste processing techniques to utilize every part of raw materials. For example, convert food waste into biofuels or use byproducts to create new products like bio-plastics or animal feed.

Community-Based Processing Centers:

  • Establish community-based food processing centers in rural areas to assist local farmers in processing their produce.
  • This approach reduces post-harvest losses and creates employment opportunities in rural regions.

-Source: The Hindu

April 2024