Food Processing Industry in India 2015

Harnessing the Potential of the Food Processing Industry in India

The Food Processing Industry in India has the potential to contribute to the country’s agricultural growth and employment, alleviate rural poverty, guarantee food and nutritional security and contain food inflation.

Policy intervention and programs sharply focused on developing the food processing industry in India with a 10 year perspective can encourage diversification of crop pattern in agriculture and substantially reduce wastage of farm produce. It can also increase farm gate prices, add value, enhance domestic consumption and export earnings.

This article briefly suggests the need for strategic actions to harness food processing industry’s full potential, which the prime minister of India Shri Narendra Modi can consider.

Need of the Food Processing Sector in India

According to the vision 2015 document, the food processing industry  envisages to increase processing of perishables from six per cent to 20 per cent, value addition from 20 per cent to 35 per cent and increase in share of global food trade from 1.5 per cent to 3.0 per cent.

food processing sector india

In order to capitalize on the available opportunities it is necessary to create an enabling environment for healthy growth of the food processing industry and formulate a strategic action plan to accomplish the Vision 2015 by end of the Twelfth Plan [2017] by focusing on the following areas.

  • Policy:  Policy initiatives need to
    1. carefully calibrate subsidies, develop innovative strategies, empower rural producers and consumers through creating better awareness, use of technology and training.
    2. encourage investment and attract significant amount of Foreign Direct Investment.
    3. review existing policies of the Union Government which are mostly generic in nature. Evolve a single comprehensive policy on food processing industry reviewing policy currently governed by multiple Acts and laws.
    4. help State Governments evolve their own policies, considering their agriculture, livestock and fisheries resource base and socio-economic needs.
  • Food regulation: Currently nine ministries are reported to administer food regulation laws comprising 13 central orders alone. Besides, States have their own control orders.This necessitates a comprehensive review of food regulation laws as they have been enacted at different points of time. There seems to be incoherence and inconsistency in the food sector regulatory scenario. Multiplicity of administering authorities at the central and State levels has resulted in a complex regulatory system that needs to be industry-friendly, simplified and well integrated without adding additional burden on the food processing industry.
  • Skilled and trained manpower: food processing industry envisages value addition during its various stages which need specific types of skilled human resources. Production or processing stage requires around 55 per cent human resources. Current status of human resources distributed across segments in the food processing industry shows that the industry has maximum work force with low level of education translating into low level of skill. food processing industry has been experiencing acute shortage of skilled and trained manpower, a critical factor impacting on the competitiveness of Indian food industry.Considerable degree of mismatch is observed between the demand for and supply of required skills. Studies exhibit that while around 58 per cent of the employers observed this type of mismatch, about 72 per cent employers were not satisfied with employees’ ability to use modern tools, equipment, and technologies specific to jobs. Currently the food processing industry has huge demand for skilled workers at all the stages, especially for persons having education level up to 12th standard and supported by short-term on the job training. The demand-supply gap has to be bridged in a time frame of three years so as to enable India capture a reasonable share in the world market.
  • Investment in R&D: Increase investment in R& D to
    1. develop Scientific &Technological capability, cost efficient processing technologies, production of intermediate and finished products and technologies for preservation and packaging of food products
    2. augment agricultural production and convert produce into value-added products. With the accessibility to modern technology India’s large and diversified agricultural production base can substantially boost the growth of the FPS
    3. educate and train the unskilled/semi-skilled labour force across various human resource profiles by strengthening existing skill development program, establishing new training institutes to match the market demand.
  • All village level agro-industries need support of technology and institutional credit and to be brought under single registration authority.
  • In order to have a desired impact on perishable food products [ viz. fruits, vegetables, milk, meat and poultry products] an efficient supply chain that, inter alia, include cold storages, refrigerated vans, better road facilities, and uninterrupted power supply is a pre-requisite to facilitate perishable farm produce to reach consumption and processing centres promptly. Prepare a road-map to strengthen infrastructure facilities specifically for uninterrupted supply of electricity, road connectivity, and storage facilities.
  • To boost domestic consumption and export trade of processed foods improvement is called for in respect of production and quality of processed foods, consumer safety and public health. There is need for up-gradation of processing, handling, packaging, production of intermediary and finished products including design and building of prototype equipment and pilot plants.
  • Total Quality Management [quality control system and quality assurance] is must for a competitive food processing sector in the world market.
  • Value addition centres demand infrastructure facilities that include
    1. processing / multi-line processing / collection centers etc. for produce of horticulture, marine, dairy and poultry etc.
    2. irradiation services with facilities of warehousing, cold storage for storage of raw material and finished products.
  • The last few years have witnessed encouraging growth in ready to serve beverages, fruit juices and pulp, dehydrated and frozen fruits and vegetable products, tomato products, pickles, pastes, processed mushrooms and curried vegetables. However, the issues concerning the low level of domestic consumption of value added fruit and vegetable products need to be addressed viz. higher incidence of tax and duties including that of packaging material, lower capacity utilization, non-adoption of cost-effective technology, high cost of finance, infrastructure constraints, weak linkage between farmers and processors leading to dependence upon intermediaries and inability of smaller units to promote market.
  • To incentivize and encourage Public Private Partnership (PPP) to overcome constraints particularly in creating facilities for cold chain, packaging and grading centers, quality control and testing, efficient supply chain, evolving process-able varieties of farm produce, seasonality of raw material, reduction in high inventory carrying cost and high packaging cost,
  • API in order to be sustainable and viable should develop and implement a system approach integrating assured supply of quality raw material exclusive for processing, timely availability of quality production inputs, technology, credit, insurance, storage, warehousing, processing, packaging, transport, marketing facilities. System approach can focus enhancing cost advantages and competitiveness in the international export market.
  • Private sectors and Agricultural universities/research institutes established in varying agro-ecological regions in a mission mode can evolve promising farming models and successfully demonstrate them.
  • Bring unorganized food processing sector into organized sector since not only the unorganized sector is very large but is also growing fast. Effective inter-institutional coordination is required in areas of training, technology up-gradation and improvement in infrastructural facility.
  • Put in place business-friendly administration and customer-oriented promotional measures.
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