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Indian food processing industry (FPI)81 has not grown with the pace which we see in the developed countries—there has been certain reasons for it:
(i) India has a lower urban population (around 30 per cent of the population).
(ii) Whatever urban population India has it does not have the typical urban food habits. As majority of it is second or third generation in the urban areas they still continue with the non-urban/rural food habits detrimental to the consumption of the agro-precessed items.
(iii) In recent times, there has come enough awareness among the population across the country regarding the chemicals which are used in the agro-processing industries—creating a general tendency to avoid such food articles (much damage has been done to the industry by the ‘fast foods’, adulteration in food items such as sweets, milk, etc.).
(iv) A wave across the world towards comsuming more ‘which comes on plants’ than ‘what is produced in plants’. A similar wave of ‘slow food’ has gained popularity across Europe and other parts of the world originating from France.
Moreover, India’s agro-processing policy today guided by the following
drivers :
(i) As urban population rises and urban food habits evolve, there will be increased demand for processed foods as it happened across the urbanising developed world. The economy has already started having an informed and increased demand in such food items as ‘dietary habits’ are
in the process of shift (NSSO, 2014).
(ii) External dimension to it was also accepted by the government by mid- 1990s. As per a joint GATT-OECD study, processed food are supposed to account for around 19 per cent of the increased trade after the provisions of the WTO are implemented.
(iii) A very high percentage of food items which have short shelf life get wasted in India. It does not look good for a country which is crippled by the short-supply of food and high rate of hunger.
While increased productivity is an essential component of a vibrant agricultural sector, improved post-harvest handling and processing is essential to ensure value addition, reduction in wastage and to make good quality products reach the markets. Too often, even when the yields are high, producers lose income due to poor post-harvest practices.
Aim: Food processing aims to make food more digestible, nutritious and extend the shelf life . Due to the seasonal variations high levels of wastage or shortages can arise if adequate measures are not taken to preserve and store the food. Food processing covers all the processes that food items go through from the farm to the consumers’ plate . It includes basic cleaning, grading and packaging as in case of fruits and vegetables and also alteration of the raw material to a stage just before the final preparation. Value addition processes to make ‘ready-to eat’ food like bakery products, instant foods, flavored and health drinks, etc., are also included in this definition.
Food processing offers an opportunity for the creation of sustainable livelihoods and economic development for the rural communities. Food processing has come a long way in the last few decades. The everchanging lifestyles, food habits and tastes of customers globally have altered the dynamics of the industry. Food processing benefits all the sections of the society:
(i) Farmers get better returns, higher yield, and lower the risks drastically;
(ii) Consumers get access to a greater variety, better prices and new products;
(iii) Economy gets benefit via creation of new business opportunities, while the workforce gets employment.
With a huge production base, India can easily become one of the leading food suppliers to the world while at the same time serving the vast growing domestic market of over a billion people. India’s large market size with growing incomes and changing life styles also creates incredible market opportunities for food producers, food processors, machinery makers, food technologists and service providers in this sector.
Growth in the food processing sector is also expected to open up a lot of opportunities for players having strong linkages in the agri-value chain. Significant investment opportunities are yet to be tapped in the areas of supply chain management, cold storages, financing, retailing and exports.
Historically, agriculture and FPI have been plagued by factors such as:
(i) Low public investment,
(ii) Poor infrastructure,
(iii) Inadequate credit availability, and
(iv) High levels of fragmentation.
Rules and regulations regarding the industry is as given below:
(i) Most food processing enterprises have been exempted from industrial licensing under the Industries (Development and Regulation) Act, 1951 with the exception of beer and alcoholic drinks, and items reserved for the small scale sector.
(ii) For foreign investment, automatic approval is given even up to 100 per cent equity for a majority of processed foods.
(iii) For manufacture of items reserved for MSEs, FDI is permissible under automatic route up to 24 per cent.
Attractive packaging mak es the product more appealing to consumers who are therefore willing to pay more if the product offered is of good quality and easy to use. The policy initiatives of the government also include assistance for opening up of mega food park, cold chain and development of agri-export
zones, skill development and R&D activities. Apart from the various schemes from the central government, various state governments are implementing their own food processing promotion policies and schemes.
The sector contributes around 10 per cent of GDP in agriculture and manufacturing sector. During the last 5 years, FPI sector has been growing at an average annual growth rate (AAGR) of around 6 per cent as compared to around 4 per cent in agriculture and 7 per cent in manufacturing.
The Ministry of Food Processing Industries (MoFPI) has been implementing a scheme for the creation of modern enabling infrastructure which includes mega food parks scheme, scheme for cold chain, value addition and preservation infrastructure and the scheme for construction and modernisation of abattoirs.
The Mega Food Parks Scheme aims to accelerate the growth of the food processing industry in the country by facilitating establishment of strong food processing infrastructure backed by an efficient supply chain. Under this scheme, capital grant of 50 per cent of the project cost is provided in general areas and 75 per cent in difficult and ITDP (Integrated Tribal Development Programme) notified areas (with a ceiling of Rs 50 crore). Each Mega Food Park takes about 30–36 months to be completed.