5. Potential of Processed Food Sector in India

Demand: With a population of more than one billion individuals and food constituting a major part of the consumer’s budget, this sector has a prominence next to no other businesses in the country.

Resilience: The importance of this sector to India’s economy becomes all the more relevant, considering the fact that this sector continued to perform well, despite fall in GDP number and poor performance by many other industries, during recession in 2008-09.

Value Chain: The industry encompasses a gamut of activities involved in reaching the final product to the consumer, starting with farming activity to produce inputs, processing of the inputs to create products and the associated supply chain involved in delivering the products.

Forward-Backward Linkages: It has increasingly come to be seen as a potential source for driving the rural economy as it brings about synergy between the consumer, industry and agriculture. A well-developed food processing industry is expected to increase farm gate prices, reduce wastages, ensure value addition, promote crop diversification, generate employment opportunities as well as export earnings. This sector is also capable of addressing critical issues of food security and providing wholesome, nutritious food to our people.

Scope for development: While the industry is large in terms of size, it is still at a nascent stage in terms of development. Out of the country’s total agriculture and food produce, only 2 per cent is processed. However, the contribution of food processing sector to GDP has been growing faster than that of the agriculture sector.

Raw material: Being an agrarian economy, there is sufficient supply of raw material in India.

Employment generation: It has the potential to generate non-farm employment, especially in rural areas. It would reduce disguise unemployment by providing productive employment opportunities.

Investments: There is 100 per cent FDI (foreign direct investment) allowed into the sector through the automatic route. There has been FDI equity inflow of US $6492.19 million in the food processing sector during 2010-11 to 2016-17 (Department of Industrial Policy & Promotion). These investments serves as a catalyst to boost agricultural income and employment.