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India’s strengths in the food processing sector lies in the following:
♤ Favourable-Factor Conditions
India has access to several natural resources that provides it a competitive advantage in the food processing sector. Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material base suitable for food processing industries. Presently a very small percentage of these are processed into value added products. The semi-processed and ready to eat packaged food segment is still evolving.
India’s comparatively cheaper workforce can be effectively utilized to set up large low cost production bases for domestic and export markets. Cost of production in India is lower by about 40 per cent over a comparable location in EU. Along with these factor conditions, India has access to significant investments to facilitate food processing industry. There have been increasing investments not only by domestic firms and Indian government, but also foreign direct investment.
♤ Related and Supporting Industries
The Indian food processing industry has significant support from the well-developed R&D and technical capabilities of Indian firms. India has a large number of research institutions like Central Food Technological Research Institute, Central Institute of Fisheries Technology, National Dairy Research Institute, National Research and Development Centre etc. to support the technology and development in the food processing sector in India.
♤ Government Regulations and Support
The Government of India has taken several initiatives to develop the food processing industry in India. The government has been developing agri-zones and mega food parks to promote food processing industry in India. In order to promote investment in the food processing sector, several policy initiatives have been taken during recent years, such as allowing 100% FDI.
♤ Large Number of Players
There are a large number of players in the organized as well as unorganized sector. The organized sector is small but growing - for example, it forms less than 15 per cent of the dairy sector and around 48 per cent of the fruits and vegetable processing. The sector offers potential for growth and a large number of Multi National Corporations have entered into India to leverage this opportunity.
Apart from above-mentioned strengths, the following areas have been identified by the Ministry of Food Processing Industries where investments are required:
♤ Mega food parks
♤ Agri-infrastructure and supply chain integration
♤ Logistics and cold chain infrastructure
♤ Fruit and vegetable products
♤ Animal products, meat and dairy
♤ Fisheries and sea food
♤ Cereals, consumer foods and ready-to-eat foods
♤ Wine and beer
♤ Machinery and packaging