India’s food processing sector to touch $535 billion in 5 years: Minister

India’s food processing sector to touch $535 billion in 5 years: Minister
The Indian food processing industry engage approximately 1.93 million people in around 39,748 registered units with fixed capital of US$32.75 billion and aggregate output of around US$158.60 billion

India’s current overall level of food processing is just 10 per cent, which can be rapidly increased to capture market opportunities and improve outcomes for farmers, said Pashupati Kumar Paras, Union Minister for Food Processing Industries (MOFPI) at a virtual conference on ‘“Global Value Chain: Creating Value Proposition for Food Processing” organised by Associated Chamber of Commerce and Industry (ASSOCHAM).

Speaking at the event, the minister said that food processing had an important role to play in linking Indian farmers to consumers in the domestic and international markets. “India’s food processing sector is one of the largest in the world and its output is expected to reach US$535 billion by 2025-26,” he said.

The food processing industry has always been the engine of growth for the Indian economy. This industry provides employment to over seven million people with around 15 lakh women, directly or indirectly and has been contributing 12.8 per cent to the Indian GDP (gross domestic products), said the minister.

The Indian food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales. The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export, and expected growth added Paras.

“The production of horticulture crops in India was estimated at a record 320.48 million metric tonnes in FY20 as per second advance estimates. India has the largest livestock population of around 535.78 million, which translates to around 31 per cent of the world population. Milk production in the country is expected to increase to 208 MT in FY21 from 198 MT in FY20, registering a growth of 10 per cent year-on-year,” the food processing industries minister said.

The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments across the value chain. The industry engages approximately 1.93 million people in around 39,748 registered units with fixed capital of US$32.75 billion and aggregate output of around US$158.60 billion.

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According to the data provided by the Department of Industrial Policies and Promotion (DIPP), the food processing sector in India has received around US$ 7.54 billion worth of FDI during the period April 2000-March 2017.

Unfortunately, there were various challenges that were faced by the food processing industry when the pandemic hit for the first-time including shortage of labour, supply chain gaps due to lockdowns, factories were shut down, and there were huge losses of material, said the food processing industries minister.

But on the upside, the pandemic has accentuated the critical importance of food safety and the management of food surpluses in the country. To this end, the sector’s policy measures have shifted the focus from livelihood to processing, distribution, and marketing, he added.

Under Pradhan Mantri Kisan Sampada Yojana (PMKSY), 42 mega food parks, 353 cold chain projects, 63 agro-processing clusters, 292 food processing units, 62 creation of backward and forward linkages projects along with six operation green projects across the country have been approved.

Mega Food Parks Scheme

It goes for giving a component to interface rural generation to the market by uniting farmers, processors and retailers amplify value addition, limiting wastage, expanding income of farmers, and creating employment opportunities, especially in the rural sector.

Scheme of Cold Chain, Value Addition, and Preservation Infrastructure

The goal of the scheme is to give incorporated cold chain and conservation framework facilities, with no break, from the farm-gate to the customer. It envelops pre-cooling facilities at production sites, reefer vans, mobile cooling units as well as value addition hubs.

PM Formalization of Micro Food Processing Enterprises

To further support the food processing industries in the country, the PM Formalization of Micro Food Processing Enterprises (PM FME) scheme was launched. It is a centrally funded scheme with an aim to provide financial, technical, and business support to micro food processing units in the country. About two lakh micro food processing units will be given direct financial assistance in the form of credit linked subsidies under the scheme.

The PM-FME scheme would give emphasis to units and groups following the ODOP (One District One Product) approach. Various states in the country will be required to identify one product per district based on existing clusters and the availability of raw materials.

Production-Linked Incentive Scheme

The Union Cabinet has also given its approval to introduce the Production-Linked Incentive (PLI) Scheme in food products for enhancing India’s manufacturing capabilities and enhancing exports. PLI scheme is to encourage players in the food processing industry to meet the demand for rising challenges. Achieving the full potential of this sector would require Indian companies to improve their competitive strength vis-à-vis their global counterpart in terms of the scale of output, productivity, value addition and their linkages with the global value chain.

The main objective of the scheme is to support the creation of global food manufacturing champions; strengthen select Indian brand of food products for global visibility and wider acceptance in the international markets; increase employment opportunities of off-farm jobs and ensuring remunerative prices of farm produce and higher income to farmers.

With these initiatives, the food processing industry is expected to gear up to the challenge and is likely to see enhanced investment into product expansion and geographical expansion.

Speaking on the occasion, Anil Rajput, Chairman, FMCG Council, ASSOCHAM said, “As India works towards becoming a manufacturing powerhouse through policy initiatives like Make in India, today the market structure of Indian food sector is again in the spotlight, by not only becoming a key connection between agriculture and manufacturing sector but also its emergence and acceptance as a giant e-commerce prospect for the final consumer.”

Addressing the conference, Himanshu Priyadarshi, Senior Member, ASSOCHAM & Director Public, Policy & Government Affairs, PepsiCo said, “As the global population continues to expand, food processors will be challenged to continue to improve productivity. To this date, the food supply chain has shown itself to be remarkably adaptive to evolving consumer demands and emerging challenges including the disruptions due to Covid-19.

“The food processing giants have a global supply chain and are sourcing raw materials from several nations around the world. The industry is working with thousands of suppliers to source raw material and primarily agricultural raw material and are establishing a strong supply chain and distribution network,” said Priyadarshi.

Highlighting steps were taken by the government during the pandemic period, Vivek Chandra, CEO, Global Branded Business, LT Foods & Co-chair, National Food Processing Council said, “Government took various steps to facilitate agricultural exports during the Covid-19 period. The validity of various certifications and accreditations was extended beyond their dates of expiry; control rooms were set up to resolve problems faced by the exporters; EIC/ National Plant Protection Organization (NPPO) and other related boards and authorities extended their support by issuing online certificates for exports; state governments and district administrations were contacted to resolve specific bottlenecks faced by the exporters; steps were taken to facilitate the opening of testing laboratories among various other initiatives taken.”

Dr Ombeer Tyagi, Sr Member, ASSOCHAM emphasised the need for a complete value chain from farm to folk to bring remunerative packages to the farmers and realise the full potential of the sector.

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