Strategies for Expanding the Food Processing Industry

Introduction

The Indian food sedulity is poised for huge growth, adding its donation to the world food trade yearly. In India due to its immense eventuality for value addition, particularly within the food processing assiduity, the food sector has surfaced as a high-growth and high-profit sector. India is the second largest patron of food in the world after China. It has the implicit to come to a food handbasket for the world, considering the compass and adding demand for food processing. With retail contributing 70 of the deals, the Indian food and grocery request is the world's sixth largest. It accounts for 32 of the country's total food requests, is one of the largest diligences in India, and is ranked fifth in product, consumption, import, and anticipated growth (NABARD, 2018). Food processing is a link between the husbandry and manufacturing sectors.  thus, it helps ensure safe and healthy food at affordable prices across the population. The food processing assiduity in India comprises different sub-sectors, such as food grain processing, fruit and vegetable products, milk and milk products, meat and meat products, etc. A well-developed food processing sector with an advanced position of processing helps reduce destruction, improves value addition, promotes crop diversification, ensures better returns to the growers, promotes employment and increases import earnings. This sector is also suitable to address critical issues of food security, food affectation, and furnishing wholesome, nutritional food to the millions.

Government Policies to Promote Food Processing

Foreign Direct Investment (FDI)

·         Hundred percent (100) FDI is permitted under the automatic route in food processing diligence.

·         Hundred percent (100) FDI is allowed through the Government blessing route for trading(e-commerce) in respect of food products manufactured in India.

·         Hundred percent (100) FDI is allowed for companies bearing Single Brand Retail Trading in India (49 under Automatic route and blessing route for beyond 49).

·         Up to 51, FDI is permitted under the blessing route for Multi Brand Retail Trading with the condition that the minimal quantum to be brought in as FDI would be USD 100 million, and 50 of this quantity to be invested in back-end structure. 

National Food Processing Policy

The policy's ideal is to reduce destruction, increase value addition, and ensure better growers' prices while icing vacuity and quality produce to consumers. The significant highlights of the policy are given below:

·         The single window concurrence system

·         Promote fruit processing clusters

·         Strengthen husbandry marketing structure

·         Facilitation of land allotment

·         Promote voodoo food premises and food premises 

·         Support the development of a logistic structure

·         Compliance with food safety nonsupervisory conditions

·         Support business units having established backward integration. 

Government of India Schemes

There are several central sectors and centrally patronized schemes operating for the creation of cold chain, agri-marketing structure, and food processing industriousness. The details are mooted in this section:

1.      Mission for Integrated Development of Horticulture (MIDH)

Ministry of Agriculture launched MIDH, GoI by carrying various being schemes analogous to the National Horticulture Mission (NHM), Horticulture Charge for North East & Himalayan States (HMNEH), National Bamboo Mission (NBM), National Horticulture Board (NHB), Coconut Development Board (CDB) & Central Institute for Horticulture (CIH). The annuity for post-harvest operation and cold chain systems executed through NHM and NHB is also part of the MIDH.

2.      Production Linked Incentive Scheme for Food Processing Industry

Union Cabinet, in its meeting on 31.03.2021, approved the Central Sector Scheme-" product Linked incitement Scheme for Food Processing Industry (PLISFPI)" to support the creation of global food manufacturing titleholders and support Indian brands of food products in the international requests. The PLISFPI has been formulated predicated on the product-linked incitement scheme of NITI Aayog under" Aatma Nirbhar Bharat Abhiyaan for Enhancing India's Manufacturing Capabilities and Enhancing Exports". The scheme will be executed six times from 2021- 22 to 2026- 27. The Scheme's objectives are to extend financial support to food manufacturing realities, with quested minimum deals and amenability to make a wedded investment for the expansion of food processing capacity and dodge expenditure in branding & marketing of food products abroad to grease the emergence of strong Indian brands.

Other Initiatives

1.      Start-up India

The Programme was announced in January 2016 with an action plan for promoting bank financing for Start-Up ventures to boost entrepreneurship and encourage start-ups with job creation. A start-up is an entity incorporated or registered in India not before seven years (for biotechnology not before ten years) with an annual turnover not exceeding 25 crore rupees in any preceding financial year working towards innovation, development, or improvement of products, processes, or services or if it is a scalable business model with a high potential of employment generation or wealth creation. A Start-up India online hub was also launched in June 2017.

2.      Skill India

Skill development in the food processing industry is a major challenge today. There is a dearth of skilled workforce.  As per a study conducted by the National Skill Development Corporation (NSDC) on human resources and skill requirements in the food processing sector, the annual human resource requirement in the food industry is estimated at 5.3 lakh people, including one lakh, in the organized sector. Skill India Programme was launched in July 2015 to train a minimum of 300 million people in India in different sectors by 2022. The following are some of the flagship programs of the Government of India for promoting skill development in the country.

Strategies for Promotion of Food Processing

·         A National Food Processing Policy may be formulated to follow a uniform approach for the food processing sector on a Pan-India basis. 

·         Relax non-agricultural land use permits for the food industry procuring raw materials directly from the farmers and to Farmer Producer Organizations.

·         The Single Window approach for Government clearances may need to be in place in all the States.

·         Exclusive Food Technology Skilling Mission for bridging the skill gap in food given the emerging food safety systems and food standards. 

·         The Model Contract Farming Facilitation Act 2017, under consideration by the government, may need to be expedited.

·         Constituting a task force to study the working capital requirement and adequacy of working capital finance to the food industry, especially considering the recent initiatives of the GoI such as Make in India, etc.

·         Providing affordable credit to the food processing Industry to promote the creation of investments in the sector.

·         Enlarging the scope of the credit guarantee fund/creating a risk fund will help mitigate stress on the banking industry on financing the sector, which is mostly seasonal and capital and labor intensive.

·         Infrastructure for setting up food research and testing facilities and traceability may be promoted in a big way to provide safe food in the domestic market and also remain competitive in the world market.

·         Creation of a National Brand Equity Fund for the Food Industry with a contribution from Industry Associations, GoI, etc. to Indian brands internationally.

·         Make in India to focus on manufacturing plants and machinery and packaging materials locally to reduce the cost of production.

Conclusion

The food processing Industry in India has seen remarkable growth and changes over the past few years driven by changing trends in the market, consumer behavior, and Government initiatives. India's food processing industry is dominated by a highly fragmented, unorganized sector with small operations. About 42% of the output comes from the unorganized sector, 25% from the organized sector, and the rest from small-scale players. The processing level in non-perishable products such as cereals and pulses is more than 90%. However, only 7 percent of the total Indian perishable produce is processed, which is significantly lower compared to other countries. A fragmented and lengthy supply chain, inadequate infrastructure, skill gap in human resources, low adherence to quality standards, capital-intensive nature of the industry, and taxation issues are the major challenges this sector faces. Addressing these challenges will take this industry to par with its global counterpart. The Government of India's focus on the food processing industry is the key to doubling farmer's income.