Sambhav-2025

Approach Briefly introduce the significance of the food processing industry in India. Analyze the key challenges faced by the sector. Suggest policy measures to enhance its growth. Conclude Suitably.

Introduction

The food processing industry refers to the transformation of raw agricultural products into value-added food items through various techniques such as preservation, packaging, and preparation. India, a leading global producer of milk, fruits, vegetables, and poultry, has a natural advantage in food processing. However, despite its vast agricultural output, the sector remains underdeveloped, contributing only 11.3% to agriculture’s GVA, due to various growth challenges.

Body

Key Challenges Facing India’s Food Processing Industry:

• Lack of Cold Chain and Storage: Inadequate cold storage and transportation facilities result in significant post-harvest losses of perishable goods. This not only affects food quality but also impacts the income of farmers.
  • A study on "All India Cold Chain Infrastructure Capacity" estimates India's cold storage capacity at 35 million metric tons, far below the 80 million metric tons needed to meet agricultural demand.
• Fragmented Supply Chain: The supply chain in India is highly fragmented, leading to inefficiencies and increased costs. Poor road and rail infrastructure can result in delays and losses during transportation.
• Weak Farmer Integration: Small and marginal farmers (accounting for 86% of the farming population) lack awareness of food processing opportunities.
  • The absence of organized farmer-producer organizations (FPOs) makes it harder for them to access the value-added processing market.
• Complex Regulations: The food processing industry is subject to a complex web of regulations, licenses, and permits, which can be challenging for businesses to navigate.
  • Inconsistent enforcement of regulations can lead to unfair competition and quality issues.
• Food Safety Concerns: Ensuring food safety and quality standards across the supply chain remains a significant challenge. Contaminated or adulterated food products can harm public health and damage the reputation of the sector.
• Research and Development: Limited investment in research and development inhibits innovation and the development of new, value-added products.
  • India’s research and development (R&D) expenditure-GDP ratio of 0.8% is very low when compared to major economies and is much below the world average of 1.8%.

Policy Measures to Enhance Growth :

• Strengthening Infrastructure and Cold Chain Development :
  • The government has initiated several schemes, such as the Pradhan Mantri Kisan Sampada Yojana (PMKSY), which aims to develop modern cold chain infrastructure, food parks, and storage facilities.
  • The Committee on Doubling Farmers Income had recommended that railways needs to upgrade its logistics to facilitate the transport of fresh produce directly to export hubs.
• Simplifying Regulations and Governance
  • The single-window clearance system for food processing enterprises should be fast-tracked to ease the approval process.
  • The National Policy on Food Processing (2017) emphasizes simplifying regulatory frameworks and aligning the industry with international standards.
• Boosting Investment and Financial Incentives
  • The Production Linked Incentive (PLI) Scheme is a major initiative to increase the competitiveness of India’s food processing sector.
  • The Food Processing Fund has been set up to provide concessional loans to small and medium enterprises (SMEs) in the sector, particularly for technology upgrades and product diversification
• Promoting R&D and Technology Adoption
  • The National Food Processing Technology Initiative aims to promote food innovation and modern processing techniques through dedicated R&D institutions and partnerships between industry and academia.
• Strengthening Farmer-Industry Linkages
  • The government has introduced schemes such as Operation Greens, which aims to regulate the supply of perishable commodities (TOP crops: Tomatoes, Onions, and Potatoes) by promoting farmer-processor linkages.
• Reducing Tax Burden and Encouraging Consumption
  • A reduction in GST rates on processed food items can boost demand in the domestic market.
  • The subsidy on food processing machinery and equipment for SMEs can also help in reducing the initial investment burden for small food processors.

Conclusion

India’s food processing industry has significant untapped potential, with abundant agricultural produce that remains underutilized. The food processing sector in India is poised for significant growth, driven by market demand, government support, and technological advancements. By embracing innovation and sustainability, the industry can unlock its full potential, contributing to economic development, food security, and improved livelihoods for millions of people.