Food processing: New era in the Indian economy

The agriculture sector has come a long way since independence. With the advent of green revolution, India has transformed itself from a country of shortages to a land of surpluses.

With the rapid growth of the economy, a shift is also being seen in the consumption pattern, from cereals to more varied and nutritious diet of fruit and vegetables, milk, fish, meat and poultry products. This has resulted in the development of a sunrise industry namely the Food Processing Industries.

The food processing sector in the country with its vast potential has emerged as one of the major driver of economic growth. It is encouraging to note that while the country's GDP growth rate had increase from 3.5 per cent in 2002-03 to 9 percent in 2006-07, the food processing sector has grown from 7 per cent to 13.1 per cent during the same period.

India is a country of over 1.10 billion consumers, there is a large untapped domestic market of 1,000 million consumers in the food processing sector and 200 million more consumers are expected to shift to processed food by 2010. It is the second largest producer of fruits and vegetables in the world.

There is a waste of perishable food items in the country because of lack of proper food processing facilities and the level of processing is only about 2.2 per cent. However, India has tremendous potential to unleash large scale process based farm activities to exploit the emerging global business opportunities.

Incredible Opportunities

India's homogeneous market size endowed with growing incomes and changing life styles has created incredible market opportunities for food producers, machinery makers, food technology and service providers. Food processing industries has great export and employment potential.

The policies are investor-friendly and more importantly technological and human resources are available aplenty in the country.

The competitive edge enjoyed in terms of raw material and labour offers lucrative opportunities. However poor perception of quality and the indifferent image of Indian products is preventing Indian food products to penetrate global markets in a big way.

While developing countries like Thailand have exploited the global markets in a big way by fine-tuning quality management aspects of their food processing industry, India are yet to make a headway on this front.

Production of high quality processed foods meeting international quality standards & regulations may very well open new frontiers for Indian food products.

This will not only create a dynamic and competitive domestic food processing industry but will also enable India to become a major player in the global food market. An attitudinal change towards quality is essential.

Several thousand crore worth of farm produce is lost every year due to inefficient post-harvest practices for storage

and processing. On one hand is the growing demand for food products, which are difficult to meet due to limited resources and on the other, there exist abnormally high wastage in farm sector due to inefficient technology in storage, processing and handling.

It is, therefore, imperative to introduce state of the art technology in the food-processing sector to minimize post-harvest losses. It also calls for a concerted attention to a few selected food products where India has or can develop a competitive edge over other countries.

FDI

The sector has been attracting substantial FDI also and is among the top ten sectors getting FDI equity. FDI up to 100 per cent equity is permitted under the automatic route in food and infrastructure like food parks and cold chains.

There are many areas for investment in this sector which include mega food parks, agri-infrastructure, supply chain aggregation, logistics and cold chain infrastructure, fruit and vegetable products, animal products, meat and dairy, fisheries and seafood cereals, consumer foods/ready to eat foods, wine and beer, machinery/packaging.

Productivity and Progress

It is essential to understand the dynamic relationship that exists between productivity and progress. The basic fact is that until both the farmers as well as the processors are convinced of benefits that accrue through productivity, the productivity campaigns will remain ineffective.

So the main challenge is to introduce the concepts of productivity and make it work under a variety of constraints for the sustainable growth of the industry.

In the process of globalization, the Indian food processing industry will be facing increased competition, particularly in domestic markets in addition to the uncertainties prevailing in the international markets. It is in this context that emphasis must be given to improve productivity and quality.

Undoubtedly, better performing firms will have a competitive edge over others. In order to maintain the tempo of productivity and quality, the National Productivity Awards have thus assumed much greater significance.

Ministry of Food Processing Industries on its part, is leaving no stone unturned to achieve the multiple objectives of stepping up the growth, higher farmer income, reduction in wastage, providing nutritious and safe food and enhancing employment opportunities.

It has initiated measures to deal with the major constraints being faced by the industry such as affordability and cost of processed foods, linking of farmers and processors, supply chain and post harvest technology, infrastructure, finance, food safety, hygiene and taxes.

With the active support and cooperation of all the stakeholders the ministry is confident of providing the necessary momentum for the rapid growth of the food processing sector and usher in a new era in the Indian economy.