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India’s Food Processing Sector Against Traditional Challenges

Most of the jobs will be generated in rural parts of the country, which would lead to the overall development of the country and curtail distress migration.

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When some value is added to an edible substance through a biological, mechanical, or automated process, it becomes processed food. The age old practice has now converted into a full-fledged industry across the globe and being an agriculture-rich country, India’s food processing sector ranks among the world’s top ten most growing sectors in terms of revenue generation. Food processing is the fifth largest sector of Indian economy, and 13 per cent of the country’s annual GDP comes from this sector only.

Inherent advantages

Blessed with technological disruptions in farming, horticulture, manufacturing, and packaging, along with fast-paced developments in logistics and supply chain, food processing sector of India is all set to touch higher skies. India encompasses 127 agro-climatic zones, and they provide a fertile ground for innumerable plant-based edibles, which not only fulfil the demand of indigenous people but also cater to global consumers. So, all these favourable factors provide a good growth recipe to India’s food processing sector whose estimated worth is $135 billion and rising further at the rate of 8 per cent per annum.

Amidst this healthy scenario, both domestic and international companies are investing profusely in this sector. However, the sector is up against a slew of challenges that are typical of the Indian market. Looking at the low level of processing and market share in the global arena, there is a huge untapped opportunity to capitalise on India's enormous raw material base and propel exports. To be able to do so, it is important to tackle the critical challenges to sustain good growth of the industry.

Current challenges

First is the supply side bottleneck as dispersed marketable surplus because of low farm productivity, high seasonality, fragmented holdings, and this perishability leads to a lack of distribution and supply of quality raw material, which affects the processing and exports. Then we have inadequate logistics and cold chain infrastructure, which results in the loss of more than 30 per cent of the produce from the farm. Most of the cold storages, around 80 per cent, are occupied by potatoes leading little to no space for F&Vs.

Transportation of perishable products is also a challenge as in Indian market we rely on traditional modes of transport instead of specialised vehicles such as reefer vans. The food processing industry (FPI) has a large unorganised segment, and to explain to them the inefficiencies in the existing production system and invest in technology upgrades becomes a challenge.  

Road ahead

Despite all these challenges, FPI is developing at a decent pace with the promise of a brighter future that is attached to the huge scope in the market. As a matter of fact, the country is the biggest manufacturer of mangoes, ginger, pulses, banana, meat and second-biggest producer of wheat, rice, garlic, cashew nut, green peas, potato groundnut, gourds, pumpkin, sugarcane, dry onion, cauliflowers and tea. The huge amount of produce and scope of increasing it by making technology invade the far reaches of the country, this would mean tremendous opportunity for the FPI.

The FPI industry has the potential to turn around the entire economy of the country. The industry targets cultivating part and this will interest agriculturists leading up to more profitable costs. Also, the industry can be a solution to the job market as FPI is an employment-intensive industry. In India, the FPI has only 3 per cent of the job at present as against the 14 per cent jobs in FPI in advanced nations. Most of the jobs will be generated in rural parts of the country, which would lead to the overall development of the country and curtail distress migration.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Food Processing Industry

Rajan Sharma

The author is Managing Director, Inter Ads & Organiser SIAL India

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