Food Processing Industry: A Rising Pillar in India's Economy

In India, the food sector has emerged as a high-growth and high-profit sector due to its enormous potential for value addition, particularly within the food processing industry (FPI). This FPI has solidified its role as a significant contributor to India's economy, impacting the GDP, employment, and exports. Over the past eight years leading up to 2022-23, the sector has grown at an impressive Average Annual Growth Rate (AAGR) of 5.35%. The Gross Value Added (GVA) in this sector increased from Rs 1.61 lakh crore in 2015-16 to Rs 1.92 lakh crore in 2022-23, according to the First Revised Estimates by the Ministry of Statistics and Programme Implementation.

What is Food Processing

Any raw material obtained from farming, dairy, animal husbandry, meat, poultry, or fishing may be processed into a product that is fit for human or animal consumption and has a commercial value by changing its physical characteristics using labor, machinery, or financial resources. This process is known as food processing.

It also covers the process of adding value to products by adding food additives, drying, and other techniques to improve their shelf life and quality and preserve food ingredients in an efficient way.

Employment in the Food Processing Industry has also seen a notable rise, from 17.73 lakh jobs in 2014-15 to 20.68 lakh in 2021-22, as reported by the latest Annual Survey of Industries (ASI). Additionally, the share of processed food exports in agri-food exports jumped from 13.7% in 2014-15 to 23.4% in 2023-24.

To foster the growth and address the challenges of the Food Processing Sector, the Ministry of Food Processing Industries (MoFPI) has been implementing several key schemes. The Central Sector Umbrella Scheme, Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), the Production Linked Incentive Scheme for Food Processing Industry (PLISFPI), and the Centrally Sponsored Scheme PM Formalization of Micro Food Processing Enterprises (PMFME) are some of the notable initiatives. Let's discuss it in detail:

Pradhan Mantri Kisan SAMPADA Yojana (PMKSY)

PMKSY aims to create modern infrastructure with efficient supply chain management, spanning from farm gates to retail outlets. This scheme focuses on the overall development and growth of the Food Processing Industry by creating employment opportunities, reducing agricultural produce wastage, increasing processing levels, and enhancing processed food exports. As of June 30, 2024, the ministry has approved the establishment of 41 Mega Food Parks, 399 Cold Chain projects, 76 Agro-processing Clusters, 588 Food Processing Units, 61 Backward & Forward Linkages Projects, and 52 Operation Green projects under various PMKSY components.

PM Formalization of Micro Food Processing Enterprises (PMFME)

The PMFME scheme provides financial, technical, and business support to set up or upgrade micro food processing enterprises. With a total outlay of Rs 10,000 crore, the scheme is operational from 2020-21 to 2024-25. By June 30, 2024, a total of 92,549 micro food processing enterprises had received approval for assistance under this initiative.

Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)

PLISFPI aims to create global food manufacturing champions, enhance branding and marketing abroad, and support Indian food product brands in the international market. With an outlay of Rs 10,900 crore, this scheme will be implemented over six years, from 2021-22 to 2026-27. By June 30, 2024, 172 food processing companies had been approved for assistance under various categories of this scheme.

Challenges to Food Processing Industries

• There are gaps in the infrastructure of the supply chain, resulting in insufficient facilities for primary processing, storage, and distribution.

• Inadequate communication between the processing and manufacturing phases

• Operations' seasonality and low-capacity utilization

• Institutional weaknesses in the supply chain include reliance on APMC marketplaces, for example.

• Disregard for safety and quality requirements, and

• Insufficient innovation and product development

Strengthening the food processing industry through concerted efforts by the Ministry of Food Processing Industries is crucial for bolstering India's economic growth and stability.