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Food processing industry in India- Current status, trend & opportunities.
Apr 13, 2023

Food processing sector is sub-sector for the Indian Agriculture. India holds the number one position for producing spices, pulses, in milk productions & number two position for growing food grains such as wheat, rice, dryfruits, fruits, and vegetables.

However, when it comes to the value addition and processing then we are far behind even in comparison with the small countries in the world.

This sector is vital for the developing countries for job creation, reduce wastage, increase global trade, curb migration and most significantly providing better price realisation to farmers.

Likewise any other sector, there were serious impacts of Covid-19 on food processing sector. The complete value chain was disturbed due to lockdown in many parts of the country. On the other hand, people have become more conscious about health, eating habits and products.

They are also conscious about sugar, salt, adhesive, nutrition in the products. There is significant growth for natural ingredient products made from haldi, tulsi and other medicinal plants. There are no doubts that the trend will continue for next few years.

Job creation in food processing industry: Ideally the growth in the food sector should directly help job creation. Small processing units setup in the rural part of India are helping generate jobs and lower migration to urban cities. As per 'Human resource & skill gap requirement report', 13.4 Lakhs job will be generated by the food processing industry from FY 2020 to FY 2023.

The maximum jobs are created by a few sub-sector such as milling, dairy and aquaculture.

Big organisations have a strong focus on automation processes. This is the reason that more than 60% of employment is generated by the medium and small enterprises in the food sector.

• Ready-To-Eat (RTE)- food market in India is projected to grow by $751.43 million during 2022-2026, progressing at a CAGR of 18.63% during the forecast period. The market is driven by the growing preference for convenience food products in working population and expanding retail chain market in India. Both ready to eat and ready to cook have significant growth rate for next 5 years.

Indian frozen foods market size has reached Rs 144.3 billion in 2022. Looking forward, the frozen food market will reach Rs 353.3 billion by 2028. The growth rate (CAGR) of 16% during 2023-2028. This segment is dominated the frozen vegetables and frozen meat.

The Indian soup market is primarily driven by the urban consumer. This sector is projected to grow from Rs 7,230.8 million in 2019 to Rs 9,023.2 million in 2024 at a compound annual growth rate of 4.5%, says Global Data, a leading data and analytics company.

Opportunities in Millet Products Development: United Nation has declared year 2023 Millet Year. India is world leader in millets production in the world with share of around 41% of total world production in 2020. India produces around 12 million MT of millets annually, according to Ministry of Agriculture and Farmers Welfare data.

There are 3C benefits from the millets i.e a) Cultivation b) Consumer c) Climate Change.

Looking from the consumer point of view, people are becoming aware of the health benefits of millets. It has opened up opportunities to develop different products from millets.

Government Schemes & Subsidy: Government is aware about the importance and potential of the food sector. Considering it, they have already allowed 100% FDI permitted for food processing, 100% FDI under Government approval route for trading, including the same through e-commerce, with respect to food products manufactured and/or produced in India. There is flagship scheme under the Central Government umbrella with the total outlay of Rs 4,600 crore will continue till March 2026.

• Integrated Cold Chain and Value Addition Infrastructure

• Agro -Processing Cluster

• Creation/Expansion of Food Processing/Preservation Capacities

• Operation Greens

• Scheme for setting-up/ up-gradation of Food Testing Laboratories

Apart from Ministry of Food Processing and Industry, National Bank for Rural Development & Agriculture Processed Food Product Export Development Authority also has a number of schemes for the food processing sector and exporters. This incudes on-farm and off-farm projects such as for agri-infrastructure development, and dairy sector.

Benefits of Free Trade Agreement (FTA): India has recently signed Free Trade Agreement with a couple of countries. This will help exporter to get more duty benefits and identify new market for products. However, its also important to identify competitors in the international market and follow labelling/packaging norms of the importing countries to avoid rejections.

Action Plan –

• Government should give more incentive to FPOs & SHG groups for setting up the small & medium processing units.

• More collaboration is needed between industry & academic / research institution’s

• Federation of FPOs should get more subsidy & credit guarantee from financial institutions

• Synergies between State Governments & Central Government schemes

All these measures can help to boost the sector.

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