Food Processing - A Game Changer for Indian Economy
Video Summary

[RSTV The Big Picture] Food Processing – A Game Changer for Indian Economy?

India has a food processing market of 40 Billion presently which is going to increase in future but there is a need to focus on many other challenges as well.
By IT's Video Summary Team
November 20, 2017

Contents

  • Introduction
  • Significance of the event
  • Will the ease of doing business ranking by World Bank help India?
  • Challenges faced by food processing industry in India
  • Solutions
  • Conclusion & Way ahead

Food Processing – A Game Changer for Indian Economy?

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GS (M) Paper-3: “Food processing and related industries in India- scope and significance, location, upstream and downstream requirements, supply chain management.”

 

Introduction:

  • The Prime Minister recently inaugurated World Food India 2017 at Vigyan Bhavan, New Delhi.
  • Describing India as one of the fastest growing economies in the world, PM told that India launched Pradhan Mantri Kisan Sampada Yojana to create world class food processing infrastructure.

Significance of the event:

  • The event has come at right time because India being one of the biggest food producers of the world is in very advantageous position to become a hub of food processing industry.
  • This will leverage the investment of 5 billion US$ benefiting 2 million farmers and create more than half a million jobs.
  • It is first time that this event is happening in India and the response itself shows India’s basic policy and environment is prepared to attract business.
  • Prime Minister also made a pitch to increase foreign investment in India to global food companies like Nestle and Unilever along with overseas policy makers highlighting the World Banks’ ease of doing business ranking in which India has jumped 30 places being at 100th

Will the ease of doing business ranking by World Bank help India?

  • Ease of doing business is very important for any industry and country. India jumped 30 places in this ranking which is in very advantage to India. Food processing is an important ingredient of Indian manufacturing industry as it is also a part of Make in India programme.

Challenges faced by food processing industry in India:

  • Though the sector has immense opportunities, but it also has lots of domestic and international problems.
  • India just has 2.2% of exports out of total global exports in food processing.
  • Issues generated by economies are major reasons for not generating exports majorly by USA & EU, in terms of Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) barriers. They impact Indian export significantly.
  • Poor warehousing and storage capacity, upgrading agri infrastructure, and lack of facility by a dedicated agency to the farmers are the domestic problems in India.
  • Though Food Safety and Standards Authority of India (FSSAI) is there, but it facilitates post production. Hence, there is a lot of issues to be addressed for pre-harvest.
  • Lots of inorganic chemicals are also used in India for agricultural production which needs to be shifted to organic ones. There are approximately 67 pesticides found in Indian food processing products by SPS.
  • Gross capital investment in agriculture infrastructure is also very meagre.
  • Meat is also a product that has been affected much and lots of cattle mandies are getting deserted due to socio-political problems. This affects export of canned meat which is having vast opportunity for India in global markets.
  • The big companies will abide by laws and maintain international standards in terms of following the rules, affluent and waste management etc., but the small domestic players are not regulated.
  • Global food consumption pattern has also changed in India also.
  • Food processing industries are mostly confined to coastal areas rather than internal areas with good food produce.
  • Till recently, the food processing industry in India has not been able to take off because even small time snacks were imported from Australia, New Zealand and Dubai.

Solutions:

  • From grass root level, India has to develop agri infrastructure, enhance public investments in agriculture sector.
  • India is an agrarian economy with lots of laborious farmers and skilled entrepreneur that can leverage the benefit from the food processing industry.
  • Connect the farms with the mandis, linking them with good warehouses and increasing the storage capacities.
  • Productivity of the farm sector is also to be increased by using modern agricultural practices and technologies. These steps will increase India’s participation in global food market and be a major global hub in this sector.
  • There is a need of broad policy framework with regards to the exports of the processed vegetarian and non-vegetarian food from grass root level.
  • Food processing food park concept can be replicated across the country as it offers an alternative to farmers.
  • There is a need to get the big investments through big brands like nestle, pepsi, kargil etc.
  • The rules must be strictly enforced and must be abided by all the domestic and international companies and deliver the quality products.
  • There is a need to change the farm patterns and diversify the crops production.
  • There must be focus on 2nd green revolution that will focus on traditional and new food items and increase productivity.
  • There is a need of adopting the good practices from best producing states and from around the world also.
  • There should be more awareness towards the education of food processing and more institutes must be opened up.
  • New technologies can be brought in to be used which can also improve the skills of the students and entrepreneurs.
  • Food processing can be a new avenue for the students to get trained to be an entrepreneur in this sector.
  • There is also a need to strengthen the university industry linkage for food processing sector which will increase the awareness and productivity that will lead to better exports globally.
  • So, it has to be the combination of output, livestock and food processing facilities as it creates much bigger market and for that India should fit into global supply chain of food processing.
  • Food processing sector can help government’s mission to double the farmers income, but it cannot come just by giving them higher prices of their produce as it will lead to inflation.
  • If India wants to be a supply chain hub and attract investment, then a strong domestic market helps.
  • The Indian dishes have made its way abroad for instance national dish of Britain Chicken Tikka Masala is from India. Hence blending Indian skills with international technology can take India far away in this sector.
  • Now at the time when agriculture in India is about to take a big leap it is to be ensured that the farmers’ produce get the good market at fair price to keep up the agricultural productivity.
  • It is not only the consumption of main cereals that matters, the surplus has also to be converted in to snacks for consumption in India and abroad.
  • The system as a whole must encourage the Indian producers to better package and brand them.
  • There is a change in the life style of the people towards the ready food to consume but what matters is maintaining quality and hygiene and its strict enforcement.
  • Substituting the import scenario in this sector will provide lots of opportunities to entrepreneurs to manufacture and export to other markets.

Conclusion & Way ahead:

  • There is a phenomenal scope for food processing in India because looking at any agricultural commodity, India ranks in top 5 in producer as well as consumer.
  • Whole world is more cautious about Indian monsoon and agriculture than India itself, as India is important player in all the food commodities.
  • Though the food processing is very crucial industry as it directly creates jobs in villages and helps farmers, India has done very little in this sector.
  • India has a food processing market of 40 Billion presently which is going to increase in future but there is a need to focus on many other challenges as well.

 

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