PAPER-IV GS-III: Technology, Economic Development, Biodiversity, Environment, Security and Disaster Management

Food Processing and Related Industries in India- Scope’ and Significance, Location, Upstream and Downstream Requirements, Supply Chain Management.

Examine the importance of the food processing sector in India. Briefly explain the steps taken by the government to promote the food processing sector.

Food processing involves transforming raw agricultural products into consumable food items, adding value and extending shelf life.During the last 5 years, Food Proce sector has been growing at an Average Annual Growth Rate (AAGR) of around 8.38%

Importance of food processing sector:

1. Employment Generation: The sector provides employment opportunities for millions, especially in rural areas.The food processing sector engages maximum number of people with 20.05 million accounting for 12.32% of the total employment share in the country (Annual Survey of Industries, 2018-19).
2. Value Addition to agricultural produce: Processing transforms raw agricultural products into higher-value products, increasing farmers’ incomes.
3. Export Potential: Processed food products have a high export potential, contributing to foreign exchange earnings.
4. Food Security: It ensures food availability and reduces wastage by preserving perishable products.
5. Nutritional Security: Processed food can be fortified with essential nutrients to address malnutrition.
6. Reduction in Post-Harvest Losses: In India, 40% of the food wasted is.Food processing minimizes wastage by utilizing excess produce and also increases shelf life of produce thereby reducing seasonality and helping control inflation. 
7. Integration of Agriculture and Industry: It acts as a bridge between agriculture and industry.
8. Rural Development: The sector provides opportunities for rural entrepreneurship and development.
9. Consumer Convenience: Processed food products offer convenience to consumers by reducing preparation time.
10. Employment opportunities in the rural areas would reduce migration to urban areas. This works in favour of rural as well as urban areas.
11. Crop-diversification: Food processing will require different types of inputs thus creating an incentive for the farmer to grow and diversify crops.

Government Initiatives to Promote the Food Processing Sector

The Indian government has implemented several initiatives to promote the food processing sector:

1. Pradhan Mantri Kisan Sampada Yojana (PMKSY): a comprehensive package which shall create modern infrastructure with efficient supply chain management from farm to retail outlet. It includes Mega Food Parks, Cold Chain, and Preservation Infrastructure.
2. Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME)This scheme aims at helping small micro-units engaged in the food processing industry.Recognising the role of such micro-units, a 35% subsidy can be availed by such units on their project cost, up to a maximum of ₹10 lacs
3. To promote entrepreneurship, a ‘Startup Forum for Aspiring Leaders And Mentors-SUFALAM’ was also held recently in which startups were urged to play a proactive role in collaborating with farmers and venturing into consumer friendly affordable and nutritious products.
4. Foreign Direct Investment (FDI) policy: FDI up to 100%, under the automatic route is allowed in food processing industries.
5. Agricultural and Processed Food Products Export Development Authority (APEDA) focusses on ‘export’ of scheduled products.
6. Production Linked Incentive (PLI) Scheme for Food Processing Industry (PLISFPI) to create global food manufacturing champions and promote Indian food brands internationally 
7. One District One Product (ODOP) is aimed at fostering balanced regional development across all districts of the country.

Despite government steps, the level of processing of agricultural produce is less than 10% and more than 75% of the industry is in the unorganized sector. Addressing these challenges will be crucial for India to realize its full potential in the global food processing market.

Source: Yojana- july: Food processing