Indian food processing: Roadmap towards value addition

• India’s food processing sector is regarded as a sunrise industry as it is has tremendous potential for growth and contribution to the Indian economy.
• Despite being blessed with factors conducive to the development of this sector such as a bounty of raw materials and cheap labour, India’s food processing industry still has a long way to go.
• Fragmentation of agricultural markets, which causes supply chain inefficiencies, technological obsolescence & infrastructural bottlenecks is a major factor constraining the sector.
• In order to combat these challenges to the growth of this sector, focus needs to be given on investing in state-of-the-art technology, imparting the necessary skills to farmers, enhancing the ease of doing business and so forth.

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Over the last few decades, the massive pace of urbanization in India has left an indelible mark across the length and breadth of the country. This has been accompanied by the rise in dual career households and consequently, a trend towards ready-to-cook/eat products. Given the growing preference among customers for packaged food, the scope for India’s food processing sector is quite bright in both the domestic and global markets. Added to this is the fact that India has a pool of young workers and an abundance of raw materials at its disposal. India is a leading producer of milk, fruits & vegetables, tea, spices, coffee & pulses cereals and marine products.

Source: APEDA (value in US$ billion)

However, despite being blessed with factors that are conducive to the development of this sector, the segment accounts for a meager 11% of agricultural value-added and 9% of manufacturing value-added. In terms of global performance too, India’s agricultural exports constitute barely 2% of the total exports. This compares to 4% for Brazil, 7% for Argentina and 9% for Thailand.

India’s processing level of perishable products is at around 10% as compared to US (80%), Malaysia (80%), Thailand (30%) and Australia (25%). Due to weak processing infrastructure, around 16% of fruits and vegetables and 10% of pulses, oilseeds and cereals are wasted every year. If managed properly through world class processing and packaging facilities, this produce can be better directed towards domestic and export markets. Besides bringing down wastage, this can also fetch better returns due to value addition. Currently, share of high value and value-added agri produce in India’s agri-export basket is less than 15%, as compared to 25% for US and 49% for China.

This keeps India at the lower end of the global agri export value chain. In horticultural products for instance, India lacks in terms of uniformity and standardisation as well as its ability to cut down on losses across its value chain. There exists a gap in the kind of produce grown by Indian farmers and the SPS/TBT standards that exist in global markets. This gap translates into lack of farm-to-fork traceability of products. What has made attaining traceability difficult is the complexity of the distribution system, which involves not just the farmer and end consumer but several middle men in the picture. This frequent change of hands makes it difficult for the consumer to hold someone accountable when issues such as food safety and quality arise, thereby impacting credibility of Indian farm exports.

In addition, several infrastructural bottlenecks also bog down the sector. More investment needs to take place in food processing machinery, grading and packaging. At the same time, the country lacks an end-to-end cold chain network. A proper cold chain infrastructure is a must for a tropical country like India, where food is likely to perish more quickly. Currently about 60% of them are situated in just four states—Uttar Pradesh, Punjab, West Bengal and Gujarat. Further, lack of last mile connectivity along the food production & distribution chain also hampers the quality of food – be it the raw materials or the finished products.

The fact that most of the workers employed in this industry lack adequate skills also affects the industry. Majority of farming in the country is being done by small farmers who posses inadequate finances and education. This has grave implications for the Indian food processing industry’s competitiveness in global markets. The economy has not witnessed an appropriate growth in education and training infrastructure. National Skill Development Corporation (NSDC) estimates that as many as 17.8 million persons in the food processing industry need to be imparted skills by 2022.

Measures including establishing mega food parks, bringing out a revamped model APMC Act, comprehensive implementation of e-NAMs, facilitating warehouse sales, reducing transportation costs and introducing 100% FDI in marketing processed food products made in India by the government are steps in the right direction. Industry stakeholders need to be imparted with the desirable skills. This entails both promoting agricultural best practices in farms as per global food safety parameters and stepping up on skill training in the food processing industry.

The government needs to establish traceability in the food supply system. This will be a much needed step in order to bring about a decrease in instances of food adulteration, fraudulence and foodborne disease outbreaks as well as help build consumer confidence. Information and communications technologies, a regulatory authority, certification & tracking of goods will facilitate India’s transition towards traceability. This will go a long way in building the credibility of India as a quality food basket across the globe. Lastly, the government needs to invest in build a holistic infrastructure network. This encompasses investing in machinery, building  connecting roads & ports, having cold storages in all states and having forward & backward linkages.

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Mahakaleshwar Overseas
Mahakaleshwar Overseas
1 year ago

We are exported from India we export our product all over the world our email ID is mahakaleswar overseas @ gmail.com WhatsApp number 0 0 91 9830 954 847

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