The Food Processing Industry in India holds up its status as one of the most vital contributors to the country’s economic growth. In terms of domestic production, consumption and exports, the food processing sector is ranked 5th in India. The industry employs 13 million people directly and 35 million people indirectly and has the potential to generate employment to another 9 million by FY 2024. With several new policies and projects the Indian Government is maintaining the sector as a high growth driver in the economy.

India is the second largest producer of fruits and vegetables in the world but only 2.2% of total fruits and vegetables are processed. To improve this situation, India requires affordable cold storages and cold chains at every food producing hub in India. The few existing cold storage plants are only concentrated in several states and are mainly used for potatoes. Therefore, the food has a long way to go and according to the National Center for Cold Chain Development, India wastes fresh food worth around $13 billion only due to inadequate cold chains. To connect the producing hubs in the country and reduce the wastage of food the Government has approved 101 cold chain projects across the country. According to the Union Ministry of Food Processing Industries, the new cold chain projects will create an additional capacity of 276,000 tonnes of cold storage, 5.6 million litres per day of milk processing capacity and enlarge India’s cold chain network with 629 new refrigerated vehicles. Besides that, these new projects will attract around $477.14 million investment for the creation of modern infrastructure in the food processing sector and will provide direct and indirect employment opportunities to 60,000 people.

In addition to the 139 existing cold storages, India has already managed to set up 14 mega food parks. These mega food parks help immensely in increasing the processing level of food.  At the end of this year another eight mega food parks will be operational. Under the scheme of mega food parks, the ministry had endorsed 42 projects throughout the country. According to the Union Food Processing Industries Ministry, all 42 mega food parks will be ready to operate by the end of 2018. Each mega food park is expected to generate direct employment to 2,500 people and indirectly to about 30,000 people.

Exports in the Food Processing Industry have seen a slight decline by 18% to $29.7 billion during FY16 due to slowdown in global demand for Food Processing Industry related products. However, according to food experts the sector is going to improve this situation and can expect a partial recovery in exports as the global demand for Indian rice is rising and meat exports are also likely to increase with a substantial demand from the Middle East, South Asia and Africa. The Government has set a target of doubling India’s food processing exports over the next five years. The rising awareness among consumers in health and an increasing global demand in new segments such as nutraceuticals and organic products will further enhance processed food exports. To support farmers and exporters the Government has recently agreed to a new export policy which allows unrestricted exports of all certified organic agricultural and organic processed products.

The Indian Food Processing has the potential to attract $33 billion of foreign investment by 2024. To generate even more India has recently strengthened its economic relations with several foreign trading partners, such as Portugal or Japan. Japan is one of India’s largest foreign direct investors with a share of 8% of all investments in India since 2000. India’s food processing minister has recently visited Japan where some major food companies are just about to enter the Indian market. India is looking to be a sourcing destination for Japan in seafood, cashew, sesame and Darjeeling tea. It is also interested in becoming a preferred destination for imported Japanese technology.

23 Indian companies have recently formed an alliance to partner with German companies to work together in the field of agri-business to help the food processing and agricultural sector in modernisation and technological advancements. The German ambassador in India Martin Ney said, “A declaration would be signed soon. Joint efforts are required to make farming more profitable and attractive for young people.” In recent years Germany and India have reached numerous agreements in areas such as food safety standards, risk management and seed development.

The Indian Food Processing Industry is still facing several challenges like an inadequate infrastructure resulting in high harvest losses, lack for skilled manpower or lack of R&D in food processing. To address these problems the Indian Government has made commendable efforts to promote investment and boost manufacturing activities in the industry by way of channelling resources through various schemes as subsidies and grants-in-aid. Further, the decision of the Government permitting 100% FDI in food processing under automatic route and 100% FDI in retailing of food products which are produced and manufactured in India has already brought some improvements and will further attract more investment in the Indian Food Processing Industry.

To read the latest news on the Food Processing Industry in India click Food Processing Newsletter.