Food Processing Industry in India

Food Processing Industry in India

Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agriculture inputs for manufacturing of edible products. ... Dairy, fruits & vegetable processing. In terms of the global food business, India accounts for less than 1.5% in spite of being one of the key food-producing nations worldwide. But this on the other hand also indicates the enormous possibilities for the growth of this industry. Supported by the GDP estimates, the approximate expansion of this sector is between 9-12% and during the tenth plan period, the growth rate was around 6-8%. Food Processing Industry provides job opportunities to 1.6 mn people and it is estimated to expand by 37 mn by 2025.

The Ministry of Food Processing, Government of India has defined the following segments within the Food Processing industry:

• Dairy, fruits & vegetable processing

• Grain processing • Meat & poultry processing

• Fisheries

• Consumer foods including packaged foods, beverages and packaged drinking water

While the industry is large in terms of size, it is still at a nascent stage in terms of development. Out of the country’s total agriculture and food produce, only 2 per cent is processed. The highest share of processed food is in the Dairy sector, where 37 per cent of the total produce is processed, of which 15 per cent is processed by the organised sector.

Primary food processing (packaged fruit and vegetables, milk, milled flour and rice, tea, spices, etc.) constitutes around 60 percent of processed foods. It has a highly fragmented structure that includes thousands of rice-mills and hullers, flour mills, pulse mills and oil-seed mills, several thousands of bakeries, traditional food units and fruits, vegetable and spice processing units in the unorganised sector. In comparison, the organised sector is relatively small, with around 516 flour mills, 568 fish processing units, 5,293 fruit and vegetable processing units, 171 meat processing units and numerous dairy processing units at state and district levels.

Indias Strength in Food Processing Industry:

Favourable Factor Conditions India has access to several natural resources that provides it a competitive advantage in the food processing sector. Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material base suitable for food processing industries. Presently a very small percentage of these are processed into value-added products. The semi-processed and ready to eat packaged food segment is relatively new and evolving.

India has the largest irrigated land in the world. It is also the world’s largest producer of milk, tea and pulses. India has large marine product and processing potential with varied fish resources along the 8,041 km coastline, 28,000 km of rivers and millions of hectares of reservoirs and brackish water. India also possesses the largest livestock population in the world with 50 per cent of the world’s buffaloes and 20 per cent of cattle. India’s comparatively cheaper workforce can be effectively utilised to set up large low-cost production bases for domestic and export markets. Cost of production in India is lower by about 40 per cent over a comparable location in the EU and 10-15 per cent over a location in the UK. Along with these factor conditions, India has access to significant investments to facilitate the food processing industry. There have been increasing investments not only by domestic firms and the Indian government but also by foreign direct investment. Related and Supporting Industries The Indian food processing industry has significant support from the well-developed R&D and technical capabilities of Indian firms. India has a large number of research institutions like Central Food Technological Research Institute, Central Institute of Fisheries Technology, National Dairy Research Institute, National Research and Development Centre etc. to support the technology and development in the food processing sector in India.

Future of Food Processing in India

The scope of food processing is increasing in India, and the trend will continue for 10–12 years for sure. The following are the reasons for the growth of food processing in India. 

• Increase in consumers purchasing level
• Supply chain infrastructure – this niche has investment potential in food processing infrastructure, the government’s main focus is on supply chain related infrastructures like cold storage, abattoirs and food parks.
• The establishment of food parks by the government– which is a unique opportunity for entrepreneurs investors to enter in the Indian food processing sector.