Mentor’s comment

• It’s a direct question asking about the policy measures undertaken by the government to meet the challenge of the food processing sector.
• In the intro, briefly explain what the food processing sector is.
• In the body, explain the challenges like-raw material availability, transportation issues, storage issues, etc. In the next part explain the various measures/schemes launched by the government to address the challenges faced by the sector.
• Conclude by highlighting the importance of the sector for the country.

Answer:

The food processing sector is valued at US$258 billion and is the fifth-largest industry domestically in terms of production, consumption, export and expected growth in the country.  It contributes to around 14 % of manufacturing Gross Domestic Product (GDP) and 13 % of India’s total food exports. Given the status of the sector, it has been the endeavor of the Government to promote the food processing industry in the country to reduce wastage of agricultural produce and minimize post-harvest losses.

Challenges in Food Processing Sector:

• Supply-side bottlenecks: Small and dispersed marketable surplus due to fragmented holdings, low farm productivity, high seasonality, perishability, and intermediation result in lack of distribution on supply and quality, and in turn, impede processing and exports.
• Deficiencies in the regulatory environment: There is a lack of integration & clarity. Numerous laws, under the jurisdiction of different ministries and departments, govern food safety and packaging. The multiplicity of legislation leads to contradictions.
• Lack of comprehensive policy: Lack of a comprehensive policy addressing the various needs of the food processing industry is obstructing its growth. 
• Lack of adequate infrastructure: Lack of cold storage facilities and road and rail connectivity to hinterlands is still a major concern.
• Credit facilities: Despite the creation of the  Food Processing Fund over a couple of years ago, the sector has been facing a resource crunch. Though the foreign investment has picked up now, it still doesn’t match the requirements of the industry.
• Lack of Holistic Approach: This can be credited to the absence of vital peripheral infrastructural linkages and legislation for contract and corporate farming, inadequate implementation of the APMC Act and cumbersome procedures to avail grants.

Measures that were taken by the Government:

• PM Kisan SAMPADA Yojana is an Rs. 6000 crore umbrella scheme incorporating ongoing and new schemes of the Ministry of food processing and industry. Some important schemes under SAMPADA yojana:
• Mega food parks: consist of supply chain infrastructure including collection centers, primary processing centers, central processing centers, and food processing units.
• Cold chain: the creation of the infrastructure facility along the entire supply chain ( pre-cooling, weighing, sorting, grading, waxing facilities, mobile cooler vans, etc.,)
• Scheme for Creation of Backward and Forward Linkages:  to perishable horticulture and non-horticulture produced by plugging the gaps in the supply chain in terms of availability of raw material and linkages with the market.
• Infrastructure for agro-processing based on cluster approach
  • The National Agricultural Market (eNam) which creates a pan India market facilitates removal of intermediaries, thereby streamlining the entire supply chain
  • The new Contract Farming Act  further helps in improving the backward and forward  integration of the supply chain
  • Electronic Negotiable Warehouse Receipt (e-NWR) System to facilitate an easy pledge financing by banks and other financial institutions 
• Inclusion of food processing and agro-warehousing under priority sector lending by RBI
• The Logistics challenge of the supply chain is being taken care of by leveraging the existing PM-Gram Sadak yojana, BHARATMALA, and SAGARMALA schemes
• Promotion of Agri Export Zones, one-time capital grants, etc.are being undertaken.
• 100% FDI in this sector.

The Government of India has identified the food processing sector as the sunrise sector. Several initiatives are being put in place for promoting primary as well as secondary processing. For unhindered growth, it becomes important to address the demand and supply-side constraints of food processing in India. The target of ensuring food security for more than a billion people requires a concerted effort by all stakeholders including the government and the food processing industry. In addition to private players and government, industry bodies and academia will also have a crucial role in the success of these initiatives.