Why in the News?

Prime Minister Narendra Modi stated on Thursday that over the past decade, India has implemented “comprehensive” reforms to revolutionize the food-processing sector.

What are the steps taken by Govt in food processing industry in India?

• Priority Sector Lending: In April 2015, food and agro-based processing units were included as agricultural activities under the Priority Sector Lending norms, facilitating easier access to credit for these businesses.
• FDI Policies: The government allows 100% Foreign Direct Investment (FDI) under the automatic route for the food processing sector, encouraging foreign investment and technological transfer.
• Special Food Processing Fund: A fund of ₹2,000 crore was established with NABARD to support food processing projects and infrastructure development.
• Regulatory Reforms: The Food Safety and Standards Authority of India (FSSAI) shifted from product-by-product approvals to an ingredient-based approval process in 2016, simplifying compliance for businesses.
• Infrastructure Development: Initiatives such as the Pradhan Mantri Kisan Sampada Yojana (PMKSY) aim to create a robust infrastructure for food processing through cold storage facilities, processing units, and logistics support.

Status of food processing industries in India

• Economic Contribution: The sector accounts for approximately 13% of India’s total exports and 6% of industrial investment. It is expected to generate around 9 million jobs by 2024.
• Growth Rate: The industry has been growing at an average annual rate of about 11.18% over recent years, indicating significant potential for expansion.
• Market Share: Despite being one of the largest producers of agricultural commodities, India’s food processing sector represents only about 10% of total food production.

What are the still challenges present in food processing industry in India? 

• Inadequate Infrastructure: A lack of cold storage and transportation facilities leads to over 30% post-harvest losses.
• Fragmented Supply Chains: The supply chain is highly fragmented, causing inefficiencies and increased costs due to poor connectivity and coordination among stakeholders.
• Regulatory Complexities: The industry is burdened by a complex web of regulations that can hinder business operations and compliance efforts.
• Lack of Skilled Labor: There is a significant shortage of skilled professionals in areas such as food technology and quality control, which hampers innovation and adherence to safety standards.
• Limited Technology Adoption: Many processors still rely on outdated technologies, which affects productivity and product quality. High costs and lack of technical expertise further inhibit technological advancements.

What should be done by Govt to resolve these challenges? (Way forward)

• Infrastructure Investment: Increase investments in cold chain logistics and transportation infrastructure to minimize post-harvest losses and improve supply chain efficiency.
• Financial Support Mechanisms: Facilitate easier access to finance through specialized loans for small and medium enterprises (SMEs) in the food processing sector.
• Skill Development Programs: Enhance vocational training initiatives focused on food technology and safety management.
• Regulatory Simplification: Streamline existing regulations to reduce bureaucratic hurdles. A unified regulatory framework could help clarify compliance requirements and foster a more conducive environment for business operations.
• Promote R&D Investment: Encourage investment in research and development to foster innovation within the sector.

Mains PYQ:

Q Elaborate the policy taken by the Government of India to meet the challenges of the food processing sector. (UPSC IAS/2019)

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