Food processing sector is indispensable for overall development
of an economy as it provides a vital linkage and synergy between the agriculture
and industry. It helps to diversify and commercialise farming; enhance
income of farmers; create markets for export of agro foods as well as
generate greater employment opportunities. Through the presence of such
industries, a wider range of food products could be sold and distributed
to the distant locations. The term 'food processing' is mainly defined
as a process of value addition to the agricultural or horticultural produce
by various methods like grading, sorting and packaging. In other words,
it is a technique of manufacturing and preserving food substances in an
effective manner with a view to enhance their shelf life; improve quality
as well as make them functionally more useful. It covers spectrum of products
from sub-sectors comprising agriculture, horticulture, plantation, animal
husbandry and fisheries.
The Indian food processing industry is one of the largest
in the world in terms of production, consumption, export and growth prospects.
Earlier, food processing was largely confined to the food preservation,
packaging and transportation, which mainly involved salting, curdling,
drying, pickling, etc. However, over the years, with emerging new markets
and technologies, the sector has widened its scope. It has started producing
many new items like ready-to-eat food, beverages, processed and frozen
fruit and vegetable products, marine and meat products, etc. It also include
establishment of post-harvest infrastructure for processing of various
food items like cold storage facilities, food parks, packaging centres,
value added centres, irradiation facilities and modernised abattoir.
The liberalisation of the Indian economy and world trade
as well as rising consumer prosperity has thrown up new opportunities
for diversification in the food processing sector and opened up new avenues
for growth. Demand for processed and convenience food is increasing constantly
because of urbanisation, changing life-style and food habits of the people.
Accordingly, the Indian consumers are being offered newer high quality
food products made by using the latest state-of-the-art technology.
India has a strong agricultural production base with diverse agro-climatic conditions and arable land of 184 million hectares. It is one of the major food producers in the world and has abundant availability of wide variety of crops, fruits, vegetables, flowers, live-stock and seafood. As per the available information, it produces annually 90 million tonnes of milk (highest in the world); 150 million tonnes of fruits and vegetables (second largest); 485 million livestock (largest); 204 million tonnes of food grains (third largest); 6.3 million tonnes of fish (third largest); 489 million poultry and 45,200 million eggs. As a result, Indian food processing industry has become an attractive destination for investors the world over. The total inflow of foreign direct investment (FDI), year-wise, in food processing sector during the period 2000-01 to 2007-08 (upto November 2007) is as follows:
Direct Investment (Rs. in Crores)
(Source: Annual Report 2007-08, Ministry of Food Processing Industries)
Though the private, public and co-operative sectors are
to play their rightful role in the progress of the industry, the 'Ministry
of Food Processing Industries' is the nodal agency for developing
a strong and vibrant food processing sector in the country. It acts as
a catalyst and facilitator for attracting domestic and foreign investments
towards developing large integrated processing capacities; providing technical
guidance and advice to the industry; as well as creating conducive environment
for its growth. It covers the products of fruits and vegetables, dairy,
milk, poultry, fishery, consumer food, grains, non-molasses based alcoholic
drinks, aerated water and soft drinks. The objectives of the Ministry
- Utilize and make value addition to agricultural produce
for enhancement of income of farmers.
- Minimize wastage at all stages in the food processing
chain by the development of infrastructure for storage, transportation
and processing of agro-food produce.
- Induct modern technology into the sector from both domestic
and external sources.
- Use efficiently agricultural residues and by-products
of the primary agricultural produce as well as of the processed industry.
- Encourage R&D in food processing for product and
process development and improved packaging.
- Provide policy support, promotional initiatives and
physical facilities to promote value added exports.
- Promote rationalisation of tariffs and duties relating
to food processing sector.
- Create the critical infrastructure to fill the gaps in the supply chain from farm to consumer.
The Government has accorded the sector a high priority and
has undertaken several policy measures and initiatives. It has offered
a number of fiscal reliefs and incentives as well as approved a large
number of joint ventures, foreign collaborations, industrial licenses
and 100% export oriented units (EOU) proposals in different food processing
areas. Some of the important steps in this direction are:- (i) Most of
the processed food items have been exempted from the purview of licensing
under the Industries
(Development & Regulation) Act, 1951, except items reserved for small-scale sector and alcoholic beverages; (ii) Food processing industries are included in the list of priority sector for bank lending in order to ensure easy availability of credit to them; (iii) Automatic approval for foreign equity upto 100% is available for most of the processed food items, excepting alcohol and beer and those reserved for small scale sector (subject to certain conditions); (iv) In budget 2007-08, excise duty has been waived on all kinds of food mixes including instant mixes, Soya Bari (food supplements) and ready to eat packaged goods as well as on biscuits; (v) Customs duty on sunflower oil (crude) reduced from 65% to 50% and on sunflower oil (refined) reduced from 75% to 60%; (vi) Special additional duty of 4% has been waived in the case of refined edible oil; (vii) Custom duty on food processing machinery reduced from 7.5% to 5%; etc.
Products Order (FPO), 1955 - promulgated under section 3 of the Essential
Commodities Act, 1955, it provides for regulation of sanitary and hygienic conditions in manufacture of fruit and vegetable products. It aims to ensure that hygienic and good quality products are manufactured and sold. It is implemented by the Ministry through the Directorate of Fruit and Vegetable Preservation. The Directorate has five regional offices located at Delhi, Mumbai, Kolkata, Chennai and Guwahati as well as a sub-office at Lucknow. The licensing under this Order laid down the minimum requirement for the following items, namely:- (i) sanitary and hygienic conditions of premises, surrounding and personnel; (ii) water to be used for processing; (iii) machinery and equipment; and (iv) products specifications. In addition, maximum limits of preservatives, additives and contaminants have also been specified for various products.
To keep pace with recent developments in the technologies and to harmonize the FPO standards with PFA, Codex, EU, FDA and other international food standards, the Ministry has taken the initiative to review the existing FPO, 1955 which aims to suggest amendment in the fruit and vegetable products standards based on the scientific development and modernization of the fruits and vegetables processing industries and the rules governing them.
Food Products Order (MFPO), 1973 - promulgated under section 3 of
Commodities Act, 1955 , it aims to ensure supply of wholesome meat
food products to the consumers. It deals with quality control of meat
food products from processing to finished product by way of ante-mortem
and post-mortem inspection of meat animals so as to ensure hygienic
conditions of processing of meat food products. It was earlier implemented
by Directorate of Marketing and Inspection (DMI), but its administration
has been transferred to the Ministry. The sanitary, hygienic, packing,
marking and labelling requirements are specified in separate Schedules
of the Order.
To keep pace with recent developments in the manufacture of meat food products and to harmonize the MFPO standards with PFA, Codex, EU, FDA and other international food standards, the Ministry has taken the initiative to review the existing MFPO, 1973 which aims to suggest amendment in the meat products standards based on the scientific development and modernization of the meat and meat processing industries and the rules governing them.
Safety and Standards Act, 2006 (Integrated Food Law) - has been
That is, Integrated food law aims to achieve a high degree of consumer confidence in the quality and safety of produced, processed, sold or exported food. It seeks to overcome problems like multiplicity of food laws and standard setting and enforcement agencies which creates confusion in the minds of consumers, traders, investors and manufacturers.
- Consolidate the laws relating to food
the Food Safety and Standards Authority of India for laying down science
based standards for articles of food
- Regulate manufacture, storage,
distribution, sale and import of food articles with a view to ensure
availability of safe and wholesome food for human consumption and
- Pool infrastructure, manpower and testing facilities for better standard
fixation and enforcement through their proper re-deployment.
As a result of such incentives and measures, the industry
has witnessed fast growth in most of its segments. The growth and development
of some of the sub-sectors may be enumerated as follows:-
- The installed capacity of fruits and vegetables processing sector has increased from Rs. 11.08 lakh tonnes as on 1st January 1993 to Rs. 24.74 lakh tonnes on 1st January 2007 and Rs. 26.80 lakh tonnes on 1st January 2008. The utilization of fruits and vegetables for processing is estimated to be around 2.20 per cent of the total production. Over the last few years, there has been a positive growth in ready to serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, pickles, convenience veg-spice pastes, processed mushrooms and curried vegetables. During 2007-08 (upto January 2008), the Ministry has released financial assistance of Rs. 13.76 crores to 70 fruits and vegetables processing units (excluding North East States, Himachal Pradesh, Jammu and Kashmir and Uttarakhand) in the form of 1st/ 2nd instalment.
- In meat and meat processing sector, poultry meat is the fastest growing animal protein in India. The estimated production is 1500 thousand tonnes growing at a rate of 13 per cent through 1991-2005. India exports more than 500,000 MT of meat of which major share is buffalo meat. Indian buffalo meat is witnessing strong demand in international markets due to its lean character and near organic nature. Its exports have the potential to grow significantly and hence presents an opportunity for exporters in the food processing segment. India is the fifth largest exporter of bovine meat in the world. However, in order to develop necessary infrastructure for processing of meat and meat food products for domestic market as well as for export market, the Ministry is providing financial assistance by way of grant-in-aid. During the year 2007-08 (upto December 2007), it assisted nine projects for manufacture of meat and meat food products.
- India has a unique pattern of production, processing
and marketing/consumption of milk. It ranks first in the world in terms
of milk production. Approximately 70 million rural households (primarily,
small and marginal farmers and landless labourers ) in the country are engaged
in milk production. The production stands at 91 million tonnes growing at
a rate of 4 per cent. This is primarily due to the initiatives taken by
the Operation flood programmes in organizing milk producers into cooperatives;
building infrastructure for milk procurement, processing and marketing;
as well as providing financial, technical and management inputs by the Ministry
of Agriculture and Ministry of Food Processing Industries to turn the dairy
sector into viable self-sustaining organized sector. About 35% of milk produced
in India is processed. The organized sector (large scale dairy plants) processes
about 13 million tonnes annually, while the unorganised sector processes
about 22 million tonnes per annum. In the organized sector, there are 676
dairy plants in the Cooperative, Private and Government sectors registered
with the Government of India and the State Governments.
- With long coastline of 8129 kms, 50600 sq km of continental shelf area, 2 million sq km of exclusive economic zones and 1.2 million hectares of brackish water bodies, India is endowed with rich fishery resources. Considerable infrastructure facilities for processing of marine products have been developed over the years. At present, there are over 369 freezing units with a daily processing capacity of 10266 tonnes out of which 150 units are approved for export to EU. 499 units are engaged in production of frozen fish with a total storage capacity of 134767 tonnes. Besides, there are 12 surimi units, 5 canning units and 471 units which are engaged in pre-processing and dry fish storage. The Ministry extends financial assistance for setting up/ technology upgradation/ modernization of fish processing units. During 2007-08 (upto 31.12.2008), an amount of Rs. 2.01 crores has been provided to 10 seafood processing units.
- India is self sufficient in grain production. All major grains, such as paddy, wheat, maize, barley, millets like jowar (great millet), bajra (pearl millet) and ragi (finger millet) are produced in the country. For the focused growth of the 'pulse milling and flour milling' sector, the Ministry is providing financial assistance to the grain processing industries for its setting up/ expansion/ modernization in the form of grant. During 2007-08 (upto December 2007), in the pulse milling sector, 13 proposals have been received which involves the grant of Rs. 222.80 lakhs and in the flour milling sector, 17 proposals have been received which involves the grant of Rs. 572.54 lakhs. Further, India is one of the largest producers of oil/ vanaspati products in the world with approximately 15,000 oil mills, 600 solvent extraction units and 250 vanaspati units. Indian oil seed sector accounts for the domestic turnover of Rs. 70,000 crore and import/ export turnover of Rs. 16,000 crore. India is also the third largest importer of vegetable oil in the world, next to European Union and China.
- Consumer food industry includes pasta, breads, cakes, pastries, rusks, buns, rolls, noodles, corn flakes, rice flakes, ready to eat and ready to cook products, biscuits, etc. Bread and biscuits constitute the largest segment of consumer foods. During the year 2007-08 (upto 10.12.07), financial assistance to 93 food processing units relating to consumer industries amounting to Rs. 17.16 crore has been provided.
- India is the largest market for alcoholic beverages in the world. The demand for spirits and beer is estimated to be around 373 million cases. There are 12 joint ventures companies having a licensed capacity of 33919 kilolitres per annum for production of grain based alcoholic beverages. 56 units are manufacturing beer under license from the Government. The wine industry in India provides considerable opportunities for value addition and employment generation in agro-processing sector. The Ministry has sanctioned a Wine Park at Vinchur, Nasik.
Moreover, the Ministry of Food Processing Industries has finalised the document regarding the Vision 2015 for the growth of Indian food processing industries, which is known as the 'Integrated Strategy for Promotion of Agri-business - Vision, Strategy and Action Plan for the Food Processing Sector', based on the recommendations made by the Group of Ministers (GOM) for growth of the sector. The objective of the strategy is to increase the level of processing of perishable food from 6% to 20%, value addition from 20% to 35% and share in global food trade from 1.6% to 3% by 2015. The level of processing for fruits and vegetables is envisaged to increase from the present 2.2% to 10% and 15% in 2010 and 2015 respectively. The thrust areas identified for strategic intervention are detailed mapping of food clusters; establishment of Mega Food Parks in identified SSI/ horticulture/ meat/ dairy/ marine sectors; strengthening backward and forward linkages and developing supply chain with cold chain mechanism; modernisation of Abattoirs; developing infrastructure for organized food retail market; rationalizing tax structure for the sector; etc.
All these efforts have given competitive edge to the food processing industry on a global platform. More and more people are consuming value-added and processed food products. The industry possess high export opportunities and its growth seeks to bring immense benefits to the economy by raising agricultural yields, enhancing productivity, creating employment and raising life-standards of a large number of people across the country, especially those in rural areas. Thus, there exists innumerable business opportunities in the diverse areas of food processing.
But, the food processing sector still remains largely untapped because of high packing costs, cultural preference of the people for fresh food, seasonalities of raw materials, lack of adequate infrastructural facilities and quality control mechanism. As a result, there is a need to diversify the sector by fully harnessing its potentialities, providing greater incentives as well as creating conducive environment for more investments and exports.