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Food Processing in India: Scope and Significance

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  • Last Updated : 25 May, 2022

To get a better insight into the food processing industry and how its works you need to know what is food processing? Food processing industries (FPI) in India contribute a significant percentage to the GDP of India thus it becomes important to understand the scope and significance of food processing industries.

What is Food Processing?

The food processing industries are nothing new as processing was carried out by people since ancient times. They used salts, sun drying, and fermentation was storing food for a longer period. Today the food processing industry also does the same thing but with the help of advanced technology and better food preservative chemicals.

Food processing can be divided into primary and secondary products, so food that is being prepared from the raw material after processing comes under primary products like vegetables and fruits, while the food products that are being processed from primary food products to obtain a new food product is called secondary food products like jam, butter, sauces, etc. Food processing is done to make new products out of existing primary food products and also to increase their shelf-life so that it stays fresh for longer. 

Similarly, the place where all this food processing is done is known as the food processing industry it can be a large-scale industry or a small-scale home-based industry. 

Working Procedure of Food Processing Industries:

Food processing industries adopt a unique procedure to increase the shelf-life of food products by processing them with chemical reagents and preservatives. Also, these industries blend different food products to form a new food product, for example, food processing industries make sauces by blending tomatoes, with different salts, oils, and spices. Also, some preservative chemicals like citric acid, salt, vinegar, butylated hydroxy toluene (BHT), butylated hydroxy anisol (BHA), calcium propionate, etc. are used by FPI to increase the shelf life of the existing food products.

Importance of Food Processing Industries (FPI):

  1. India is an agriculturally prosperous nation and more than 50% of its population is employed in the agricultural sector. Thus India has a surplus amount of raw materials for food processing industries. In 2018-19 the total production of Horticulture products in India was 313.85 million tons.
  2. With the help of food processing industries, India easily processes raw products into processed foods.
  3. As the agricultural sector is the major contributor to the Indian economy all the related sector like the food processing industry helps in creating employment and simultaneously benefit the economy of the country. According to the Food Processing Minister in 2020-21, the food processing industry contributes 12.8% to India’s GDP.
  4. Food processing is the next step in sustainable development as processed foods are less likely to get rotten thus reducing food wastage.
  5. Due to its longer shelf life, processed food can be smoothly exported to different parts of the world.

India holds the sixth-largest food and grocery market in the world with 70% of retail sales.

Scope of Food Processing Industries in India:

In India, there is a great scope of food processing industries and for this reason, during the period March 2017 to April 2000 India has received around USD 7.54 billion worth of FDI in the food processing sector

  • Globally India holds the number 1 ranking in producing some of the major products like mango, papaya, banana, milk, ginger, guava, etc. Also, India is a mass producer of sugar, cashew nuts, potato, rice, wheat, etc. 
  • Apart from food products India also produces a significant amount of coffee and tobacco every year.
  • Spices are among one of the most exported food products of India. With the help of FPIs India is making processed spices that can easily be transported with a shelf life of more than a year. As per the data of IBEF (India Brand Equity Foundation), India exported spices worth US$ 4 billion in the financial year 2021.
  • The diverse climatic condition and availability of different kinds of soil help India produce different kinds of food throughout the year. Additionally, the numerous sea coasts, rivers, and lakes cater to the supply of non-vegetarian food items.
  • Establishing FPIs in rural areas of India provides a significant amount of resources at the same place along with cheap labor. Thus, from 2014 to 2015 the Government of India issued a fund of Rs. 2000 crore via NABARD to support the Food processing Industries and Food parks.
  • With the help of the Food processing industries (FPI), Indian farmers will be able to directly sell their crops to the industry for better output.
  • The demand for food items is significantly increasing with the increased population and thus more FPIs are needed to meet the demand.
  • The Government of India is making significant efforts for the enhancement of FPIs in India and thus many investments in FPIs can prove to be quite profitable.

Location of Food processing industries (FPI) in India:

The food processing industries are divided into many segments like grain processing, meat and poultry, fruits, and vegetables, marine products, consumer foods, etc. However, all these food items are produced in FPIs located in different regions of India like Gujarat, Maharashtra, Andhra Pradesh, Kerala, Punjab, Uttar Pradesh, and West Bengal. The FPIs in India are mainly located along with the coastal states because of the raw material availability and ease of transportation. 

As per the ASI (Annual survey of India) and data presented by the Ministry of Food Processing there are around 37,175 registered processing industries across India

Some of the Challenges to FPI in India:

  • Climatic Condition: It is often seen that due to bad weather many farmers in India lose their crops every year thus resulting in a short supply of raw materials for the food processing industries.
  • Lack of technology: There is still a need for advanced technology to be adopted in food processing industries to make it more efficient.
  • Infrastructure: Due to poor infrastructure it becomes difficult to transport food items from one place to another.
  • Food Standards: Every nation has its food standards for consumable food items and thus, the food processing industries must satisfy all these food standards. However, there are not enough laboratories in India to check these food items as per the standards.

Some of the Government’s initiatives to Promote FPI:

  • The ministry of food processing launched a scheme called National Mission on Food Processing in April 2012 that was sponsored by the central government. Under this scheme, the main was to establish more food processing industries in India and proper supervision and monitoring of the existing ones. 
  • Under the vision 2015 for food processing, the Government of India is conducting a study on the growth of food processing industries in India. Its main aim is to enhance the existing food processing industries and expand production capacity by establishing new ones.
  • The mega food park scheme of GOI can prove to be game-changing as it aims to directly connect the farmers with industries via mega food parks.
  • The government is focusing on developing Agri Export Zones (AEZs) and under this scheme, many cities like Ahmedabad, Anand, Vadodara, Surat, Jamnagar, etc. have been converted into Agri-export zones. This zone caters export facilities of the food processing industries in India by strengthening the overall backward linkages with a market-oriented approach and it also helps to create healthy competitiveness abroad as well as in the domestic market. Recently, in various places in India, the Government has sanctioned 60 AEZs comprising about 40 agricultural commodities. 
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