The Food Processing Sector in India

The Food Processing Sector in India

Executive Summary:

The food processing sector is critical to India’s development, for it establishes a vital linkage and synergy between the two pillars of the economy—Industry and Agriculture. India is the world’s second largest producer of food and is expected to be a US$ 344 billion market in 2025 at a compound annual growth rate of 4.1 per cent.

The enormous growth potential of this sector can be understood from the fact that food production in the country is expected to double in the next 10 years, while the consumption of value-added food products will also correspondingly grow. The growth of this industry will bring immense benefits to the economy, 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.

This industry ranks fifth in the country and employs 1.6 million people directly, comprising 19% of the country’s industrial labour force. It accounts for 14% of the total industry output with 6.3% of the GDP. Its turnover is estimated at Rs.2,80,000 crore, of which unorganized sector accounts for more than 70% of production in terms of volume and 50% in terms of value. Some salient features are listed below:

Broad categorization:

Government Regulations and Policy Initiatives:
• Identified as a thrust area for development
• Industry included in the priority lending sector
• Most food processing enterprises have been exempted from industrial licensing under the Industries (Development and Regulation) Act, 1951
• For foreign investment, automatic approval is given even to 100% equity for majority of the processed foods
• The government would also set up abattoirs and dairies and will give a grant of US$ 3.1 million per abattoir and US$ 2.08 million per dairy.
• The government has planned to establish 30 mega food-parks in different parts of the country through the...

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