In this article we will discuss about the initiatives taken by the government to improve the food processing sector and challenges which need immediate action to stimulate the growth of this sector.
Government Initiatives for the Growth of Agro-Processing Industries:
The government provides various incentives for the growth of food processing industries in the country. Its Vision Document 2015, prepared by the Ministry of Food Processing Industries (MoFPI), lays the plan to increase the level of processing of perishables from 6 percent to 20 percent and aims at trebling the size of investment in the processed food sector.
Some of the recent major initiatives taken by the government to improve the food processing sector in India are as follows:
i. Union Budget 2016-17 has opened the way for 100 percent foreign direct investment (FDI) through Foreign Investment Promotion Board for marketing of food products from India.
ii. Two Indian dairy companies, Parag Milk Foods and Schreiber Dynamix Dairies, have been given permission to export milk products to Russia.
iii. A mega international food park was inaugurated at Dabwala Kalan, Punjab.
iv. The Food Safety and Standards Authority of India (FSSAI) has issued new rules for importing products and simplified the process by relaxing labelling guidelines.
v. The MoFPI announced a scheme for creation of infrastructure facilities for degree/diploma courses in food processing sector, a programme for entrepreneurship development and establishing Food Processing Training Centres.
vi. The Spices Board is selling 30 spices and value-added products globally under the brand names ‘Spices India’ and ‘Flavourit’.
vii. The government is setting up of five Mega Food Parks in the states of Bihar, Maharashtra, Himachal Pradesh and Chhattisgarh and plans to set up 42 such mega food parks across the country.
viii. A corpus of Rs. 2,000 crore was created under NABARD in the Budget 2015-16, to provide cheaper credit to food processing industry and reduction of excise duty.
Besides this, the government has set up R&D organizations for agro-processing across the country. Leading among these are the ICAR, CSIR and state agricultural universities.
Many other R&D institutes also exist, some of which are:
1. BCKV, Kalyani
2. CFTRI, Mysore
3. CIAE, Bhopal
4. CIPHET, Ludhiana
5. CIRCOT, Mumbai
6. DFRL, Mysore
7. GAU, Anand
8. GPBUA & T, Pantnagar
9. HBTI, Kanpur
10. IARI, New Delhi
11. IGFRI, Jhansi
12. IGMRI, Hapur
13. IISR, Lucknow
14. IIT, Kharagpur
15. ILRI, Ranchi
16. IVRI, Izatnagar
17. KVIC, Mumbai
18. MERADO, Ludhiana
19. MPKV, Rahuri
20. NDRI, Karnal
21. NIRJAFT, Kolkata
22. OTRI, Anantapur
23. PAU, Ludhiana
24. PHT Institute, Pune
25. PPRC, Thanjavur
26. RAU, Udaipur
27. TNAU, Coimbatore
However, whether food processing industry has many takers is seriously in doubt, given the fact that many of these industries remain small and fail to achieve critical mass. Only large companies with marketing muscle have established themselves in this market.
Village processing initiatives have remained just that; unless they tie up with marketing companies such as Unilever, ITC, Pepsi, Nestle and others. One of the reasons is that Indian consumers still prefer fresh produce and do not really care for processed articles.
Despite all the measures taken by different agencies, agro-foods have been slow to pick up in the country. Only the large companies have succeeded to establish their brands. SMEs do succeed in producing viable products but lack the marketing muscle to distribute goods across the nation or the ability to establish brands. Getting consumers to change their preference for fresh produce has also been difficult.
Challenges in Agro-Processing:
Many government reports and reports by international consultancies suggest that there are many opportunities in the agro-processing industry in India. They appear to be off the mark. For one, it is not easy to make a success of food processing in India yet.
There are many challenges to the industry; even if the technology to process crops is available, marketing the goods or convincing customers is not an easy task. Indian customers prefer fresh agricultural products and are slow to take on processed foods. Only large companies can afford the huge marketing expenditure required to build brands. Small manufacturers struggle with quality, distribution and sales issues.
There are many other constraints as well. A FICCI survey ‘Bottlenecks in Indian Food Processing Industry, 2010’ (FICCI 2010) has identified top five challenges which need immediate action to stimulate the growth of the sector:
1. Inadequate Infrastructure:
More than 30 percent of the produce from farm gate is lost due to inadequate cold chain infrastructure and inadequate logistics, estimates Kapoor (2011). Inadequate support infrastructure is considered to be the biggest bottleneck in expanding the food processing sector. Long and fragmented supply chains, inadequate cold storage and warehousing facilities, lack of transport infrastructure, lack of modern logistics and last mile connectivity are some of the problems that exist in India.
2. Regulatory Environment:
Numerous laws, under the jurisdiction of different ministries and departments, govern food safety and packaging. The multiplicity of legislation leads to contradictions of various kinds. Manufacturers of packaged food products are obligated to comply with quality standards and label declarations prescribed under multiple legislations and statues. India needs a national food processing policy with a number of legislative, administrative and promotional measures, evolved through discussions between all the stakeholders.
3. Multiple Authorities:
The multiplicity of ministries and administering authorities at both at the Central and state level has resulted in a complex regulatory system that burdens the industry.
4. Inadequate Manpower:
There is a shortage of skilled and semi-skilled workers which is a hindrance to the growth of the sector. There are strong deficiencies in technical knowhow and support and employees are unable to use modern tools and equipment.
5. Other Factors:
Constraints in raw material procurement, taxation, access to credit, and lack of applied research are other major challenges for the growth of food processing sector.
It is hoped that things may change as consumer tastes change, but so far small manufacturers in food processing have remained small.