Wednesday, 09 Oct, 2024
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India's food and grocery market is the sixth largest globally. The food processing industry is a key component, contributing 32% to this market. It stands as one of the largest sectors in the country, representing 13% of total exports and 6% of industrial investment.
In a speech to industry leaders and micro-entrepreneurs in Patna last week, Union Minister Chirag Paswan emphasised the transformative potential of the food processing sector to boost India's economic standing and create jobs through extensive processing units. He also called on all states to actively participate in the World Food India 2024 event, scheduled for September 19-22 in Delhi, which will showcase the initiatives of the Ministry of Food Processing Industries (MoFPI).
Earlier, Food Processing Industries Secretary Anita Praveen noted in June that India earns a bad reputation whenever a food consignment is returned due to quality concerns. She urged food companies to become more responsible and supply top-quality products in both domestic and overseas markets by meeting international quality standards. The secretary emphasised the importance of the food processing sector for the Indian economy, highlighting its significant employment opportunities.
Notably, the emphasis on the food processing industry is starting to produce significant results. The latest Economic Survey highlights substantial growth in processed food exports from India over the five-year period from 2017-18 to 2022-23. The report indicates that the share of processed foods in total exports increased to 23.4 per cent in 2022-23, up from 14.9 per cent in 2017-18, reflecting an 8.5 percentage point rise.
In 2022-23, the value of agri-food exports, including processed foods, reached $46.44 billion, equivalent to more than Rs 385,400 crore, representing approximately 11.7 per cent of India's total exports for the year. The food processing industry stands as one of the largest employers within organized manufacturing, holding a 12.02 per cent share of total organized sector employment. Beyond its economic impact, the sector is crucial for minimizing wastage of perishable agricultural products, extending food shelf life, adding value to agricultural outputs, and promoting agricultural diversification and commercialisation.
The Economic Survey 2023-24 emphasizes the importance of the food processing industry due to its strong connections with the agriculture sector and its potential to absorb surplus labour from agriculture. Over the past eight years leading up to 2022-23, the sector has grown at an average annual growth rate (AAGR) of approximately 5.35 per cent at 2011-12 prices. Despite being labour-intensive and significantly impacted by the pandemic, the industry is currently on the path to recovery.
(Data: IBEF)
The report highlights that recent government efforts to enhance supply chain management from farms to retail outlets have positively impacted the sector. The Production Linked Incentive (PLI) scheme for the food processing industry is anticipated to generate off-farm employment, offer better prices for agricultural produce, and boost farmers' incomes. At present, 173 applications are included in the PLI scheme. Beneficiaries have invested Rs 76,900 crore, and an incentive of Rs 1,070 crore was disbursed over the two years 2021-22 and 2022-23.
Experts are of the view that the Indian food processing market, projected to reach $535 billion by 2025-26 with a compound annual growth rate (CAGR) exceeding 15 per cent, will necessitate a strengthened food processing value chain. The Centre has, however, introduced initiatives like the Pradhan Mantri Kisan Sampada Yojana (PMKSY) and the Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME) to support and enhance the sector.
They further said that the emphasis should now shift to promoting cluster development and micro-processing units, fostering public-private collaborations, and expanding market access. There should be a focus on encouraging Farmer Producer Organisations (FPOs) to establish clusters and micro-processing units, which will aid farmers in achieving better price realisation.
In the Budget 2024-25, Finance Minister Nirmala Sitharaman announced plans to develop large-scale clusters for vegetable production near major consumption centres. The government will support FPOs, cooperatives, and start-ups in enhancing vegetable supply chains, including collection, storage, and marketing.
Regarding shrimp production and export, financial support will be provided for establishing Nucleus Breeding Centres for shrimp broodstocks. Financing for shrimp farming, processing, and export will be facilitated through NABARD.
Productivity and resilience in agriculture is the top priority among the nine focus areas outlined in the Union Budget. The Budget allocates Rs 1.52 lakh crore for agriculture and allied sectors.
According to a study by the India Brand Equity Foundation, India's food and grocery market is the sixth largest globally. The food processing industry contributes 32 per cent to this market and stands as one of the largest sectors in the country, accounting for 13 per cent of total exports and 6 per cent of industrial investment.
It said the food processing sector is poised for significant growth, with its market size expected to expand to US$ 1,274 billion by 2027, up from US$ 866 billion in 2022. This expansion is fuelled by factors such as population growth, evolving lifestyles, changing food habits, rising disposable incomes, and ongoing urbanisation.
The food processing sector plays a key role in employment and economic contribution. According to the MoFPI, the sector employs approximately 1.93 million people, representing 12.38 per cent of employment in the registered factory sector. Furthermore, the unregistered food processing sector provides job opportunities for about 5.1 million workers.
