Food Processing Industry – Attractive Sector for Investment in India

Food processing industry plays a vital role in the economy of any country because it links agriculture to industry. The food processing industry is responsible for diversification of agriculture, improvement of value-added opportunities, and creation of excess that can be exported.

The food processing industry of India is one of the largest in the world in terms of manufacture, use, export, and development.  The sector has immense potential to contribute to growth and employment opportunities of the country.

The food processing industry is very important for an agriculture-based economy like India because it helps in the commercialization of farming and increases the income of farmers. It also generates employment opportunities and assists in the creation of markets for export of agriculture-based products.

In the beginning, the food processing industry was limited to procedures of food preservation and packaging that involved drying, salting, and pickling. However, in the last few years, with advancement in technology, the scope of the sector has grown tremendously. The industry now also includes ready-to-eat food items, frozen fruit and vegetable products, and seafood and meat products. The storage, processing, preservation, and transportation of various food items have given rise to many irradiation facilities, cold storage facilities, and packaging centers.

The food processing industry in India has players from private, public and cooperative sectors. The Food Products Order (FPO) of 1955, Meat Food Products Order (MFPO) of 1973, and Food and Standards Act of 2006 ensure that the food items made after processing in India meet international standards of hygiene and quality.

The main agency responsible for the development of this industry in India is the Ministry of Food Processing Industries. This ministry deals with a range of products related to fruits

and vegetables, fisheries, poultry, meat, dairy, soft drinks, and other aerated drinks.

The ministry also plays a proactive role in attracting investments in India into the sector. It keeps announcing various schemes and incentives to promote a favorable environment for functioning and growth of the industry. One such step is the “National Food Processing Policy”.

The main objective of this policy is to increase investment in the industry by:

  • Bringing about financial initiatives in the form of rationalization of tax structure of food and machinery used in the industry
  • Simplification of food laws to cover all issues related to equalization funds, futures marketing, and merit goods
  • Enabling planned investments in the sector by boosting the market and database intelligence system
  • Enhancing productivity to ensure availability of the raw material required for the industry all year round
  • Promoting establishment of processing units close to production areas to avoid cost of transportation and wastage

Thanks to these policy initiatives, the industry has undergone rapid growth in the last few years.

The FDI inflow in this sector from 2005–06 was approximately US $74 million. Thus, investment opportunities in the food processing sector of India are immense. Not only does the country have the highest food production in the world, it also has a wide variety of crops, fruits, vegetables, livestock, and seafood.

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