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Food Processing Sector

Investment in Food Processing Sector

There is a scope for growth of food processing industries as the level of food processing in the country was only 6.76% in 2010-11, as per a 2014 study, commissioned by Ministry of Agriculture & Farmers Welfare, and undertaken by Institute of Economic Growth. Government is promoting both domestic and foreign investment in food processing sector and employment levels therein.As per the Annual Survey of Industries 2014-15 conducted by Central Statistical Office, Ministry of Statistics and Programme Implementation, Food Processing is one of the major employment intensive industries constituting 12.77% per cent of employment generated in all factories registered under Factories Act 1948. The total number of persons engaged in such food processing industries was 17.73 lakhs in 2014-15. As per the NSSO 67th Round, 2010-11, total number of persons engaged in unincorporated enterprises of food processing industries was 47.9 lakh. As per Food and Agriculture Organization of the United Nations, India ranks number 1 in the world, in 2014, in the production of Banana, Guava (including mangoes and mangosteens), Ginger and Papaya with the following share:

Item Share (%)
Banana 26.04%
Guava (including mangoes and mangosteens) 40.75%
Ginger 30.37%
Papaya 44.51%

   India has huge diversified production base but low level of processing. The level of processing in perishable products in India is estimated only at 2.1% in fruits and vegetables, 6% in poultry, 21% in meat, 23% in marine and 35% in milk and milk products.  To increase investment in food processing infrastructure the Ministry of food processing industries is implementing a number of central sector schemes namely (1) Scheme for Mega Food Parks (2) Scheme for Modern Abattoirs (3) Scheme for Integrated Cold Chain and Value Addition Infrastructure (4) Scheme for Creation/Expansion of Food Processing and Preservation     Scheme for Quality Assurance (6) Scheme for Human Resource and Institutions. Further, the Government has provided various fiscal incentives in terms of reduction and exemption of taxes. A fund of Rs. 2000 crore has also been constituted with NABARD to provide loans at concessional rate to Mega Food Parks and units established therein. Loans to food & agro-based processing units and Cold Chain have been classified under Agriculture activities for Priority Sector lending (PSL) as per the revised RBI Guidelines issued on 23/04/2015. 100% FDI is permitted under the automatic route in food processing industries and through approval route for trading, including through e-commerce in respect of food products manufactured and/or produced in India.

Database for Food Processing Units

The Government is implementing a number of Central Sector Schemes for promotion and development of food processing industries in the country including rural areas. These schemes are (1) Scheme of Mega Food Parks; (2) Scheme of Modern Abattoirs; (3) Scheme of Integrated Cold Chain and Value Addition Infrastructure; (4) Scheme for Creation/Expansion of Food Processing and Preservation; (5) Scheme for Quality Assurance; and (6) Scheme for Human Resource and Institutions. These schemes are demand driven and not specific to any region. Farmers, Farmer Producer Organizations, Individuals, Group of Entrepreneurs, Cooperative Societies, Self Help Groups, NGO’s, Central/State PSU etc. are eligible to avail financial assistance under these schemes for setting up food processing industries in the country including rural areas. Central Statistical Office (CSO) and National Sample Survey Organization (NSSO) under the aegis of the Ministry of Statistics and Programme Implementation, regularly update data on food processing industries in the country including in the rural areas to facilitate policy formulation on food processing sector.

Mango Processing Units

At present, Ministry of Food Processing Industries does not have any scheme for assisting setting up of food processing units including mango processing units. However, under the Scheme for Technology Upgradation/ Establishment/ Modernization of Food Processing Industries implemented during 11th Plan, the financial assistance has been provided for setting up of new food processing units as well as Technological Upgradation and Expansion of existing units including mango processing units under Fruit & Vegetable sector in the country. This scheme was subsequently subsumed in the Centrally Sponsored Scheme (CSS)-National Mission on Food Processing (NMFP) with effect from 01.04.2012 till 31.03.2015. Thereafter, the said scheme got delinked from Government of India’s assistance and it was left to the State Governments to decide on its continuance from their increased resources as per recommendation of 14th Finance Commission. The committed/spillover liabilities of cases received upto end of 11th Plan are being considered by Ministry of Food Processing Industries for sanction of Grant – in – aid during the 12th Plan under the said scheme as per availability of funds and merits of proposals However, under the Skill Development initiative, this Ministry has been assisting Food Industry Capacity and Skill Initiative (FICSI) since September, 2015 to impart training in food processing sector under Pradhan Mantri Kaushal Vikas Yojana (PMKVY). Besides, National Institute of Food Technology Entrepreneurship and Management (NIFTEM), a deemed de novo university & Indian Institute of Crop Processing Technology (IICPT) under the administrative control of Ministry of Food Processing Industries also conduct programmes/courses on Skill Development (under self-financing, sponsored and PMKVY) and entrepreneurship for the youth, farmers, self–help groups besides running their normal educational courses and other academic research and outreach activities.

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