Food Processing – Key challenges and Opportunities

food processing

Aptly famed as the ‘sunrise industry’, delivering important linkages between the 2 pillars of our economic atmosphere – manufacturing, and agriculture – the food Processing industry in India is present process a massive transformation. With a turnover of 110 billion, it bills for 35 percent of the Indian food market and has been growing at a just right fee of 14 percent within the last few years.

This may also be attributed to increased policy environment and growing thrust of public-exclusive partnership and growth of rural infrastructure, to leverage India’s strengths on the provide and demand frontiers.

The government has made commendable efforts to promote funding in the industry through channeling resources by way of quite a lot of schemes as subsidies and provides. The schemes incorporated the development of built-in cold chains, Mega Food Parks (MFP), brand new Terminal Markets (MTM) and bulk storage facilities as well as a transformation of markets, first-rate manage laboratories and abattoirs. These efforts have placed the food processing enterprise on a high developmental trajectory as reflected by using the broaden in food processing from 6 percent in 2005 to 11 percent in 2009.

Although low phases of processing and market share in the international environment suggest an untapped opportunity to capitalize on India’s biggest raw material base and propel exports, they also indicate valuable challenges to be overcome to sustain continual growth of the enterprise.

Supply aspect bottlenecks: Small and dispersed marketable surplus because of fragmented holdings, low farm productivity, excessive seasonality, perishability, and intermediation outcome in lack of distribution of giving and fine, and in a flip, obstruct processing and exports.

Infrastructure bottlenecks: greater than 30 percent of the produce from the farm gate is lost because of insufficient cold chain infrastructure (masking only one percent of complete F&Vs creation) and inadequate logistics. About 80 percent of the 217 lakh tonnes cold storage potential is engaged via potatoes at the same time other F&Vs account for simplest 0.2 percent.

Likewise, as a substitute for using specialized transportation for perishables like reefer trucks, their logistics predominantly depend on ordinary modes, more often than not used for grains. Yet, the development of cold chains and logistics infrastructure remains an enviable investment option, because of, lack of valuable scale and high working fees (twice than in the West).

The food processing enterprise has a high awareness of unorganized segments, representing just about 75 percent throughout all product classes. For that reason, explaining the inefficiencies within the present construction process, ascribed to the debility of small regional avid gamers to spend money on technological know-how up gradation and diversify into alternate product classes.

Deficiencies in the regulatory environment: Lack of integration & readability: countless laws, under the jurisdiction of different ministries and departments, govern food protection and packaging. The multiplicity of laws leads to oppositions in requisites, conflicting process, lack of coordination and administrative delays.

For example, producers of packaged food merchandise corresponding to jams and squashes are obligated to conform with quality requirements and label declarations prescribed underneath more than one legislations such as the specifications of Weights & Measures (Packaged Commodities) ideas, Prevention of Food Adulteration (PFA) and Fruit Products Order (FPO). Correspondingly, FPO makes it possible for usage of sophistication II sweeteners in Fruit products, whereas PFA does now not.

Lack of a Holistic approach

Regardless of conferring numerous incentives for commencing new processing units, proportionate results have not been done. This can be credited to the absence of imperative peripheral infrastructural linkages and laws of contract and company farming, inadequate implementation of the APMC Act and cumbersome techniques to avail can provide. Additionally, not like for small scale industries, fewer schemes have been designed to advertise scale by way of incentivizing significant scale traders.

Apart from these, inherent anomalies such as the mounting price of finance, lack of expert and educated manpower, inadequate first-rate control and packaging units and excessive taxes and responsibilities, thwart the progress of FPI.

The need of the hour is to adopt an integrated process to deal with the above-mentioned tailbacks with a transparent-cut center of attention on improving the first-rate and worth of the output, decreasing the rate of raw fabric for the processors, at the same time improving the farmers’ revenue levels. Additionally, to the host of path-breaking interventions introduced by the federal government, especially the Ministry of Food Processing Industry (MFPI), following are a few recommendations to recognize the fullest talents of FPI:

Policy initiatives to plug supply part and infrastructure bottlenecks

Foster development of backward linkages important for securing scale and economic viability by evolving a favorable regulatory framework for contract and corporate farming and encouraging commodity clusters and intensive cattle rearing.

Promote holistic development via personal sector participation whilst expounding a mighty supporting framework with well-defined roles of the contributors, threat sharing mechanisms, fiscal incentives, and partnership items for the creation of infrastructure for logistics, storage, and processing.

Encourage science up gradation of existing facilities and funding in the development of ancillary industries like research and development, packaging, food processing apparatus manufacturing, meals protection certifying companies by using extended fiscal incentives to buyers.

Allow better entry for credit by means of augmenting present cap of Rs 10 crore funding in plant and equipment to qualify as precedence Sector credit to accommodate the excessive price technology adoption and scale enhancement.

Streamlining the regulatory constitution

Put off impediments of multiple departments and legal guidelines in searching for approvals by bringing them under a single window, thereby delivering readability in the roles and channels of operational and service supply.

Ensure uniform implementation of the APMC acts to motivate confidential sector investment in infrastructure progress.

Hasten harmonization of indirect taxes with the aid of implementation of items & offerings Tax, as aimed in the present budget, to approve uniform tax structures throughout the country and lessen monstrous rate differences in merchandise.

Trade in attitude-Orienting stakeholders in the direction of ‘demand and profit pushed production’

individuals across the Agri value- chain need to shift their center of attention from looking to market ‘what’s produced’ to producing ‘processable sorts and marketable products’ assembly global great requirements and traceability requisites, duly adopting need-based viable technologies and first-class controls.

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