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The food processing sector in India has the potential to reshape the country’s economic landscape going beyond the reduction of wastage and upliftment of farmers’ incomes. This article delves into the current state, growth trends, key challenges, and the strategic initiatives needed to position India as a global leader in processed food exports by 2047.
India’s journey towards becoming a developed country is intricately linked with the growth of its food processing sector. This sector, bridging the gap between farmers, consumers, and international markets, has the potential to revolutionise agriculture, uplift rural livelihoods, and significantly contribute to economic development.
The food processing industry, currently contributing less than 10% of total food production in India, has witnessed robust growth from 2015 to 2022, boasting an average annual growth rate of 7.3%.
The sector’s contribution to India’s total GDP has soared by 27% over the last five years, underscoring its substantial impact on the country’s economic landscape. It has contributed 10.54% to the gross value added (GVA) in manufacturing and 11.57% in the agriculture sector during 2020-21.
However, the food processing sector must quadruple its contribution (to ~7.2%) to the overall GVA for India to achieve a developed nation status by 2047. Various growth scenarios and projections emphasise the urgency of devising a robust strategy to attain this remarkable target.
Despite remarkable growth, the sector also faces significant challenges. This is depicted in the graphic below. While the sector enjoys the benefit of 100% foreign direct investment (FDI) under the automatic route, the recent years have seen challenges in sustaining FDI inflows due to factors such as COVID-induced lockdowns, infrastructural limitations and global competition. Recognising these challenges is crucial to addressing bottlenecks, attracting foreign investments, fostering infrastructure development and ensuring sustained growth.
India’s food processing sector offers significant potential for expansion, presenting lucrative investment opportunities. Beyond contributing to economic growth, such investments play a vital role in empowering farmers and ensuring the sustainability of agricultural practices. Developing robust supply chains that connect farmers to processing and marketing is essential. Significant investments in rural infrastructure, including grading and packing centres, storage facilities, transportation, and testing laboratories, are imperative for unlocking the sector’s full potential.
The Government of India has taken several steps to address the challenges faced by the food processing industry. This includes launching the Pradhan Mantri Kisan Sampada Yojana (PMKSY) and the Food Processing Industries Scheme (FPIS). However, more needs to be done to create a favourable environment for the industry to thrive. Here are some of the steps being taken by the Government of India to foster growth in the sector:
The journey towards ‘Viksit Bharat by 2047’ is linked to the transformative potential of the food processing sector. From leveraging global best practices to addressing challenges and fostering innovation, a holistic approach is essential. The sector’s role is not confined to economic growth but extends to shaping a resilient and thriving India. As India aspires to become a developed country, the food processing industry stands as a testament to its ability to innovate, adapt, and lead on the global stage. By recognising its pivotal role, aligning policies, and fostering collaboration, India can truly usher in a new era of development through its vibrant and dynamic food processing sector.