Food processing and related industries in India

FOOD-PROCESSING SECTOR

• A well-developed food processing sector with higher level of processing helps in the reduction of wastage, improves value addition, promotes crop diversification, ensures better return to the farmers, promotes employment as well as increases export earnings.

Status of Food Processing Sector

• The sector constituted nearly 8.83% and 10.66% of Gross Value Added (GVA) in Manufacturing and Agriculture sector respectively in 2017-18 at 2011-12 prices.
• Nearly 7 million persons are engaged
• The value of processed food exports in 2018-19 was $35.30 Billion accounting for about 10.69% of India’s total exports.
• The annual value of harvest and post-harvest losses of major agricultural produces at national level was at Rs.92,651 crore calculated using production data of 2012-13 at 2014 wholesale prices.

Mega Food Parks

Avantee mega Food Park in Dewas (Madhya Pradesh) was inaugurated. This is the first food park of central India

• Draft National Food Processing Policy in 2019 to boost the food processing industry.
• A well-developed food processing sector with higher level of processing helps in the reduction of wastage, improves value addition, promotes crop diversification, ensures better return to the farmers, promotes employment as well as increases export earnings
• This sector is also capable of addressing critical issues of food security, food inflation and providing wholesome, nutritious food to the masses.

PM Kisan Sampada Yojana (Scheme for Agro- Marine Processing and Development of Agro-Processing Clusters).

• Central Sector umbrella scheme of Pradhan Mantri Kisan Sampada Yojana (PMKSY) of Ministry of Food Processing Industries (MoFPI).
• comprehensive package resulting in creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet.
• allocation under PMKSY is Rs.6,000 crore for the period 2016-20 coterminous with the 14th Finance Commission cycle.
• Seven schemes are implemented under PMKSY:
• Mega Food Parks;
• Integrated Cold Chain and Value Addition Infrastructure;
• Creation/Expansion of Food Processing & Preservation Capacities (Unit Scheme);
• Infrastructure for Agro-Processing Clusters;
• Creation of Backward and Forward Linkages;
• Food Safety and Quality Assurance Infrastructure;
• Human Resources and Institutions.
• MoFPI is also implementing central sector scheme "Operation Greens" as a vertical of PMKSY since November 2018.  

Mega Food Parks (MFP)

• Introduced in 2008
• aims at providing modern food processing infrastructure along the integrated value chain from farm to market with a cluster-based approach.
• operates in “hub and spoke model” comprising Collection Centres (CCs) and Primary Processing Centres (PPCs) as spokes and a Central Processing Centre (CPC) as hub.
• includes creation of infrastructure for primary processing and storage near the farm in the form of PPCs and CCs and common facilities and enabling infrastructure like roads, electricity, water etc. at CPC. 
• These PPCs and CCs act as aggregation and storage points to feed raw material to the processing units located in CPC.
• These are demand-driven projects and facilitate food processing units to meet environmental, safety and social standards.
• MoFPI does not establish MFPs on its own but assist Special Purpose Vehicle (SPV) registered under the Companies Act and State Government/State Government entities/Cooperatives to establish MFPs.
• Financial assistance is provided as grant-in-aid @ 50% of eligible project cost in general areas and @ 75% in NE Region and difficult areas [Hilly States and Integrated Tribal Development Project (ITDP) areas] subject to a maximum of Rs. 50 crore per project.

Significance of MFP Scheme

• facilitate establishment of an integrated value chain, with food processing at the core and supported by requisite forward and backward linkages.
• bring together farmers, processors and retailers and link agricultural production to the market to ensure maximization of value addition, minimization of wastages and improving farmers’ income.

Progress achieved under MFP scheme

• Government has so far approved 42 Mega Food Parks. However, only 18 MFPs have been operationalized
• Modern processing and preservation capacity of 23.02 Lakh MT & 63 PPCs with farm level infrastructure of 2.45 Lakh MT have been created so far in operational parks.

Challenges of Mega Food Parks

• The units in the MFP cannot own land and, therefore, they cannot use the land as collateral to take loans from banks
• Delay in statutory clearances from State Government/Agencies.
• There are problems of change in Detailed Project Report during implementation of the project, delay on the part of promoters to contribute their equity, change in promoters midway.
• The approach of ‘one-size-fit-all’ has not been able to attract investors with different investment requirements.
• The SPVs complaints that skill levels of workers are poor and skilled workforce is not cheap.
• The timeline of 30 months to make the park operational is too tight and it does not take into account the contingencies.
• The awareness of the scheme is low.

Way Forward

Draft Food Processing Policy 2019

• Aim: develop the sector along with increasing investment in the sector six-fold by 2035.
• Objectives: Reducing wastage at farm level, creating more employment opportunities, ensuring higher deployment of credit and infrastructure and skill development in the sector.

Key features of the policy:

• Infrastructure development by Identifying, developing and promoting new agriculture processing and production clusters, and supporting the development of logistics infrastructures such as cleaning and packing facilities.
• Financial incentives like capital investment subsidy for setting up new food processing units and technology up-gradation of existing units and lower Goods and Services Tax rates on food products and food processing machineries.
• Encouraging employment, training and skill development through measures like facilitating farmers to set up food processing units, promoting food processing training cum incubation centers and starting new courses and conducting research in food technology, entrepreneurship, and management.
• enhanced role of States in development of food parks, where the state government would
• allot land, on priority basis, to such parks to promote agri & food processing industry apart from support setting up of such parks in their respective states from their own resources.
• extend incentives viz. capital investment subsidy, stamp duty exemption, conversion charges to food parks and the units set up in such parks, under their respective policy.
• identify crop production and processing clusters using space technology and other IT tools and provide end to end value chain solution and backward and forward linkages.
• Mega Projects, as defined by Centre and the states governments, would be supported in fast track mode and will receive priority in the allotment of land, sheds in industrial parks, electricity, water connection, environmental clearances etc.
• Special incentive package will be provided by the central and state governments to promote such projects which will support development of a cluster of smaller units around it.
• “Specialized Agro Processing Financial Institutions” (SAPFI) for the food processing sector through appropriate incentives. This will ensure easier access to credit to MFPs.
• Cold chain and Food Parks have been declared as infrastructure to ensure greater flow of funds to the sector on easier terms.

PM FORMALIZATION OF MICRO FOOD PROCESSING ENTERPRISES SCHEME

Ministry of Food Processing Industries (MoFPI) launched Centrally Sponsored ‘PM Formalisation of Micro food processing Enterprises (PM FME) scheme’ as part of Atmanirbhar Bharat Abhiyan.

• Objective: To provide financial, technical and business support for upgradation of existing micro food processing enterprises.

Features

• Aim to generate total investment of Rs 35,000 crore, 9 lakh skilled and semi-skilled employment and benefit 8 lakh units through access to information, training, better exposure and formalization.
• One District One Product (ODOP) approach to reap benefit of scale.
• States would identify food product for a district that could be a perishable produce or cereal based product.
• focus on waste to wealth products, minor forest products and Aspirational Districts.
• Support for common infrastructure and branding marketing for ODOP products.
• Micro enterprises will get 35% subsidy on project cost, with a ceiling of Rs 10 lakh, for capital investment along the value chain.
• Seed capital @ Rs. 40,000/- per SHG member would be provided for working capital and purchase of small tools.
• National Institute of Food Technology, Entrepreneurship and Management (Sonipat, Haryana) and Indian Institute of Food Processing Technology (Thanjavur, Tamil Nadu) (both under MoFPI ) would be provided support for training of units, product development etc. with special focus on capacity building and research.
• Funding pattern: Outlay of Rs 10,000 crore with sharing mechanism as 90:10 for North Eastern and Himalayan States, 60:40 for other states, 60:40 ratio with UTs with legislature and 100% by Centre for other UTs.
• implemented over a period of five years from 2020-21 to 2024-25.