Day 15 – Q 1.Assess the export potential of India’s food processing sector.

1. Assess the export potential of India’s food processing sector.  

भारत के खाद्य प्रसंस्करण क्षेत्र की निर्यात क्षमता का आकलन करें।

Introduction

The Ministry of Food Processing, Government of India has defined dairy, fruits & vegetable processing, Grain processing, Meat & poultry processing, Fisheries and Consumer foods including packaged foods, beverages and packaged drinking water segments within the Food Processing industry.

Body

Export potential of India’s food processing sector:

• India’s export of Processed Food was Rs. 31111.90 Crores in 2018-19.
• Land area: India ranks second in terms of availability of arable land with 127 diverse agro-climatic zones, having a share of 11.2% of the total arable land in the world. In addition, the resource-rich country has the sixth largest food and grocery market and fifth largest retail market globally.
• Strategic position: The Indian food processing industry is primarily export orient. India’s geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea.
• Transition phase: Retail, one of the largest sectors in the global economy (USD 7 Trillion), is going through a transition phase in India.
• Quality products: One of the prime factors for non-competitiveness of the food processing industry is because of the cost and quality of marketing channels. 
• Mega food parks: The government has sanctioned 42 Mega Food Parks (MFPs) to be set up in the country under the Mega Food Park Scheme. Currently, 17 Mega Food Parks have become functional.
• Big retailer: Globally more than 72% of food sales occur through super stores. India presents a huge opportunity and is all set for a big retail revolution.
• Organized market: India is the least saturated of global markets with a small organized retail and also the least competitive of all global markets.
• Automatic route: 100% FDI is permitted under the automatic route in Food processing industries.
• Approval route: 100% FDI is allowed through government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India.

Challenges in food processing sector

• Food processing sector supply chain today relate to access, infrastructure, and inadequate information for market linkages. This has led to significant wastage of produced foods in the supply chain.
• Numerous laws, under the jurisdiction of different ministries and departments, govern food safety and packaging. The multiplicity of legislation leads to contradictions in specifications, conflicting approach, lack of co-ordination and administrative delays.
• Processed food is still seen as inferior to fresh foods by consumers.
• Forward and backward linkages are not fully developed to match the global market.
• Expensive to match to international standards in processing, storage and infrastructure.

Conclusion

The Food Processing Sector in India represents an attractive investment opportunity for new players both domestic and international. Demand for processed foods over the next decade will increase rapidly due to the steady economic growth, rising income levels and changing lifestyles.