With effective implementation of technology and adequate financial subsidy, the Government of India aims to uplift the food processing industry

The Government of India (GoI) is striving hard to upgrade the food processing sector of the country. It has been noted that the country has largely been unable to cater to the basic needs of its consumers as it lacks latest machinery, technological knowhow as well as financial subsidy to bolster crop production.

The domestic market is a basket full of rich resources; however, these have to be utilised fully by the players engaged in the food processing sector. Piruz Khambatta, president of the All India Food Processors’ Association (AIFPA), has pointed out that India is bestowed with 26 types of diverse climatic belts, largest irrigated area, variety of fruits and vegetables and supportive export measures undertaken by GoI. Proper usage of these available resources will aid the country to attain global standards.

GoI initiatives

Food and groceries account for 31% of consumers’ total expenditure. The domestic agro-produce market has managed to acquire the third position in the global market. This has provided a fillip to the country’s economy.

“GoI has aided the food processing industry to improve export facilities like lowering duties on goods, thereby helping traders to increase their profit margins,” says Ashok Santhal, manager of Nirmal Pvt Ltd, a small-sized agro product manufacturer and exporter in Chennai. The Union government has also established several food parks to minimise wastage and reduce losses incurred by players engaged in the food processing industry.

Bottlenecks to overcome

Despite the country being gifted with numerous natural as well as man-made resources, the Indian food processing industry is unable to maintain a strong foothold in the global market. “One of the key bottlenecks faced by the industry is the lack of proper cold chains. Due to poor cold storage facilities, farmers are unable to store agro products as well as seafood items, which are required to be stored under low temperatures,” says Dilip Bakshi, manager of Agro Limited, a small-sized agro products manufacturer in Pune.

It has been noted that during the time of bumper crop production, there is lack of storage facility in India. As a result, farmers are left with no other alternative but to leave the agro produce in the open for the rodents. Therefore, GoI should ensure that farmers have adequate storage capacity to store huge quantities of cultivated crop and prevent the same from getting damaged. Moreover, storage facilities in India should be designed according to the prevailing climatic conditions.

High transportation cost is another problem experienced by players in the industry. As a result, traders as well as retailers have no other alternative but to pass some portion of the cost onto consumers, thereby leading to high food inflation.

Different value-added tax (VAT) rates levied in different states in India also act as a major bottleneck. GoI should ensure uniformity by levying 4% VAT across the country.

Introducing contract farming

The concept of contract farming should be introduced to improve agro produce. As a result, farmers would be able to fetch an assured income on a regular basis, thereby benefiting them to earn high profits. They can further invest this money to purchase latest machinery and high quality seeds, which will further improve crop production.  

Sabrina Mitchell