The domestic food processing sector is one of the largest employment generators in India. With the aid of cheap labour and abundant availability of natural resources, the country has managed to improve its position in the global market.

Processed food products constitute more than 35% of the total food market in India. It has been noticed that the processed food industry has been gradually growing at 14% since the last few years. It is expected that the industry will scale great highs in the future due to factors such as high demand from domestic consumers, exceptional supply strengths and support from the Government of India (GoI).

The continuous population spurt has increased the demand for food products in the domestic market. As a result, farmers are compelled to increase the productivity of crops, especially staple crops such as rice, wheat and pulses, which constitute the basic requirements of consumers. 

“The supply strengths include abundant natural resources that are available to farmers to improve crop production. Farmers are bestowed with conducive agro-climatic zones, proper irrigation facilities and availability of different soil types that are suitable for cultivating different crops. These have further bolstered crop production in the country,” says Murtaza Bharmal, CEO of M.S.Y Traders, a mid-sized agro food manufacturer and exporter in Pune.

Besides consumer demand and availability of natural resources, the support provided by the policy makers has also proved to be beneficial for farmers. It is due to the initiatives of the Ministry of Food Processing Industries (MoFPI) that a number of support schemes have been introduced to bring about growth and development in the food processing industry. Infrastructure has developed significantly and robust R&D facilities have improved the food quality standards in India.

Challenges in the industry

Although the food processing industry has been able to record high growth, there are certain areas that need further improvement. India processes only 2.2%  of its cultivated fruits and vegetables as compared to Thailand that processes 30% of its cultivated crops. Adoption of latest technology is therefore imperative for players engaged in the perishable food segment. Therefore, more storage chains should be set up in order to store the perishable cultivated crops for a longer period of time.   

“The quality standards and production of crops have been affected due to non-availability of raw materials such as superior quality seeds and lack of usage of high tech machinery. Once these raw materials and technologies are made available, farmers would be able to ensure surplus crop production for domestic consumers as well as engage in export activities,” says Panneer Selvam, CEO of Selvam Impex, a large-sized rice and pulses manufacturer and exporter in Chennai. 

Although the domestic market has a huge supply of cheap labour, farmers are unable to bring about a drastic transformation in the industry. The labourers lack training and knowledge about the latest technology essential for high crop production. Therefore, GoI should provide training sessions to farmers and the labourers to gain knowledge about modern machinery as well as latest trends in the food processing industry.      

Sabrina Mitchell