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Changing face of the Indian food processing industry
Wednesday, 16 September, 2009, 08 : 00 AM [IST]
The past decade has witnessed a radical development in India's food processing sector. The growth of this industry is expected to change the way people perceive food and their eating habits. Yashodhan Jadhav maps the evolution of the processed food sector, proposed development plans and upcoming trends in India.

The food processing sector in India is poised to be one of the largest in terms of production, consumption, export and growth prospects. The government too has prioritised its focus on this sector and bestowed it with a number of fiscal reliefs and incentives to commercialise and add value to the agricultural produce. The focus is also directed towards minimising pre and post harvest wastage, employment generation and export growth. While India's food processing industry features an array of products like fruit and vegetables, meat and poultry, milk and milk products; other consumer product groups like confectionary, chocolates and cocoa products, soya-based products, mineral water and high protein food also falls under its purview. As per the figures given by the National Committee on Food Processing & Regulatory Affairs, the food processing sector received investments worth USD 144 million between 2007 and 2008, as against USD 5.7 million in the previous year. During April 2008 - January 2009, the sector received USD 760 million worth of investments.

The Food Processing Industry: In Retrospect

With an aim to streamline the meat and poultry processing industry in India, the government has launched the National Meat and Poultry Processing Board (NMPPB) in New Delhi on February 2009. The new board will have 19 members and will address issues related to the production of clean and hygienic meat and meat products. The board will also go a long way in helping the rural economy through employment generation. Further, NMPPB will work towards raising domestic standards in meat and poultry processing to international levels, developing uniform and effective meat quality testing systems and addressing environmental pollution issues arising out of the conditions, which is now prevalent in the meat industry. The cabinet had given the approval for the board's set up, with an outlay of Rs 14.64 crore (Rs 146.4 million)

Setting up Mega Food Parks

Similarly a sum of Rs 3,700 crore has been assured in order to set up 10 mega food parks in the first phase of the 11th five-year Plan. This includes Rs 2,500 crore-investment from individual units, Rs 700 crore from special purpose vehicles (SPVs) and the Centre contributing Rs 500 crore. A total of 30 mega food parks are expected to be set up during the 11th Plan. Each food park is expected to have 30 units, which are collectively expected to attract Rs 250 crore. The SPV, which will require an investment of Rs 120 crore, will include the government's contribution of Rs 50 crore. Hence, each park will attract an investment of Rs 370 crore. Apart from private entities, government agencies are also allowed to be part of the SPV. Consequently, the West Bengal Horticulture Development Corporation and Assam Industrial Development Corporation are stakeholders in their respective state mega food parks.

The parks will be set up in Chittoor (AP), Chikmagalur (Karnataka), Dharmapuri (Tamil Nadu), Pune (Maharashtra), Jalandhar (Punjab), Jangipur (West Bengal), Rai Bareilly (Uttar Pradesh), Haridwar (Uttarakhand), Nalbari (Assam) and Ranchi (Jharkhand). Private partners, who have taken part in the SPV, include Patanjali Ayurved of Ramdev fame in Uttarakhand, Shrei Infrastructure in West Bengal, Unity Infra in Punjab and Chordia Food Products in Maharashtra. For the SPV to be approved, it should have a minimum of five members, out of which one should be from the food processing industry. Each mega food park will have a minimum catchment area of five districts. Each will incorporate a chain developing from the farm gate to the retail shelves, with collection and distribution centres and central processing centres in between; functions like sorting, grading and packaging along with irradiation and food incubation-cum-development will take place, as well. The food processing ministry hopes that the initiative will be a commercial success.

Some staggering facts

India has 184 million hectares of cultivable land and the country produces 90 million tonnes of milk (highest in the world), 150 million tonnes of fruit and vegetables (second largest), 485 million livestock (largest in the world), 204 million tonnes food grain (third largest), 6.3 tonnes fish (third largest), 489 million poultry and 45,200 million eggs. In spite of having a vast production base, the processing level is low - two per cent in fruits and vegetables, 26 per cent for marine products, six per cent for poultry and 20 per cent for buffalo meat. With only 1.5 per cent share of India's export of processed food in global trade; there lies immense potential for investment and development in this sector.

Indian Grape Processing Board

In early 2009, the government launched the Indian Grape Processing Board (IGPB) in Pune, Maharashtra. This board will provide a platform for the advocacy of the Indian wine sector. The board's major objectives are to formulate a vision and action plan for the Indian wine sector's growth including research and development for quality upgradation in new technologies/processes; to collaborate and advise wine-grape growers, the wine processing industry, central and state governments on commercial, regulatory and technical issues related to the Indian wine sector, including best practices in viticulture; to increase farmers' income and employment generation, with a particular focus on rural areas; to encourage cluster farming, contract farming and farm diversification; to bring the benefits of value addition to the farming community and farmers fetching remunerative prices for their produce; co-ordinating with premier Research and Development (R&D) institutes in order to identify and develop appropriate root-stock and wine varieties of grapes suited for different geo-climatic regions of India.

Annual grape production in the country is estimated to be 1.6 million metric tonnes and area under cultivation is about 60 thousand hectares. Approximately 80 per cent of total production, irrespective of variety, is consumed fresh. Of the total grapes produced in the country, about one per cent is processed into wine. The Indian wine market is growing rapidly at 25-30 per cent per annum for the last five years.

The food processing sector is likely to be the driving seat for the Indian economy. At present, the sector is growing at the rate of 15 per cent per annum; however, the sector's future growth depends on adherence to safety and quality standards, infrastructure facility, capacity building, skilled manpower, and rationalisation of tax structure, opined Subodh Kant Sahai, Union Minister for Food Processing Industries. The food processing sector needs strong venture capital arrangements, either from the government or via Private-Public Partnership (PPP) mode, as banks do not give priority to sectors, which fall under perishable segment.

Research and Development

In August 2009, Sahai said that the government was planning to formulate a separate policy for India's food processing industry and develop R&D activities in the sector. The minister addressed this topic at a workshop on 'New Perspectives in Research and Development in the Food Processing Sector,' jointly organised by the ministry and the Federation of Indian Chambers of Commerce and Industry (FICCI). The proposed new policy would lay special emphasis on PPP for giving a commercial orientation to
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