India’s food processing sector is growing at a fast pace at 8.4%, which is one of the fastest growing sectors in the Indian economy. On 29th April, 2015, the Union Minister for Food Processing Industries, Harsimrat Kaur Badal indicated that India had the potential of becoming a world leader in the food processing sector. Importantly, this sector could close the divide between the farmers and the consumers. This sector also generates huge employment opportunities. For example, in 2012-13, it constituted 13.04% of employment generated in all registered factory sectors in India.
The sector has performed very well over the past year. Industry indicators like Index of Industrial Production (IIP) for factory output was 5.7% (April-February) in 2014-15, compared to 2.1% over the same period in 2013-14. This increase has been largely due to growth in the rice (11.8%), edible hydrogenated oil (5.6%) and milk (1.4%) processing sectors. Importantly, as high as 100% foreign direct investment (FDI) is allowed through the direct route, except for items under micro and small enterprises (MSE). The food processing sector, which is a major sector under Prime Minister Narendra Modi’s “Make in India” campaign attracted nearly USD 422 million FDI over the April-January (2014-15) period.
Over the past 6 months, the average inflation rate has declined appreciably: 13% to 5.1% for food articles, and 1.8% to 1.5% for manufactured food products.
One of the major challenges was stopping the wastage of perishable food items, but every effort was being made to arrest the wastage and thereby ensuring higher returns for the farmers.
The central government is looking to promote the food processing sector. That’s why it’s investing heavily on development of infrastructure such as cold chains and mega food parks. Importantly, the central government has recently sanctioned 17 new mega food parks in order to attract investment in the area. It will also sanction 30 more new cold chains in the very near future. Therefore, the outlook for the food processing sector appears to be very bright in the present financial year.