Food Processing Industry of India – An Insight

Food Processing Industry of IndiaInsight into Nourishment Industry

Food processing term refers to transformation of raw agricultural produce, by means of processing, into products that can be used as food. Food processing sector can be considered as ligature between agriculture and industry.

After China, India ranks 2nd in agricultural output provider which is facilitated by wide climatic variation with 20 agro-climatic regions. India enjoys all 15 major climates that exist worldwide. Processing of agricultural produce provides lucrative prices for produce benefiting Indian economy. Government realises the high domestic demand and consumption as well as huge foreign market for processed foods.

India offers the largest diversified production base, giving upper hand to channelize its raw material in Food & Beverage Industry.

  • Largest producer of milk– India is the largest producer of milk and second largest producer of fruits, vegetables, cereal pulses.
  • Largest livestock population– India has the largest livestock population of around 512 million, globally comprising of 119 million milch animals, 80.06 million goats and 44.56 million sheep, contributing about 25 per cent to the country’s farm GDP
  • Consumer awareness and preference– Due to awareness and health consciousness people are seeking for organic foods and are willing to pay for nutritional foods.
  • Open export market– International market has shown great demand in Indian processed food. Reason for this hike in demand is also due to many Indians living in foreign countries.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) stated in one of its report in 2017 that food processing industry is expected to reach US$482 billion by 2020. However, in 2019 itself the revenue in food & beverage segments amounts to US$570m. Some of the big names in this sector are PepsiCo, Glaxo-SmithKline (GSK), Mapro Foods, Dabur, Parle, Nestlé, Frito-Lay, and Haldiram, etc.

Why Lacking Behind!

Despite of having such significant backbone of agricultural production, we are able to process less than 10 % of the total produce, making significant loss in the economy, which is quite less when compared to other developing countries which are able to process around 30-50 % of their overall produce.

  1. Weak supply chain– Due to high variety in products and some are highly perishable product. They pass through long food chain which increases the percentage of loss.
  2. Inadequate infrastructure– No Proper Facilities such as packaging facilities, storage, transportation, cold chain for proper storage and transportation of raw material.
  3. No stringent rule on following standards– Low quality processing standard are followed and lenient punishments even if caught make it even worse.
  4. Post-Harvest Losses– Ministry of Food Processing Industry (MoFPI), shared report stating annual loss of US $1.5 billion (Rs 92,000 crores) in respect to post harvest losses showing where we are lacking the most.

Sector & it’s Revenue 

  1. Fruits and vegetables – India is the world’s 2nd largest producer of fruits and vegetables. 25 per cent growth in the sector is expected in total production by 2025.
  2. Milk– India is the largest producer of milk in the world, with the production estimation of 146.3 million tonnes in 2015.
  3. Meat and poultry – India is the largest producer of buffalo meat (1.4 MT in 2015) and the second largest producer of goat meat (0.91 MT in 2015). India is also the second largest egg producer (78.4 billion) and third largest producer of broiler meat (4.2 million tonnes in 2016), globally.
  4. Marine products– Total fish production in India was estimated to be 13.0 MT during 2015-16. Andhra Pradesh was the largest producer of fish with production of 741.3 thousand tonnes during 2015-2016 (up to June 2015).
  5. Grain processing– India is a producer of more than 200 million tonnes of different food grains every year. Total food grains production reached 270.10 MT in FY-16 (As per Ministry of Agriculture).
  6. Consumer food– Among the fastest growing segments in India, it includes – packaged food, aerated soft drinks, packaged drinking water, alcoholic beverages

Future Opportunities

Agriculture will keep on playing a vital role in the Indian economy and food processing will go a long way for providing opportunities for sustainable and profitable agriculture in time to come. The rise in food processing sector can be marked if post-harvest losses can be curbed for which government has sanctioned and launched various schemes like Mega Food Parks, integrated cold chain etc. in food processing sector is great opportunity for private players. There is special need to follow food safety and quality assurance mechanism for achieving several benefits. Stringent quality & Hygienic norms will enable the food processing market to keep up with global competition.