Sarat Chandra IAS Academy

UPSC Civils Daily Mains Question 27th April 2020

Q) The Food Processing Industry (FPI) in India has emerged as one of the important segments in terms of its contribution to the Indian economy. Discuss the significance of FPI in India. What are the various Initiatives taken by the Government for development of FPI in India? What are the challenges India has been facing in FPI? Suggest measures for the promotion of food processing industries.


The Food Processing Industry in India is a sunrise sector that has gained prominence in the recent years. Food processing has become an integral part of the food supply chain in the global economy, and India has also seen growth in this sector in the last few years. The food processing industry is of enormous significance as it provides vital linkages and synergies that it promotes between the two pillars of the economy, i.e. agriculture and industry

Significance of FPI:

  • Creates Employment: Food Processing being a labour intensive industry will provide localized employment opportunities.
  • Doubling of farmers’ income: With the rise in demand for agri-products the price paid to the farmer will increase, thereby increasing the income.
  • Reduction of food wastage: NITI Aayog estimated annual post-harvest losses of close to Rs 90,000 crore. Diverting extra produce to FPI, the wastage in the post-harvest could be reduced, leading to better price realization for farmers.
  • Curbing Migration: As it creates employment in rural areas it reduces migration from rural to urban and thus will reduce the push factor in source regions of migration.
  • Reduces Food Inflation: Processing increases the shelf life of the food thus providing level play between supply and demand thereby controlling food-inflation.
  • Enhances nutrition levels: India has a significant proportion of population which is undernutrition, stunted and wasted. Processed foods when fortified with vitamins and minerals can reduce the nutritional gap in the population.
  • Diversification of crops: Different types of inputs required for FPI creates an incentive for the farmer to grow and diversify crops.
  • Trade and Foreign exchange: It is an important source of foreign exchange by allowing processed food exporting to other parts of the world, thereby increasing the trade with other countries

Various Schemes by Government for promoting FPI:

  1. National Food Processing Policy 2017
    • The main focus of the policy is to reduce wastages, increase value addition, ensure better prices for farmers while ensuring availability of affordable and quality produce to consumers.
    • It also address the challenges of malnourishment and malnutrition by ensuring availability of nutritionally balanced foods
  2. National Mission on food processing: The basic objective of NMFP is to substantial participation of State Governments / UTs for decentralization of the food sector. The scheme helps for better outreach and to provide more flexibility to suit local needs.
  3. Pradhan Mantri Kisan Sampada Yojana (PMKSY): It is an umbrella plan that consolidates different progressing plans like Mega Food Parks, Integrated Cold Chain, Value Addition Infrastructure, Food Safety, and Quality Assurance Infrastructure, Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages and Creation and Expansion of Food Processing and Preservation Capacities.
  4. Mega Food Parks Scheme: It helps for giving a component to interface rural generation to the market by uniting farmers, processors and retailers to amplify value addition, limiting wastage, expanding income of farmers and creating employment opportunities especially in the rural sector.
  5. Scheme of Cold Chain, Value Addition and Preservation Infrastructure: The goal of the scheme is to incorporate cool chain and conservation framework facilities, with no break, from the farm gate to the customer. It envelops pre-cooling facilities at production sites, reefer vans, mobile cooling units as well as value addition hubs
  6. Modernization of Abattoirs scheme: The major goal of the Scheme is a form of processing and preservation capacities and modernization and growth of obtainable food processing units with a vision to increase the level of processing, value addition leading to a diminution of wastage.
  7. Make in India: A portion of the Make in India campaign, the food processing sector was recognized as one of the 25 concentrated areas to draw a policy ecosystem in financial, technological and human resources into the zone.
  8. Food Processing Fund: A special fund in the NABARD worth INR 2,000 crore, chosen as the Food Processing Fund, was set up in the FY 2014-15 for offering reasonable credit for food processing units in Mega & Designated Food Parks.
    • Allowing 100% FDI via automatic direction and reduction in excise duties in this sector boosts the FPI.
    • GOI has entrusted specialized agro-processing financial institutions to finance/refinance the food processing sector, and has launched neoteric initiatives such as ‘Operation Greens’, to monitor price fluctuations.

Challenges in Food Processing Industries:

  • Lack of good laboratories in India: Food export to US and EU demands high quality standards. India lacks good laboratories to check heavy metal and other toxic contamination in food.
  • Consumers currently lack awareness of several nutritional and food safety and quality aspects thereby reducing nutritional value in foods.
  • Lack of material resources necessary for development.
  • Extensive use of fertilizers, pesticides and other chemicals has raised concerns about the quality of food
  • Unavailability of reliable handling and transportation system.
  • Inadequate cold storage faculties
  • Higher cost of raw material and packaging
  • Continued dependence on seasonal products
  • Lack of skilled workforce.
  • Limitations in supply chains.

Suggested measures:

  • There is a need to establish risk-sharing mechanisms, fiscal incentives and partnership models for creation of infrastructure for logistics, storage and processing.
  • The infrastructure and storage capacities have to be increased with enhanced quality and quantity
  • Transition from staple food crops to diversification of crops is needed with good agriculture practices.
  • Encouraging the domestic startups and industry than the international companies.
  • New technologies have to come into force with improvised skill in promoting agriculture and in processing activities.
  • A comprehensive policy will ensure that various initiatives across the departments are aligned to the overall goal of ensuring availability, awareness, affordability, access, quality and safety of food.

Food processing is one of the promising sectors in India which offers unique opportunities in production and export of processed food. The future prospects of food processing industries are bright. India has an advantage of huge agricultural land and it should tap this potential favorably and become an ideal sourcing destination for food products internationally.

To summarize, Major food processing divisions with high progress potential includes dairy, poultry, ready to eat and bakery foods. Indian government has also launched numerous schemes to promote the food processing sector and made huge investments.

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