RSTV - The Big Picture: Food Processing - A Game Changer for Indian Economy?

Context:

  • The Prime Minister recently inaugurated World Food India 2017 at Vigyan Bhavan, New Delhi.
  • India also launched Pradhan Mantri Kisan Sampada Yojana under the guidance of visionary leader PM Narendra Modi to create world-class food processing infrastructure.

Analysis

  • India being one of the biggest food producers of the world is in a very advantageous position to become a hub of the food processing industry.
  • This can trigger an investment pull of US$ 5 billion benefiting 2 million farmers and create more than half a million jobs.
  • Prime Minister also made a pitch to increase foreign investment in India to global food companies like Nestle and Unilever along with overseas policymakers highlighting the World Banks’ ease of doing business ranking in which India has jumped 30 places being at 100th
  • Food processing is an important element of the Indian manufacturing industry as it can further boost the Make in India program.

Challenges faced by the food processing industry in India:

  • India just has 2.2% of exports out of total global exports in food processing.
  • Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) barriers impact Indian export significantly.
  • Poor warehousing and storage capacity, upgrading Agri infrastructure, and lack of facility by a dedicated agency to the farmers also account to the crisis in the development of this sector.
  • Since the Food Safety and Standards Authority of India (FSSAI) facilitates post-production, there is a lot of issues to be addressed for pre-harvest.
  • Lots of inorganic chemicals are also used in India for agricultural production which needs to be shifted to organic ones. There are approximately 67 pesticides found in Indian food processing products by SPS.
  • Gross capital investment in agriculture infrastructure is also very meagre.
  • Meat is also affected much and lots of cattle mandies are getting abandoned due to socio-political problems. This affects the export of canned meat which is having the vast opportunity for India in global markets.
  • The small domestic players are not regulated with respect to global standards, rules and regulations which is potentially hindering the growth in exports.
  • Change in Global food consumption pattern has influenced a change in local also.
  • Food processing industries are mostly confined to coastal areas rather than internal areas with good food produce. Thus increasing the final cost as a result of increased transport cost

Solutions:

  • Presently, India has to focus on the development of agricultural infrastructure by enhancing public investments in the agriculture sector.
  • India is an agrarian economy with lots of laborious farmers and skilled entrepreneur that can tap the benefit from the food processing industry.
  • Secondly, focus on connecting the farms with the mandis, linking them with good warehouses and increasing the storage capacities should be considered.
  • The productivity of the farm sector is also to be increased by using modern agricultural practices and technologies.
  • There is a need for a broad policy framework with regards to the exports of the processed vegetarian and non-vegetarian food from the grass-root level.
  • Food processing food park concept can be replicated across the country as it offers an alternative to farmers.
  • There is a need to promote big investments through big brands globally like Nestle, Pepsi, Kargil etc.
  • The rules must be rigorously imposed and must be stood by the entire domestic and international companies and deliver quality products.
  • The need of the hour is to change the farm patterns and diversify the production of the crop.
  • There must be a focus on the organic evergreen revolution that will focus on traditional and new food items and increase productivity.
  • There is a need of adopting good practices from best-producing states and from around the world also.
  • There should be more awareness towards the education of food processing and more institutes must be opened up.
  • New technologies can be brought in to be used which can also improve the skills of the students and entrepreneurs.
  • Food processing can be a new avenue for the students to get trained to be an entrepreneur in this sector.
  • There is also a need to strengthen the university-industry linkage for food processing sector which will increase the awareness and productivity that will lead to better exports globally.

Way forward

  • Food processing sector can help the government’s mission to double the farmer’s income, but it cannot come just by giving them higher prices of their products as it will lead to inflation.
  • To make India a supply chain hub and attract investment, a strong domestic market helps.
  • The Indian dishes have made its way abroad, for instance, the national dish of Britain Chicken Tikka Masala is from India. Hence blending Indian skills with international technology can take India far away in this sector.
  • Now at the time when agriculture in India is about to take a big leap, it is to be ensured that the farmers’ produce gets the good market at fair price to keep up the agricultural productivity.
  • It is not only the consumption of main cereals that matters, but the surplus has also to be converted into snacks for consumption in India and abroad.
  • The system as a whole must encourage the Indian producers to better package and brand them.
  • There is a change in the lifestyle of the people towards the ready food to consume but what matters is maintaining quality and hygiene and its strict enforcement.
  • Substituting the import scenario in this sector will provide lots of opportunities for entrepreneurs to manufacture and export to other markets.

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