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Food processing sector need more investment for creating adequate infrastructure and removing inefficiencies in supply chain to boost growth in the sector, industry body Assocham said today.
The association said that inefficiencies in supply chain, absence of economies of scale, technology up-gradation and quality issues are certain key challenges dogging India's Rs 6 lakh crore worth food processing industry.
It demanded that the government should fill prevailing gaps in infrastructure availability.
"There is a need to lure more investments in infrastructure to bring in more organized sector investments into food processing as currently unorganised sector forms major part with a share of about 42 per cent," Assocham Secretary General DS Rawat said in a statement.
He pointed out that just over two per cent of annual production is processed in India, an abysmally low figure when compared to countries like Malaysia, US and China, where around 83 per cent, 65 per cent and 23 per cent of produce is processed, respectively.
"Ensuring a more efficient supply-chain network to boost linkages between food processing industries and farmers, promoting crop planning, extending advisory to farmers to produce top quality processed food, promoting agricultural export zones, encouraging contract farming, developing robust cold storage infrastructure and other related factors can help drive growth and development of food processing industry," the association said.
On challenges faced by the industry, Assocham said that achieving economies of scale to increase output is constrained due to proliferation of unorganised players in the processed food segment.
"Small scale of most food processors in India prevents any timely up-gradation of technology, which is vital to improve quality of product," it said.