Govt. should focus on filling gaps in infrastructure availability, says ASSOCHAM

Apex industry body ASSOCHAM has urged the government to fill prevailing gaps in infrastructure availability, awareness and efficiency of value chain that have hampered the growth of food processing sector in India.

With Union Food Processing Minister Harsimrat Kaur Badal set to discuss various issues facing food processing sector, including foreign investments, with various government departments and other stakeholders today, ASSOCHAM has highlighted that inefficiencies in supply chain, absence of economies of scale, technology up-gradation and quality issues are certain key challenges dogging India's Rs. six lakh crore worth food processing industry.

"There is a need to lure more investments in infrastructure to bring in more organized sector investments into food processing as currently unorganized sector forms major part with a share of about 42 per cent," said Secretary general ASSOCHAM, DS Rawat.

Growing at a compounded annual growth rate (CAGR) of about 10 percent, India's food processing industry accounts for almost 32 per cent of total food market and contributes 9-10 per cent to gross domestic product (GDP) in agriculture and manufacturing sector and ranks fifth in terms of production, consumption and exports.

Grains processing occupies maximum share in food processing sector accounting for 40 per cent of the industry size followed by horticulture and oil seed processing.

With over 9,000 registered factories in food processing sector, Andhra Pradesh accounts for over 25 per cent share in over 35,800 total registered food processing factories across states in India followed by Tamil Nadu (14.5 per cent share), Maharashtra (8.2 per cent share), Punjab (7.7 per cent share) and Uttar Pradesh (5.7 per cent share).

Challenges faced by food processing sector in India:

Due to proliferation of unorganized players in the processed food segment and as the processing activity being highly diffused in India, achieving economies of scale to increase output is constrained.

Besides, small scale of most food processors in India prevents any timely up-gradation of technology, which is vital to improve quality of product.

Though many quality norms and measures for domestic and international trade have been laid out for processed food, many small scale processors lack necessary monitoring mechanisms to implement these quality norms.

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 both in India as a whole.

Despite production strengths, climatic advantages and availability of cheap labour force, there are major challenges that have stood underway the potential development of food processing sector in India.

Unlike farm level skill development, food processing sector requires a more intensive capacity building accompanied by specific skill sets.

Augmenting knowledge and skill levels of the workforce, and youth in particular, is essential to enhance resource productivity, boost innovation, manage finance, mitigate risks and improve decision making ability.