Share of food processing in GVA needs to be raised to 7.2%: Report

The contribution of India’s food processing sector to the country’s gross value added (GVA) needs to quadruple to 7.2 per cent from the existing just 1.8 per cent if the nation aspires to become a developed country by 2047, consultancy firm Grant Thornton Bharat said in a report.

The report, which was released today, also identifies challenges that the sector faces in achieving its desired potential, including food safety and sustainability, to labor shortages.

“Future strategies must be aligned to achieve the target of 10.4 per cent CAGR by 2047,” the report said.

It said to achieve food processing’s targeted share in GVA, significant investments are needed in rural infrastructure such as grading and packing centres, storage facilities, transportation, and testing laboratories.

This is because increasing agricultural output without investing in processing facilities can harm farmers’ earnings and cause rural distress.

Also, the development of strong supply chains that connect farmers to processing and marketing is crucial, the report added.

It said there is also a need to strengthen primary processing at the farm level, including sorting and grading, packaging, drying, etc., while focusing on improved levels of value addition.

“An integrated cold chain can be an industry driver that can transform India’s rural economy,” the report said.

India’s food processing industry is still at a nascent stage, accounting for less than 10 per cent of the total food produced in India, the report said.

It said that studies have shown that the level of food processing in India is 4.5 per cent for fruits, 2.7 per cent for vegetables, 21.1 per cent for milk, 34.2 per cent for meat, and 15.4 per cent for fish.

Between 2015 to 2022, the food processing sector has grown substantially, averaging an annual growth rate of around 7.3 per cent, compared to approximately 4.87 per cent in the agriculture and allied sectors, at 2011–12 prices.

The report said that the food processing sector has also emerged as a pivotal segment of the Indian economy, contributing significantly to GDP, employment, and investment.

In 2020–21, the sector constituted 10.54 per cent of gross value added (GVA) in manufacturing and 11.57 per cent of GVA in the agriculture sector, both at 2011–12 prices.

Within the registered factory sector, the food processing industry accounts for 12.38 per cent of the total employment, engaging roughly 1.93 million individuals, the report said.

The unregistered food processing sector also employs approximately 5.1 million workers, as reported in the NSSO 73rd Round report.

“The primary sectors comprising the Indian food processing industry include grains, sugar, edible oils, beverages, fisheries, fruits, vegetables, and dairy products,” the report said.