The food processing sector is a crucial sector for India’s economy, given its importance in achieving food security, controlling food inflation, and providing wholesome, nutritious food to the masses. Significance of food processing sector is growing due to its large employment generation, boosting farm incomes, reducing massive Agri-produce wastages, enabling value creation. It plays a key role in managing supply-side food inflation. In India, processed food contributed 22.6% share of Agri-food exports in 2021-22. At present, India has 23 Operational mega food parks, 271 Integrated cold chain, 47 Backward - forward linkage projects & 140 Food testing labs.
Post-pandemic there has been a significant shift in consumer patterns towards heathier and more nutritious foods. This led to rising demand for ready to cook, ready to eat meals, quick and healthy snacks. Innovations in the processed food segment growing backed by changing lifestyles, higher disposable incomes, better market connectivity (convenience stores, retail markets, e-commerce platforms) and focus on nutrition. Innovations are being witnessed in terms of products, packaging materials, technologies for increasing shelf life, system automations, food machinery etc. Growth in Food Processing can help India move ahead towards meeting several SDGs including.
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Zero Hunger by improving access to foods and reducing wastages
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No Poverty & Decent Work and Economic Growth given its employment intensive nature and linkage between agriculture and industry
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Good Health and Well Being by allowing access to nutrition
Exports
The exports from food processing industry during 2021-2022 stood at USD 3.2 billion, registering an increase of 39%, as compared to corresponding period of 2020-2021. Although, other miscellaneous processed items accounted for a negligible share in India’s total export, the exports of miscellaneous processed items recorded the highest y-o-y growth of 35% during the given period. On the other hand, the export of processed vegetables and processed meat witnessed a decline of (-) 2.92 and (-) 9.80 % during the given period.
EXPORT OF SELECT PRINCIPAL COMMODITIES FROM INDIA IN FOOD PROCESSING INDUSTRY
(IN USD MILLION)
Foreign Direct Investments
FDI of 100% is permitted under the automatic route in the food processing industries from 2016. Further, in 2017, 100% FDI under the Government approval route for retail trading, including through e-commerce, is permitted in respect of food products manufactured and/or produced in India. Food processing sector attracted over USD11.79 billion of FDI during April 2000 - December 2022.
Outlook
Going Forward, India has the potential of becoming global champions in food processing sector due to its strong production numbers specifically with several horticulture commodities and their processed products like Mango, Potato, Citrus, Banana, and Pomegranate. Further, the packaged food segment has been reporting double digit growth since 2018 with bakery products and dairy products accounting for a major share. Food processing sector’s projected growth is also supported by shift in consumer preference for branded ready to cook, ready to eat, quick and healthy packaged products, amid rising awareness of healthy living. The growth is further fuelled by increasing competition in the segment with new product launches and new entrants leading to increased choices for consumers. Moving forward, the segments of cultivated meats and alternative proteins are expected to gain focus, in tandem to global trends. Further, rising health concerns are leading to growth in retail volume and current value sales for organic packaged food in India and globally.
