Food processing refers to the transformation of raw agricultural commodities into value-added, marketable, and storable products through physical, chemical, or biological methods. India’s FPS is projected to grow from USD $billion (2023) to $700 billion by 2030.
Challenges of the Food Processing Sector in India
Low Level of Processing – Only ~10% of total agricultural produce is processed (vs 60-70% in developed countries).
Post-harvest losses of 15-20% due to shortage of cold-storage, and transport infrastructure.
Fragmented Supply Chain – 86% of farmers are small/marginal – limits aggregation
High Logistics Cost of 13-14% of GDP (vs 8-9% in developed countries).
Delay in project implementation – Eg- only 25 out of 42 approved Mega Food Parks operational
Regulatory & Compliance Issues – Complex FSSAI norms and licensing delays discourage small processors.
Micro and small units struggle to access formal credit, collateral, and working capital.
Skill gap – Only 3% of the food processing workforce is formally trained
Quality & Safety Gaps – Inconsistent adherence to food safety standards, and limited testing infrastructure. Eg- Rejection of Indian exports by EU.
Negligible R&D (<0.5% of sectoral GVA) – stall innovation in packaging and product design.
Policy Measures Taken by the Government of India
The food processing sector has been recognized as a ‘sunrise sector‘ and a key priority industry under the ‘Make in India’ initiative.
PM-Kisan SAMPADA (2016) – Central Sector Scheme to build a modern processing ecosystem from farm-gate to retail.
Mega Food Parks Scheme – Provides land, utilities, common facilities, effluent plants, R&D labs.
PM Formalisation of Micro Food Processing Enterprises (PM-FME) – Provides 40% credit-linked subsidy, branding support, and training for 2 lakh micro units under the One District One Product (ODOP) approach.
Production Linked Incentive Scheme (PLISFPI) to boost domestic manufacturing.
Agriculture Infrastructure Fund (AIF) – A fund for financing warehouses, cold storage, packhouses, and primary processing units.
Operation Greens (TOP to TOTAL) – Price stabilization fund for tomato, onion, potato, now expanded to all perishable crops
100% FDI in food processing and 100% FDI under Government route for retail of food produced in India.
e-NAM Integration – Linking mandis for better price discovery, quality grading, and seamless movement of produce.
Krishi Udan and Krishi Rail schemes – to ease out freight rates enabling smooth movement of perishables.
Food processing included under PSL to improve access to affordable credit.
National Makhana Board to globally position Indian superfoods like makhana.
Infrastructure Status (HLIS) – Food parks are included in Harmonized List of Infrastructure – enables concessional loans.
Collaboration with Invest India for FDI facilitation, market access, regulatory assistance.
Budgetary Push – MoFPI budget 2024-25 increased by 30.19%, reflecting policy priority.
Way Forward
Develop Smart Food Processing Hubs using IoT, AI, and blockchain
Zero-Waste Processing using circular economy models. Eg- converting fruit peels to bio-plastics
Cluster-Based Development under One District One Product (ODOP) model
Regulatory Simplification – Create a single-window clearance system
Develop export-oriented zones with plug & play infra, market intelligence systems & customized packaging
Effective implementation of these interventions can position India as a global food processing hub.