The Agro-processing industry in India has gained prominence in recent years. Availability of raw materials, changing lifestyles and liberal government policies has given a considerable push to industry’s growth. Today, the GDP share of food processing industries (FPI) accounts to 12% and has been on the rise since past five years. It’s further estimated that the country’s domestic food market will reach US$ 258 billion by 2015.
The food processing sector serves as a crucial link between agricultural and industrial segments of the economy. In 2013-14, the value of total processed agricultural products exported from India stood at US$ 37.7 billion as compared to US$ 36.2 billion in 2012-13. This indicates towards the steady rise in consumption of processed foods in the society. Other factors such as rising per-capita incomes, increased media penetration and cultural transformation has further led to consumers experimenting with various cuisine, tastes, and new brands.
However, despite the growth, the industry continues to be at the nascent levels of processing.
Consider the case of the tomato ketchup industry. We produce and export large amounts of tomatoes, yet we have been importing a significant amount of tomato paste from neighbouring countries like Nepal and China. This indicates that despite the large availability of raw materials, we are not fully equipped to process our agricultural produce.
Though, agricultural production is on the rise, the wastage of agricultural produce is sizeable. Owing to this, India continues to import a significant amount of tomato paste from neighboring countries like Nepal and China, even after being the second largest producer of tomato in the world. 13% of the total tomato production is rotting due to lack of proper storage facilities. The below statistics gives a clear picture of our fledgling food processing industry:
To fully leverage the growth potential of this vast untapped sector, the challenges in the terms of logistics, credit and technology needs to be properly addressed. A thrust to the food processing sector can lead to a significant development in agriculture and ensure value-addition to it. This could further result in a remunerative process to farmers and create a favourable demand for Indian agricultural products in the world market.