Farm to fork: How food processing industry can drive India’s economy

India is the second largest food producer in the world after China. However, it has one of the lowest levels food processing In the world. At around 10 percent, the gross value added (GVA) of India’s food processing industry is among the lowest in the world compared to 30 percent in China and ranges from 60-80 percent in Western economies.

However, the food processing industry in the still developing country has huge potential and influences on its economy. Food processing is one of the largest job-creating industries in India, and it contributes significantly to the country’s GDP.

The food processing industry continues to play a vital role in transforming raw agricultural products into value-added commodities and its growth can lead to significant economic development and job creation. Government data from 2016 considered India’s food processing industry to be in a nascent stage, accounting for less than 10 percent of India’s total food. While the industry has been growing steadily over the years, there is still a lot of untapped potential that needs to be realized.

Rising above challenges

According to a report by the Ministry of Food Industries, the Indian food processing industry has grown at an annual growth rate of about 11.18 percent over the past five years, outpacing the overall industrial growth rate. However, there are still many challenges that need to be addressed to take full advantage of the potential of this industry.

Also read: Save the planet by cutting down on food waste

One of the major challenges facing the food processing industry in India is the lack of adequate infrastructure. Inadequate cold storage facilities, transportation networks and capacities of existing food processing units lead to significant post-harvest losses. To overcome this, there is a need for increased investment in infrastructure development as well as making existing infrastructure compatible globally, especially in rural areas where agriculture is the main source of income.

Despite being one of the top five producers of most agricultural products, India lags behind in exports due to a limited proportion of processed products in the overall agro-food basket. Raw agricultural products are exported by India with limited value addition. In some cases, value is added to Indian exports by other countries and then the final products are exported to India and other countries.

Explore opportunities

Despite the above challenges, there are huge opportunities for the food processing industry to contribute to the Indian economy. One such opportunity lies in the growing demand for processed and packaged food products. With rising incomes and changing lifestyles, consumers are increasingly looking for convenient, ready-to-eat food options. This trend represents an important market for food manufacturers to leverage and diversify their product offerings.

In addition, the food processing industry can play an important role in reducing food waste and improving food security. India is facing the challenge of feeding a growing population and a large portion of agricultural products are being lost due to spoilage and insufficient storage. By investing in advanced processing and preservation technologies, the industry can help reduce post-harvest losses and ensure a steady supply of food throughout the year.

The food processing industry has the potential to create jobs, especially in rural areas. A parliamentary report from 2022 revealed that the food processing industry is one of the major labor-intensive sectors, with 12.38 percent of the employment generated across all registered factory sectors in 2017-2018. Through appropriate training and skill development programmes, it can empower individuals to become entrepreneurs and contribute to local economic development. This will not only create job opportunities but also address the issue of rural-urban migration.

Multi-pronged approach

To fully realize the potential of the food processing industry, a multi-pronged approach is required. First, supportive government policies and incentives that encourage investment in the sector are needed. This includes streamlining regulations, providing access to affordable credit, and promoting research and development in food processing technologies.

Secondly, collaboration between industry stakeholders, research institutions and farmers is essential. This will facilitate knowledge transfer, innovation and adoption of best practices across the value chain. In addition, public-private partnerships can help bridge the infrastructure gap and promote sustainable growth.

Untapped potential

The food processing industry has The ability to accelerate the economy of India. The industry has grown steadily over the years, but there is still a lot of untapped potential that needs to be realized. The industry faces many challenges, and there is an urgent need for investment in infrastructure, skills development, and innovation. Government and industry need to cooperate to support the growth of the industry, which will not only benefit the industry but also the agriculture sector and the economy as a whole.

The author is co-founder, Agrizy