(The Gist of Kurukshetra) Food Processing: Potential Driver of Agri-Business

(The Gist of Kurukshetra) Food Processing: Potential Driver of Agri-Business

Food Processing: Potential Driver of Agri-Business


  • Food processing in India has treaded a long path of transformation, from merely a household activity to a prominent industrial sector impacting national economy, especially the rural one. 

Need of growth in agriculture:

  • Simultaneous growth in agriculture provided due leverage to processing industries by maintaining a regular supply of raw materials (agricultural produce) in desired quantity and quality. Besides, the amazing diversity of Indian food basket also adds novelty and value to processed products especially for exports.
  • Food processing units/industries promote industrial growth in rural areas, create livelihood/employment opportunities, check rural-urban migration and ultimately improve rural economy for greater socio-economic benefits. From farmers' perspective, food processing sector is a promise of prosperity as it opens several pathways for augmenting their profit and income. Significant rise in demand of agricultural produce for processing ensures better price to farmers, even during glut season. Market demand of varied food products promotes diversification in crop selection in favour of high value crops. Most importantly, this sector links the unorganised farming community with formal industrial sector to advance rural economy.
  • Further, food processing sector is also capable of addressing critical issues of food security, food inflation, food wastage and nutritional security to the masses.
  • The Ministry of Food Processing Industries is striving to create and ensure a conducive environment for healthy growth of the food processing industry. Ministry has launched several policy, developmental and promotional initiatives to attract greater investment into this sector.
  • Formulation and implementation of sector-friendly policies and schemes have made a positive impact on food processing sector, especially during last six years. During the last five years ending 2017-18, food processing sector has been growing at an average annual growth rate of around 8.19 percent as compared to around 3.45 percent in agriculture at 2011-12 prices. Food processing sector has also emerged as an important segment of Indian economy in terms of its contribution to national GDP, employment, investment and exports.

Potential and Strategies:

  • Food processing sector is a rising sector in India with potential to become a global player soon. In addition to rich and diversified agricultural resources, the country due to its technological strength can provide a perfect blend of traditional and hygienic foods, processed and packaged according to global standards with state-of-art technology. 
  • The remarkable growth in this sector is chiefly driven by a strong 1.3 billion consumer base that has created world’s sixth largest food and grocery market.
  • On domestic front, as consumers are becoming more health conscious, the demand for nutritious food is growing proportionately. Rising number of working women in urban areas and growing trend of nuclear families are also pushing demand for ready-to-eat and frozen food.
  • Increasing urbanization and rise in disposable incomes has substantially increased spending on food products. Growth of organised retail and penetration of e-commerce companies have further helped increase in demand of processed food products. 
  • Thus, overall India's food value chain is poised to create multiple opportunities for investment and employment in various verticals of food processing sector, such as value addition, transport, storage infrastructure, farming, retail chains and quality control.


  • Holistic and inclusive development of food processing sector vis-a-vis rural economy desires to have sustainable supply chains that will link the farmer to the processing and marketing centres seamlessly. 
  • Simultaneously, there is a need to create on-farm cooling and grading arrangements with cold-chain infrastructure to increase income of farmers. If the farmer is enabled to grade and store his produce close to the farm, the farmer will be empowered to demand and obtain a better price from the processors and also add value to his produce. 
  • With a view to attract and augment private investment for building desired infrastructure, Government launched an integrated umbrella scheme- Pradhan Mantri Kisan Sampada Yojana in 2017. 
  • The scheme is providing financial support to create and develop infrastructure for mega food
  • parks, integrated cold chain and value addition, food processing and preservation capacities and agro-processing clusters. 
  • The Ministry of Food Processing Industries has sanctioned 39 mega food parks and 298 cold chain projects throughout the country for seamless transfer of perishables from production to consumption areas. 
  • The scheme has created effective backward and forward linkages for perishable agri-horti produce by setting up primary processing centers/collection centers at farm gate, while distribution hub and retail outlets at the front end. 
  • Preservation facilities are also created for enhancing shelf-life of perishable agricultural produce resulting in better remunerative price to farmers.

Entrepreneurship and Engagements:

  • Food processing sector, due to its close linkage with farms and farmers, provides a huge opportunity for entrepreneurship in rural areas. Rural youth, who are potential migrants, can easily be trained as per industry requirements and mentored to start their own small units of processing, packaging, etc. Many government agencies and technical institutions
  • are providing training, technical guidance and hand holding services to start-ups that have kickstarted a new breed of enterprises in rural areas based on agricultural produce. Prime Minister Employment Generation Programme, ASPIRE (Scheme for promoting innovation, rural industry and entrepreneurship) and SFURTI (Scheme for regeneration of traditional industries) are some of the specific schemes to address capital needs of agri-entrepreneurs.
  • Food processing sector has been identified as one of the key and priority sector of the Government's ambitious 'Make in India' campaign. Under the scheme, special efforts are being undertaken to improve the competitiveness of the private and public sector units operating in the country, so that they can integrate well with global value chains and global markets. Programs such as Start-up India, Stand-up India and Skill India are other major initiatives that are backing development of food processing sector, in their own domain.
  • Green shoots are emerging fast in food processing sector due to promotional activities and initiatives by Government of India. 


  • However, we need to accelerate implementation of supportive schemes at ground level. 
  • Food processing has the potential to act as an engine of growth for rural economy and to bring prosperity in rural areas. But India needs to develop its strategy in a way which takes care of small-scale players along with attracting big investments from domestic and global food giants.
  • Food processing sector is on the pathway of building a New India where rural economy is as bright as its urban counterpart.



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Courtesy: Kurukshetra