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(GIST OF YOJANA) India’s Food Regulator landscape: Transition Towards a Robust and Contemporary System

(JULY-2024)

India’s Food Regulator landscape: Transition Towards a Robust and Contemporary System

Introduction:

Agricultural production in India has consistently recorded higher output, ranking first in pulses and milk, second in vegetables, fruits, wheat, and rice, and third in cereals, eggs in world agriculture. With increasing production and supply of raw materials, India’s food processing sector in recent years has been known for its high growth, thus increasing its contribution to world food demand every year.

Background:

Currently, India is processing less than 10% of its agricultural output, thus presenting immense opportunities for increasing processing levels and leading to immense investment potential in this sector. With about 70% of households still dependent on agriculture for their livelihood in India, this sector provides huge employment generation potential as well.
In this background, the food processing sector has been recognised as a ‘sunrise sector’ and a key priority industry under the ‘Make in India’ initiative, led by the Prime Minister, Shri Narendra Modi and is being promoted aggressively through fiscal and monetary incentives.

Status and Role of the Food Processing Sector in India

a. Contribution to GDP

During the last 5 years ending 2020-21, the food processing sector had grown at an average annual growth rate of around 8.38%, as compared to around 4.87%in the agriculture and allied sectors (at 2011-12 prices). The food processing sector has also emerged as an important segment of the Indian economy in terms of its contribution to GDP, employment, and investment.

b. Employment Generation

As per the latest Annual Survey of Industries (ASI) for 2019-20, the total number of persons engaged in the registered food processing sector was 20.32 lakhs. Moreover, the unregistered food processing sector supported employment for 51.11 lakh workers as per the NSSO 73rd Round, 2015-16, and constituted 14.18% of employment in the unregistered manufacturing sector.

c. Skill Development Initiatives

The availability of skilled manpower has been identified as one of the major challenges facing the food processing industry in India. In order to address the issue, the MoFPI has been working in close collaboration with the Food Industry Capacity and Skill Initiative (FICSI), the Sector Skill Council (SSC), and the National Institute of Food Technology Entrepreneurship and Management (NIFTEM), an institute under the MoFPI, to regularly guide and assist it in achieving its mandate.

Role of NABARD in Food Processing and Storage Infrastructure

NABARD has been at the forefront as an important stakeholder in the food processing sector, playing a vital role in infrastructure creation for the food processing industry.
Currently, NABARD manages two important funds viz., the Food Processing Fund (FPF) and Warehouse Infrastructure Fund, allocated by the Government of India for supporting the food processing sector and the creation of warehouse infrastructure for scientific storage of food grains in the country.

a. Food Processing Fund

The Government of India instituted the Food Processing Fund (FPF) in NABARD during 2014-15, agro processing clusters, and individual units; and to different borrowing entities, viz. State Governments, State Government-owned entities, SPVs, federations, companies, partnership firms, and limited liability partnerships.

b. Warehouse Infrastructure Fund

The Government of India announced a dedicated Warehouse Infrastructure Fund (WIF) with a corpus of Rs. 5,000 crore in 2013-14.
The WIF corpus was augmented with a further allocation of Rs. 5,000 crore in 2014-15.
The fund was set up to support State governments, State-owned agencies, and Corporates for the creation of scientific warehouse capacity through financial support. The creation of storage infrastructure in APMCs was later included as an eligible activity for support under WIF.

Way forward:

The Gross Value Added (GVA) of the food processing sector has increased from Rs. 1.34 lakh crore in 2014-15 to Rs.2.08 lakh crore in 2021-22. The share of processed food exports in agri-exports has increased substantially from 13.7% in 2014-15 to 25.6% in 2022-23.
However, India’s food processing sector contributes only around 1.8% to the total GVA. This has grown at a six-year average annual rate of 3.5%. To make India a developed country by 2047, the contribution of the food processing sector to the overall Gross Value Added (GVA) needs to quadruple to -7.2%.
Future strategies need to be aligned to achieve the target of 10.4% CAGR by 2047 and make India a developed country. This can be achieved by making India’s processed food exports globally competitive.

Conclusion:

The policy focus should be on making India a market leader in global trade for at least five value chains (processed fruits and vegetables, processed fish and sea food, meat, dairy products, poultry, and eggs) by 2047. This must be accompanied by nurturing a skilled workforce for the food processing sector and addressing the current skill gaps between the workforce and the industry.