Food Processing Industry Scenario in India & Attracting private investments to promote exports

India is amongst the largest producers of food in the world – the largest producer of milk and second largest producer of fruits and vegetables. Yet critics will point to the fact that though agriculture employs 58 percent of the working population, it accounts for only 14.3 percent of GDP. The agri –economy has been growing at approximately 2-3 percent, leaving substantial room for further growth. More importantly, there is even greater scope for growth in overall agri business. We define agribusiness as comprising businesses closely linked with agricultural production – these include agri-inputs, trade & logistics and food processing. Agribusinesses in India is heavily under-developed. For every USD 1 of agricultural output, the incremental agribusinesses generated in India is only USD 1 vs. USD 2.7 in Brazil and USD 11 in the US.


According to the industry estimates and as per the Department of Industrial Policies and Promotion (DIPP), the food processing sector in India has received around USD 7.47 billion worth of foreign direct investments (FDIs) during the period April 2000 – January 2017. The sector has the potential to attract even a higher number of FDIs in the coming years. India is the second largest producer of food in the world after China. It has the potential to become food basket for world, considering the scope and increasing demand for food processing. It is pertinent to note that during 2020-21, the total agro food exports from India were of USD 38,314.3 Million.


Whereas, the processed food exports have been recorded as USD 8,543.06 Million. The government of India has also introduced lot of schemes for the creation of infrastructure for agro processing clusters . The budgetary allocation for the said scheme for the financial year 2021- 22 is INR 37.50 crores. Further, the Ministry of Food Processing industries (MoFPI) incentivizes setting up of food processing industries through credit linked financial assistance (capital subsidy) in the form of grants-in-aid under component schemes of Pradhan Mantri Kisan SAMPADA Yojana (PMKSY).


Potential for significant impact -

India is the second most populous nation in the world and accounts for close to 16 percent of the global population. We are currently at the cusp of transformational growth. Over the last 10 years the per capita income has nearly doubled and India has shifted to a high growth phase , with last 5 years delivering an 8 percent growth per annum , increased incomes and improved nutritional intake. While, this is heartening, it is critical that entire population has access to adequate food & is included in the process of development – else the social fabric of the country could come under strain.


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