India should grab the opportunity and unlock its potential to become global leader in the food processing sector

  • Home Articles India should grab the opportunity and unlock its potential to become global leader in the food processing sector

India should grab the opportunity and unlock its potential to become global leader in the food processing sector


India's food and grocery market is the sixth largest in the world. It contributes between 8.80 and 8.39 percent of gross value added (GVA) in manufacturing and agriculture, 13 percent to India's exports, and 6 percent to total industrial investment. The Indian gourmet market is currently valued at $ 1.3 billion and is growing at an average annual growth rate (CAGR) of 20 percent.

The government of India has uplifted agricultural exports to meet an aspiring target of 60 billion by 2022. The predominant share is mainly made up of processed agricultural raw materials. India's export earnings will increase by focusing more on value-added processed foods than on processed primary agricultural products. From 2015-16 to 2019-20, the value of agricultural and processed foods increased significantly from USD 17.8 billion to USD 20.65 billion. Indian agriculture is moving from primary to secondary agriculture, with an increased focus on the development of various processed foods. The Indian food industry promises high economic growth and is making good profits.

Changing export basket

India's agricultural export basket is moving from traditional raw materials to non-traditional processed foods.  Basmati rice is traditionally one of the most important export products. However, there is now an unusual increase in non-basmati rice exports. India exported 13.09 million tons of non-basmati rice ($ 4.8 billion) in 2020-21, up from an average of 6.9 million tons ($ 2.7 billion) in the previous five years.

Buffalo meat from India is also in high demand in international markets due to its lean character and almost organic nature. The export potential for buffalo meat is huge, especially to countries like Vietnam, Hong Kong and Indonesia.

In 2020- 21 the export of poultry, sheep and goat meat, cashews, peanuts, guar gum and cocoa products decreased in  value and volume.

Processed food exports have not grown fast enough because India does not have a comparative advantage in many areas. This may mean that domestic prices for processed foods are much higher compared to world reference prices.

The main objective of the agro-export policy is to diversify and expand the export basket so that exports of higher value goods, including perishable goods and processed foods, are increased instead of primary products.

Processed food exporters are facing difficulties due to tariff and non-tariff measures of other countries towards Indian exports:

  • Mandatory pre-shipment inspection by Export Inspection Agency is lengthy and expensive.
  • Compulsory spice board certification being needed even for ready-to-eat products which contain spices in small quantities.
  • Lack of strategic planning of exports by most State governments.
  • Lack of predictable and consistent agricultural policies that discourage private sector investment.
  • Prohibition of import of meat- and dairy based-products in most of the developed countries
  • US removing India's Status  as a beneficiary developing nation from the Generalized System of preferences (GSP ) for import of processed food from India, thereby removing the benefits  India used to get as a developing nation.
  • Export shipments to the U.S. requiring an additional health certificate.
  • The lack of an equivalence agreement with developed countries for organic products.
  • Developed countries have fixed higher standards for import of food items.

Step taken by the government -

The center's policy should be aimed at promoting food processing companies, ensuring low production costs and global food quality standards, and creating an environment conducive to promoting the export of processed foods. The reputed Indian brands should be encouraged to export processed food all over the world as they can comply with the global standards. Indian companies should focus on global food grade technology, standards and cost competitiveness, and take advantage of the global processed food export market. India has competitive and comparative cost advantages in various agricultural products this benefit can be forwarded to processed foods.  India has the potential to become a world leader in food processing. The Government is taking efforts to boost growth in the food processing sector through reforms such as 100 percent Foreign Direct Investment (FDI) in the marketing of food products and various  central and state incentives and a strong focus on supply chain infrastructure.

In the 2017 Union budget -18, the Government of India established an infrastructure fund for milk processing  worth Rs 8 billion (US $ 1.2 billion).

The Government of India has relaxed the foreign direct investment (FDI) rules for the sector, automatically allowing up to 100 percent of FDI in e-commerce of food products.

Food Safety and Standards Authority of India (FSSAI) has planned to invest approximately Rs 482 Crore (US$ 72.3 million) to strengthen the food testing infrastructure in India by upgrading existing  59 food testing laboratories and The country is installing 62 new mobile testing laboratories across India.

The Indian Council for Fertilizer and Nutrient Research (ICFNR) will adopt international best practices for research in the fertilizer sector which will enable farmers to obtain good quality fertilizers at affordable prices, thus achieving food security for the common man.

The Ministry of Food Industry announced a program to develop human resources (HRD) in the food sector. The HRD program is implemented by state governments as part of the National Food Processing Mission. The program consists of the following four components:

  • Creation of infrastructure facilities for undergraduate / graduate courses in the food industry
  • Entrepreneurship Development Program (EDP)
  • Food Processing Training Centers (FPTC)
  • Training in institutions accredited in the state / national level

Partners Message

Recent Articles