With an aim to double the rate of food processing in the country from the current 8-10% to 20% by the end of the term of the Modi government, ministry of food processing industries (MoFPI) has stepped up efforts such as completing 37 Mega Food Parks, well connected with the infrastructure needed for the purpose.
Recently, after completing two years in the office, Union minister for food processing Harsimrat Kaur Badal had put forth the roadmap for achieving the target. The ministry’s focus is on the FDI proposed in the marketing of the Indian manufactured food products. While the ministry is still awaiting the nod for the project, Badal is betting a lot on it and wants investors to spend at least 15% at the farm gate on areas such as controlled atmosphere warehousing, and grading and sorting facilities.
Aimed at transforming the food economy through food processing, the minister stated that in the last two years her government had created huge 32 lakh MT capacity of processing worth Rs 9,000 crore. And in another two years it shall reduce wastage by 10% per annum amounting to Rs 9,200 crore every year.
It is pertinent to mention here that in a study conducted by MoFPI, it was observed that food worth Rs 92,000 crore was wasted every year during the post-harvest period. This includes wastage of 16% of perishables. The study was carried out by the Central Institute of Post-Harvest Engineering and Technology (CIPHET) Ludhiana.
“Our target is to operationalise 37 Mega Food Parks by the end of our term as government,” Badal told media persons recently. According to her, 44 cold chain projects were completed, 24 accredited labs established, Rs 350 crore investment in 8 (6 in last two years) currently operational mega parks were put in place in last two years,” she added.
The government intended to make 134 cold chain projects in total. “Through cold chains alone, we have added a capacity of 1.28 lakh metric tonne of cold storages/CA/MA, 53.05 MT per hour of Individual Quick Freeze (IQF), 19 lakh litre per day of milk processing and 240 reefer vans,” said the minister.
A total of Rs 800 crore grant was given for strengthening the food processing infrastructure in the country that which was now worth Rs 2,000 crore. This has created 32 lakh metric tonne capacity of processing out of which currently 12 lakh metric tonne processing is happening currently. The revenue generation is Rs 3,000 crore currently which can be upped to Rs 9,000 crore with the utilisation of the overall capacity, according to her.
The ministry is also ensuring transparency in working of MoFPI for investors. A link has been provided in the ministry’s website for the applicants where they can see the progress of their applications and the grants given to them. This has been started for the Mega Food Park scheme currently and would be applicable for other schemes soon.
Further, MoFPI is developing a mobile app with the help of NIFTEM, which is carrying out a village outreach programme to help smallholding farmers understand the nuances of food processing. ”After the official launch, anybody can download the app to seek information on how food processing leads to various food produce,” she stated.
The sector has also witnessed a continuous rise in foreign direct investment. The cumulative figure for the sector since 2000 to March 2016 is Rs 40,264.87 crore (US$6,815.69 m), which is 2.36% of the total equity inflow into the country.
However, during the last fiscal, the ministry officials were visibly stressed about the lowering of the contribution of food processing in the overall manufacturing GDP. Despite that the sector is witnessing a continuous double-digit growth.
In recent times as well the FICCI quarterly survey predicted a slowdown in the sector but industry representatives believe it will not be having much effect on the sector performance. The minister stated that there was overall decline in the manufacturing sector, which was slightly impacting the food processing sector. “The situation is not worrying,” she stated, adding that with an eye on FDI in food retail she was expecting a complete makeover of the sector.
Badal added that to facilitate investments, a single-window facilitation cell has been created to handhold overseas and domestic investors in the food processing sector. A Food Map identifying surplus and deficit areas of various agricultural and horticulture produce in the country has also been made and is available on the website of the ministry to help the investors understand the demand and supply needs.
Briefing about tax incentives, the minister said that in the last two years, Excise Duty on machinery for processing has been reduced from 10% to 6%. Pre-cold storage services like pre-conditioning, pre-cooling, ripening, waxing, retail packaging, labelling of fruits and vegetables have been exempted from Services Tax. Loans to food & agro-based processing units and cold chains have been classified under agriculture activities for Priority Sector Lending subject to aggregate sanctioned limit of Rs 100 crore per borrower.
However, in terms of challenges, the industry feels that a lot is to be done to achieve the actual goal of doubling the food processing in the country. Nilesh Lele, secretary, Association of Food Scientists and Technologists of India (AFST[I]), said, "We have seen that the governments have been working on several initiatives to add on to the growing food processing sector. Government has relaxed policies and laws to create an atmosphere for development of food processing companies. The crucial challenges are still the same - power and water. Several areas which have experienced consecutive drought or drought-like situations have to be addressed carefully. Such areas can be considered to build a food park but simultaneously government should also look at the allied infrastructure that is essential for setting up of the companies in the park. If the area doesn't have water body one can connect it to a waterbody nearby taking into consideration that the people and the industries and ecosystem is not affected. As even if one of it is affected by such water being drawn for the food park, it will be difficult for industries to dwell in such areas. I think that while setting up a food park the government should think of the allied infrastructure which is required."
"The main thing that has been for a while in the industry is that it lacks planning," he adds.
Meanwhile, keeping the gigantic need of infrastructure for mega food parks, the ministry has decided to give the entrepreneurs freedom to choose the size of the landholdings. In a new cluster-based approach, the ministry is now going to allow the industry to set up a park.
“The ministry has cut the size of the land requirement to 25 acre now from 50 acre and minimum five units. The entrepreneurs can now set up the park near to the farming clusters,” said one senior official with MoFPI.
