Home » FSS ACT » Food processing Industry in India is one of the largest and expected to grow further

Food processing Industry in India is one of the largest and expected to grow further

Food processing Industry in India is one of the largest and expected to grow further

Food Processing Industry

Food processing is a way or technique that is used to convert raw foods into well-cooked and well preserved eatables for both humans and animals. Food processing uses raw, clean, harvested crops or slaughtered and butchered animals and turns these into food products for daily consumption.  A number of products are nutritious, easy to cook and have a long shelf life. They are packed in an attractive manner and are highly marketable.

As per Ministry of Food Processing of India (MOFPI), the term ‘food processing’ is mainly defined as a process of value addition to the agricultural or horticultural produce by various methods like grading, sorting and packaging. In other words, it is a technique of manufacturing and preserving food substances in an effective manner with a view to enhance their shelf life; improve quality as well as make them functionally more useful. It covers a wide spectrum of products from sub- sectors comprising agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agricultural inputs for manufacturing of edible products.

State of the food processing sector

Food processing sector is indispensable for the development of the economy. It helps to commercialize farming which gives farmers the opportunity to diversify and increase their income and generates employment. However, a large number of FBOs have small operations and productions and many are in the unorganised sector. The organised sector remains small and includes flour mills, fish processing units, fruit and vegetable processing units, sweetened and aerated water units, milk product units, sugar mills, solvent extract units, rice mills, modernised rice mills. The organized sector consists of only 30 per cent the food processing industry in India and within this sector highest meat and poultry processed foods segment contributes the most. India’s food processing sector is highly fragmented and comprises of fruit and vegetables, spices, meat and poultry, milk and milk products, beer and beverages, fisheries, plantation, grain processing, packaged drinks and consumer products such as confectionery, chocolates and cocoa products, soya-based products, packaged drinking water, high protein foods, snacks, etc.

The food processing sector is divided into three segments according to the levels of processing required

  1. Primary processing of food comprises of sorting, grading and packaging of fruits and vegetables, milk, rice, spices, etc.
  2. Secondary processing of food comprises of re-shaping of food for ease of consumption. It includes flour, oil cakes, tea leaf and beverages powder.
  3. Tertiary Processing of Food (or) Value Added Food Segment Value added food segment includes processed fruits and vegetables, juices, jam & jelly etc.

The primary and secondary processing food segments make up 62% of processed foods in value terms and the value added food segment holds around 38% share in the total processed food market.

Fruits and Vegetables

India is the world’s 2nd largest producer of fruits and vegetables but only about 10 per cent of the produce is processed. It is expected that the processing in this segment will grow to 25 per cent by 2025. This segment is highly export oriented as the domestic penetration is low presently but is expected to grow. Fruits and vegetables processing is equally divided into organised and non-organised sector where organised sector produces juices and pulps and the unorganised makes pickles and sauces

Fisheries 

India is the third largest producer of fish and second largest in inland fish production. This segment is also export oriented and is dominated by small scale players in the organised sector or fishermen cooperatives.

Meat and Poultry

India is the largest producer of buffalo meat and the second largest producer of goat meat. Only 1- 2 per cent of the raw meat is converted into value added products as the rest goes to provide raw meat for domestic consumption. Eggs and broilers are leading the growth in this segment through the unorganised sector dominates this too.

Milk & Dairy

India is the largest producer of Milk and Milk Products and it also has the maximum number of cows and buffaloes in the world. Unorganised sector controls this segment and only about 15 per cent falls into the organised sector.

Grains and Cereals 

India is a self-sufficient country in terms of grain production with rice dominating. Rice, wheat and pulses milling is the most important food processing activity in this segment. The unorganised sector has a firm grip here too and since technological upgrading is lacking there is a lot of wastage.

Consumer Foods 

This is the fastest growing segment in India and it is highly organised and consist of

  • Packaged Food (snacks, chips, namkeens and bakery products)
  • Aerated Soft Drinks
  • Packaged Drinking Water
  • Alcoholic Beverages

Government Initiatives

According to MOFP,  food processing accounts for about 32 per cent of the country’s total food market, the food processing industry is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. During the last 5 years ending 2012-13, Food Processing Industries sector has been growing at an Average Annual Growth Rate (AAGR) of around 8.4 per cent as compared to around 3.3 per cent in agriculture and 6.6 per cent in manufacturing. The total food production in India is likely to double in the next 10 years. India’s share in exports of processed food in world trade has remained at about 1.5 per cent or $3.2 billion.

Under the ‘Make in India’ initiative, the food processing sector has been identified as a priority sectors. Mega Food Parks that have common utilities like road, electricity, water supply, sewage facility and common processing facilities for pulping, packaging, cold storage, dry storage and logistics are being promoted in a big way. These parks are to provide fully developed plots and factory sheds to entrepreneurs on long-term lease basis where they can set up food processing units. With the right infrastructure processing units will be able to provide a big boost to the availability of processed foods in the domestic consumption especially for restaurants.

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