(Written by Rupa Dutta, Senior Adviser, DPIIT and Surabhi Menon, Consultant, DPIIT)
The food processing industry entails the conversion of raw agricultural materials into processed or value-added food products that have an extended shelf life and are suitable for consumption. It involves a range of activities including sorting, grading, packaging, storage, preservation, and cooking, as well as the development of new food products and technologies. The food processing industry in India is a major contributor to the country’s economy and provides employment opportunities to lakhs of people. As per the Annual Survey of Industries (ASI) data (2019-20), 20.32 lakh persons were engaged in the food processing sector. It encompasses a wide range of sectors, including fruits and vegetables, dairy, meat and poultry, fisheries, grains and cereals, beverages, and packaged foods.
The industry is one of the largest in India and its output is expected to reach $535 Bn by 2025-26. To give a macroscopic idea of the Indian food processing sector export, the export of Processed-Food Products has increased from US$ 8.56 billion in 2020-21 to US$ 10.42 Billion in 2021-22, and the share of processed food exports in total Agri-food exports has increased to 22.6% in 2021-22.
The food processing industry is also crucial for connecting domestic and international consumers to Indian farmers. In this regard, the role of the government also becomes crucial for balancing that farmers get their remunerative prices while also ensuring the availability of quality and affordable produce to the consumers.
With India being the most populous nation in the world, there is an increased demand for processed food. It has been estimated that India’s total consumption expenditure will grow by a factor of four, from $1.5 trillion in 2018 to $5.7-6 trillion by 2030. With increased urbanization and development, even rural areas are seeing increased demand. There is a formation of developed rural areas. Developed rural areas are those that have better than average infrastructure and public amenities, with incomes on par with small towns and vastly higher than the rest of rural India. Estimates of consumption demand in developed rural areas suggest that those regions could represent a $1.2 trillion annual consumption opportunity or 20% of the national total, by 2030. As India’s food processing market touch $470 Bn by 2025,1 Tier-II and Tier-III cities could mirror the trend visible in metropolitan areas, by consuming more processed food in the coming years.
The increased demands are to be met by investments from public and private entities. The Government of India has implemented several food processing policies, and the Ministry of Food Processing Industries (MoFPI) is making significant efforts to facilitate investments across the entire value chain while also promoting the welfare of farmers and consumers.
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The Government of India’s umbrella scheme for improving farm productivity and ensuring better utilization of the resources in the country Prime Minister Kisan Sinchayee Yojana (PM-KSY) has an allocation of INR 4600 Cr till March 2026. ₁Similarly, the central government has also implemented the PM Formalization of Micro Food Processing Enterprises Scheme (PMFME) for providing financial, technical, and business support for the upgradation of existing micro food processing enterprises. Moreover, the introduction of the One District One Product (ODOP) central government scheme launched by the DPIIT, the Ministry of Commerce and Industry is yet another scheme that will strengthen the food processing sector. The scheme deals with identifying products with export potential in a specific district.
Nagaland is a north eastern state in India that is traditionally agrarian with the economy being dependent primarily on agriculture with approximately 70% of people relying on agriculture for their livelihood. Nagaland has the potential to develop agro and food processing industries, thanks to its rich agri-horti sector. The state has been blessed with abundant rainfall, fertile soil, and a pleasant climate, resulting in a bountiful harvest. In addition, farmers are embracing mechanization and adding value to their products, leading to the emergence of commercial agro enterprises.
Under the national food processing policy, The North Eastern Region (NER), Hilly Areas, Islands, and Integrated Tribal Development Project (ITDP) areas in the country are given special attention and high consideration. This includes fiscal incentives such as excise duty/sales tax concession and the tax holidays built up in these areas. There’s also a tax holiday for the food processing units for a time frame of 10 years.
We have seen the consequences of enabling more investment and growth in the Northeastern region with the recent 85% growth in the export of agricultural products in the northeast region over the last six years. The agriculture and processed food products development and authority (APEDA), under the Ministry of commerce and Industry, is closely dealing with increasing investments and opportunities in the Northeastern region. With APEDA’s interventions, Nagaland’s King Chilli was exported to London for the first time in 2021. Moreover, a total of 10 products are selected from 11 districts in Nagaland under the ODOP approach.
Read more: Nagaland’s Rich Agri-Horti Sector: Transforming Northeast India’s Food Processing Landscape
Ploughing Ahead – exploring Nagaland’s agriculture potential
The northeastern region offers immense opportunities for investments. To begin with, the Northeast region’s strategic location that connects India to Southeast Asian markets makes it a highly desirable location for a potential manufacturing hub. Additionally, the region boasts abundant social capital, inexpensive labour costs, and ample natural resources, including significant energy potential in the future.
Nagaland possesses immense agro resources like spices, fruits, medicinal and aromatic plants, etc. In this regard, startups and MSME’s are encouraged to avail of government benefits in the region. The establishment of collaborative systems to support local farmers and the promotion of entrepreneurship among young people are crucial steps in creating job opportunities and reducing unemployment.
Nagaland has a great opportunity to tap into its full potential as a resource-rich state by promoting its food processing industry. With the right support and resources, it can be transformed into a thriving sector that contributes significantly to the state’s economy.
Reference:
https://www.investindia.gov.in/sector/food-processing
https://www.weforum.org/agenda/2019/10/future-of-consumer-spending-in-india/
