Food and Agro Processing

Sectoral Paper
Food Processing
NABARD’s Vision
Development Bank of the Nation for
fostering rural prosperity
NABARD’s Mission
Promote sustainable and equitable
agriculture and rural development
through participative financial
and non-financial interventions,
innovations, technology and
institutional development for
securing prosperity
Title : Sector Paper on Food Processing

Written and Published by : Farm Sector Policy Department
NABARD Head Office, Mumbai
Date of Publishing : August 2018
Design & Printing : Wyatt Prism Communications and Image Impression
Contact : Plot No. C-24, ‘G’ Block, Bandra Kurla Complex, Bandra
East, Mumbai- 400 051, India.
Tel. : +91 22 2653 0094
E-mail : fspd@nabard.org
Website : www.nabard.org,
www.youtube.com/nabardonline
Sectoral Paper on
Food Processing
Farm Sector Policy Department

National Bank for Agriculture and Rural Development
Mumbai
Disclaimer
The views expressed in the sectoral paper are those of the authors and do not necessarily reflect the views or policies of NABARD.
NABARD accepts no responsibility in whatsoever for any loss or damage arising out of use of this document.
Foreword
Food processing industry has been accorded high priority by Government of India (GoI) and NABARD. It is in this context,
Government of India (GOI) has approved a new Central Sector Scheme – Pradhan Mantri Kisan SAMPADA Yojana (Scheme
for Agro-Marine Processing and Development of Agro-Processing Clusters) with an allocation of ` 6,000 crores for the period
2016-20 coterminous with the 14th Finance Commission cycle. The scheme envisages creation of mega food parks, agro
processing clusters, integrated cold chain infrastructure and expansion of food processing capacity in the country. The
scheme is poised to reduce wastage of perishable produce, create gainful employment and also ensure food security of
growing population. There are 42 mega food parks located in 24 States sanctioned by Ministry of Food Processing Industry,
GoI, which are in different stages of implementation. The GoI has also approved 238 cold chain projects, of which 120 are
completed. There are number of fiscal incentives offered to investors under food processing sector including permission
for 100 per cent Foreign Direct Investment (FDI) through automated route. Various State Governments have their own food
processing policies and offer various incentives to this sector.
In order to provide affordable credit to the Designated Food Parks including Mega Food Parks and establishment of food
processing units therein, a food processing fund was created by GoI in NABARD during 2014-15, involving an initial corpus of
` 2000 crore. NABARD has sanctioned 16 projects in 13 States with a fund commitment of ` 602.43 crore and disbursed
` 275.28 crore which when becomes operational would improve the common processing infrastructure and reduce the
post-harvest losses. NABARD also supports the sector under Rural Infrastructure Development Fund (RIDF), National
Infrastructure Development Fund (NIDA) and Warehouse Infrastructure Fund (WIF). All these initiatives of GoI and NABARD
are likely to create significant impact in the food processing sector.
Indian food processing industry is one of the largest and ranks 5th in terms of production, consumption and export. The
industry provides employment to large number of people and also helps in containing inflation. The country has a huge
domestic market for food products and potential for export to various countries. There is good potential to further this
growth, if some of the bottlenecks are removed by following effective strategies. This document prepared by NABARD is an
attempt to collate available information on the sector into a status paper on food processing.
I, personally, congratulate Central Technical Advisory Group (CTAG) team, NABARD for bringing out this document on Food
Processing Sector covering programme and policies of Government of India, roles of various stakeholders, problems and
constraints faced by the sector and strategies to promote food processing industries. I hope readers will make best use of this
document and get inclined towards this sector.
Harsh Kumar Bhanwala

Chairman
Mumbai
August 2018
Message
Food processing industry forms an important segment of the Indian economy in terms of contribution to GDP, employment
and investment, and is a major driver in the country’s growth in the near future. Food processing operations includes many
methods that are used to add value to the raw food materials (including marine products, poultry and meat) which can be
consumed by human beings or animals. Raw food materials are transformed into edible products by processing and value
addition. The operations involved in food processing are mainly classified into two groups, viz., primary processing and
secondary processing. This provides employments to rural people including women and prevents capital drain from rural
to urban areas and thereby helps in narrowing down the economic disparity between rural & urban population. This is also
one of the focus sectors under Make in India initiative of Hon’ble Prime Minister of India. Indian Food Processing Sector has
already emerged prominently on the global manufacturing map. There has been a constant inflow of new technologies and
investments into the sector. As per CII estimates, the sector has the potential to attract USD 33 billion Foreign Direct Investment
(FDI) in the next 10 years. The Food Processing Sector has witnessed the growth rate of nearly 20% in the past few years.
To meet the current demand of food materials, the industrial food processing sector has emerged. The food processing
sector in the country is mainly handled by the unorganized sectors. About, 42% of the output comes from the unorganized
sector which is dominated by small scale industries, 25% comes from the organized sector and the rest of it comes from
the small scale players. The small-scale food processing sector is a major source of employment and adds value to crops by
processing. It is a major source of food in the human diet.
The small-scale food processing sector is, however, under increasing threat and competition from the large manufacturers who,
through economies of scale and better presentation and marketing. Good packaging lies at the very heart of presentation and
thus customer appeal. It is an area of vital importance for small and medium food manufacturers if they are going to continue
to compete and expand. With food processing, it is possible to maintain a nutritious and safe food supply for the millions of
people that inhabit both urban and rural areas. Improvement in processing efficiency, by increased yield of usable product, is a
tangible means of reducing food loss and increasing food supply. Demand for increased convenience of food preparation in the
home, institution and restaurant has created a need from processing industries for food ingredients as well as new food forms.
NABARD, being an apex development bank of our country, has extended financial support to eligible financing institutions
for various agro and food activities and also administering Food Processing Fund (FPF) to provide affordable credit for
designated food parks and processing units therein. The sectoral paper has also brought out various issues that needs to be
addressed to realise the full potential of the agro and food processing sector.
H.R. Dave
Deputy Managing Director
Mumbai
August 2018
Contents
1 Introduction 01
2 Overall Industry Status 03
3 Sub-sector Analysis 05
4 Govt. Policy 14
5 Agencies involved in Food

Processing / Export / R&D 16
6 Credit to Food Processing

Industries 18
7 Technological Development
and Investment Opportunities 21
8 Major GoI Schemes and

Initiatives 23
9 Quality Control & Regulatory

Environment 27
10 SWOT Analysis of
Food–Processing Industry 30
11 Issues and Challenges 32
12 Policy Interventions /
Suggested Action Plan 34
13 Financial support from NABARD 36

1. Introduction
Sectoral Paper on Food Processing | 1

The Indian food industry is poised for huge It has approved proposals for joint ventures,
growth, increasing its contribution to world food foreign collaborations, industrial licenses, and
trade every year. In India, the food sector has 100% export oriented units. Also, the allocation
emerged as a high-growth and high-profit sector to food processing ministry has been doubled to
due to its immense potential for value addition, ` 1400 crore during 2018-19.
particularly within the food processing industry.
In spite of huge success that India has achieved
According to the data provided by the Department in agricultural production, the post-production
of Industrial Policies and Promotion (DIPP), the wastage levels are unduly high, resulting in
food processing sector in India has received wastage of about of ` 440 billion worth of fruits,
around USD 7.47 billion worth of foreign direct vegetables and grains every year. According
investments (FDIs) during the period April 2000 - to ICAR-CIPHET study on post-harvest losses
December 2016. The sector has the potential to of major agricultural and horticultural crops
attract even a higher number of FDIs in the coming as well as livestock products, the losses in
years. India is the second largest producer of food selected fruits were found to be in the range
in the world after China. It has the potential to of 6.70% -15.88%, the losses in vegetables
become food basket for world, considering the varied from 4.58%-12.44%, losses in inland and
scope and increasing demand for food processing. marine fisheries were estimated to be 5.23%
and 10.52% respectively. The assessed loss
The organised food processing sector employs in milk sector was only 0.92%, whereas the
more than 17.74 lakh people (2013-14). As per losses in meat and poultry sectors were 2.71%
NSSO 67th round, unorganised food processing and 6.74% respectively. India has a strong raw
sector provides employment to 47.9 lakh people. material base but it has been unable to tap the
Therefore, the sector as a whole provides real potential for processing (overall processing
employment opportunities to more than 65 lakh level of perishables is only 8%). This paper is an
people, which is likely to reach 9 million by 2024. attempt to take stock of the situation and identify
The unorganised sector accounts for 42% of the areas of concerns, possible investment
India’s Food Processing Industry. The strength of opportunities and possible suggestions for
the sector lies in the fact that India is the leading future. The status of agriculture production and
producer in a number of commodities like cereals, post-harvest losses is given in the Table 1.
banana, mango, chillies, ginger, milk, meat, etc.
Table 1: Production and post-harvest losses in major sub-sectors of agriculture
The country is also the second largest producer
of fruits & vegetables after China, third largest in Sub-Sector Export of Production Level of Post-harvest
marine landing and fifth in poultry production in quantity (2016-17) Processing (% Losses (%)
the world. However, the major cause of concern (` In crore) of production)
always lies in poor post-harvest management Food Grains 19783.60 275.11 MT NA 4.65-5.99
infrastructure facilities. The post-harvest Fruits & Vegetables 9410.81 287 MT 2.20 Fruits – 6.70-15.88
wastage has been estimated to the tune of Vegetables –
` 92,651 crore per annum. 4.58-12.44
Milk 1196.19 165.4 MT 35.00 0.92
Accounting for about 32% of the country’s total Meat 29813.00 7.4 MT 21.00 2.71
food market, the Government of India has been Poultry 60.00 Meat – 3.46 MT, 6.00 Meat - 6.74
instrumental in the growth and development of Eggs – 88.14 Egg - 7.19
the food processing industry. The government, billion no.
through the Ministry of Food Processing Fish 37870.00 11.40 MT 8.00 Marine - 10.52
Industries (MoFPI), is making all efforts to Inland – 5.23
encourage investments in the food business. (Source – Department of Agriculture Cooperation and Farmers Welfare & APEDA – 2017-18)
2 | Sectoral Paper on Food Processing

2. Status of Indian
Food Processing
Industry

The Indian food and grocery market is the
world’s sixth largest, with retail contributing
70% of the sales. It accounts for 32% of the
country’s total food market, one of the largest
industries in India and is ranked fifth in terms of
production, consumption, export and expected
growth. It contributes around 8.80 and 8.39%
of Gross Value Added (GVA) in manufacturing
and agriculture respectively, 13% of India’s
exports and 6% of total industrial investment.
The Indian gourmet food market is currently
valued at US$ 1.3 billion and is growing at a
compounded annual growth rate (CAGR) of
20%. India’s organic food market is expected to
increase by three times by 2020.

3. Sub-sector Analysis
3.1 Grain Processing
3.2 Horticultural products
3.3 Milk and milk products
3.4 Meat and poultry products
3.5 Marine Products
3.6 Consumer food products (RTE, packaged

foods, packaged drinking water,
alcoholic and non-alcoholic beverages)

Food processing is a link between agriculture Each type of cereal requires a specific post-
and manufacturing sector. Therefore, it helps harvest treatment, however, there are certain
in assured supply of safe and healthy food general principles that apply to most of them.
at affordable prices across the population. Cereals undergo a number of processing stages
Food processing industry in India comprises between harvest and consumption. This chain
of different sub-sectors, such as food grain of processes is often referred to as the total
processing, fruit and vegetable products, milk post-harvest system. The post-harvest system
and milk products, meat and poultry products, can be split into three distinct areas. The first is
etc. A brief status of these sub-sectors is the preparation of harvested grain for storage.
discussed below. The second, which is referred to as primary
processing, involves further treatment of the
3.1 Grain Processing grain to clean it, remove the husk or reduce the
After independence, the country has not only size. The products from primary processing are
been able to reach self-sufficiency in food still not consumable. The third stage (secondary
production but also been able to produce processing) transforms the grains into edible
surplus food. The production of food grains has products. Primary processing involves several
increased from 213.2 MT in 2003-04 to 275.11 MT different processes, designed to clean, sort and
in 2016-17. All food grains need one or other form remove the inedible fractions from the grains.
of processing before consumption. Therefore, Primary processing of cereals includes cleaning,
food processing industry plays a critical role in grading, hulling, milling, pounding, grinding,
making food edible. tempering, parboiling, soaking, drying, sieving.
Secondary processing of cereals (or ‘adding
The 2nd advance estimates for production of value’ to cereals) is the utilisation of the primary
major crops for 2017-18 of GoI suggest record products (whole grains, flakes or flour) to make
aggregate food grains production in 2017-18 more interesting products and add variety to the
(Table 2). The record highs are on account of diet. Secondary processing of cereals includes
near normal rainfall during monsoon 2017 and processes like fermentation, baking, puffing,
various policy initiatives of the Government. flaking, frying, extrusion, etc.
Table 2. Production of food grains and oilseeds during 2017-18 (2nd Advance
Amongst the food grains, crops like rice,
Estimates)
coarse cereals, maize, pulses, green gram and
black gram is expected to witness record high Particulars Estimated Production in Average % yoy
production level in 2017-18. Production 2016-17 Production in increase /
2017-18 (m tonnes) last 5 years decrease
Total oilseeds production in the country during (m tonnes) (m tonnes)
2017-18 is estimated at 29.88 MT, which is Food grains 277.49 275.11 260.18 0.9%
lower by 1.39 MT than the production of 31.28 Rice 111.01 109.7 106.29 1.2%
MT during 2016-17. However, the production Wheat 97.11 98.51 93.34 -1.4%
of oilseeds during 2017-18 is marginally Coarse Cereals 45.42 43.77 41.7 3.8%
higher by 0.34 MT than the average oilseeds Pulses 23.95 23.13 18.85 3.5%
production. Oilseeds 29.88 31.28 29.54 -4.5%
(Source - Department of Agriculture Cooperation and Farmers Welfare)

Puffing: Puffed grains are often used as breakfast
cereals or as snack food. During puffing, grains
are exposed to a very high steam pressure which
causes the grain to burst open. The puffed grains
can be further processed by toasting, coating or
mixing with other ingredients.
Flaking: Flaked cereals are partially cooked

and can be used as quick-cooking or ready to
eat foods. The grains are softened by partially
cooking in steam. They are then pressed or
rolled into flakes which are dried. The flakes are
eaten crisp and should have a moisture content
of below 7%.
Fermentation: Doughs made from cereal flour

can be fermented to make a range of products.
Baking: Doughs and batters made from cereal

flours are baked to produce a range of goods.
Extrusion: Extrusion involves heating and

forcing food (usually a dough) through a
small hole to make strands or other shapes.
The extruded shapes then undergo further
processing such as frying, boiling or drying.
Extruded products include pastas, noodles,
snack foods and breakfast cereals.
3.2 Horticultural products

Over the last decade, the area under horticulture
grew by about 3% per annum and annual
production increased by 5.4%. The record
horticulture production during 2017-18
outstripped even the food grains production
(estimated at 276 MT in 2016-17). As per MoFPI,
76% of fruits and vegetables fresh in India and
only 2% of fruits and 4% of vegetables are
processed. The remaining 20 to 22% go as post-
harvest wastage between farms to fork.
Vegetables are less acidic than fruits and food

poisoning bacteria are able to grow in many
vegetable products. Some types of bacteria
produce poisons in the food without signs
of spoilage and consumers may be unaware
of the contamination and eat the poisoned
food. It is, therefore, especially important that
vegetable processors carefully follow the correct
processing methods and pay strict attention
to hygiene and sanitation to reduce the risk of
harming their customers.

Because fresh fruits and vegetables are both additives in washing, gentle peeling, cutting,
bulky and spoil rapidly, it is better to locate a slicing, or shredding, and a low temperature
processing unit in the area where they are grown. (usually below 5 °C) during processing. In the
This reduces transport costs and also reduces the production of minimally processed fruits and
amount of handling Too much handling bruises vegetables, packaging is an important factor
them and they will spoil quickly. Processed fruit that helps prolong their shelf life. Modified-
and vegetable products are likely to be sold atmosphere packaging is one of the packaging
in different markets and there is less reason to methods used to reduce the respiration activity
locate the unit near to customers (in contrast to of the produce since it balances the levels of
bakeries for example). An ideal site is close to a CO2 and concentration of O2 (generally at 2–5%
fruit and vegetable growing area and near to a for both gases) inside the package by using
main road leading to an urban centre. appropriate permeable packaging materials
and/or a specific gas mixture in the package.
After harvesting, fruits and vegetables still
undergo active biological processes, such as Products that have high demand
respiration, ripening (fruits) and senescence. Fried Products: Starchy fruits such as banana can
In some fruits and vegetables, these activities be fried and eaten as snack foods. Heat destroys
cause significant changes in the quality so the enzymes and micro-organisms and moisture
post-harvest storage conditions and processing is removed which prevents re-contamination.
steps need to be carefully conducted to prevent When products are packed in moisture-proof,
these changes. For example, the level of sugar in light-proof and air-tight containers, they can have
potatoes increases up to 5–10 times the original a shelf life of several weeks or months. The main
sugar concentration at harvest if they are stored cause of spoilage is rancidity of frying oil that
below 10 °C after harvesting. The high sugar remains on the product.
content in these potatoes can cause Maillard
browning reactions during further processing Dried fruits and vegetables: Dried fruits,
steps, especially during drying and frying. In ripe vegetables, herbs and spices are low-volume,
sweet corn, the opposite reaction is of concern. high-value foods that can be profitable for
During storage, the level of sugars decreases small-scale processors, if there is sufficient
and starch is produced, causing losses in flavour demand. Drying preserves fruits and vegetables
and texture. because it removes most of the water needed
by enzymes and micro-organisms to
Minimal processing: Many fresh fruits and spoil them. However, drying can also
vegetables are minimally processed to keep cause unacceptable changes to the
them fresh, prevent quality loss, and prolong colour, flavour and texture if the
shelf life. The shelf life of minimally processed drying conditions are not properly
fruits and vegetables is at least 4–7 days at controlled.
5 °C. Commercial minimally processed products
are ready-to-eat, pre-peeled, sliced, grated, or Juices, squashes, cordials and
shredded fruits and vegetables, such as pre-cut wines: Juice can be extracted from
lettuce, grated carrot, shredded Chinese cabbage fruits in a number of ways, depending
for salad mixes, etc. Minimal processing of fresh on the hardness of the raw material. Soft
fruits and vegetables includes strict hygiene and fruits such as berries or tomatoes can be
good manufacturing practices, careful cleaning pressed in a fruit press, or pulped using a juicer
and washing before and after peeling, mild attachment to a food processor Preservation is

due to pasteurisation and the natural acidity of The quality criteria for jams and marmalades are
the juice. Some types of juice (e.g. melon juice) decisively determined by the flavour, colour and
have low levels of acid and this can be increased consistency as well as state of preservation and
by adding citric acid to give a pH below 3.5-4.0. distribution of fruits. These properties depend
Although some producers add a preservative, to a high degree on the raw materials used, with
such as sodium benzoate, to ensure a long special importance given to the proper selection
shelf life, this is not necessary if juice is properly of suitable fruits.
processed. Unopened bottles should have
a shelf life of 3-9 months, depending on the 3.3 Milk and milk products
storage conditions and quality of the package. India continues to be the largest producer of
Juice production can be spread over a larger milk in the world. The total milk production
part of the year by processing a sequence of was 165.4 MT during 2016-17, with
fruits or by part-processing pulps and storing per capita availability of 355 grams
them in 1000-2000 ppm sodium meta-bisulphite per day. Among milk products, ice
solution. The sulphur dioxide is driven off during cream is one of the major processed
pasteurisation. Squashes are made from fruit products with an estimated market
juice mixed with sugar syrup. Cordials are size of ` 4000 crore growing at 15%
crystal-clear squashes. The process involves year on year growth. The packaged
producing juice, which is then filtered through milk market in India is to the tune of
fine cloth, or special juice filters to make it 450 LLPD, which is worth ` 55000 crore
crystal-clear for cordials. A 50-60% solution of per annum. Milk powder, flavoured milk,
filtered sugar syrup is heated to 90 °C and mixed curd, butter, cheese, etc. are other potential
in the correct proportion with the juice. Adding milk products manufactured in India.
hot sugar syrup to juice reduces the time that
the juice is heated and the colour and flavour are
better preserved.
Wines
Wines are produced by fermentation of fruit juice
or pulp by varieties of the yeast Saccharomyces
cerevisiae, named ‘wine yeasts’. Sugars in the
juice, together with added sugar, are converted
into alcohol and carbon dioxide. During
fermentation, it is important to keep air out of
the vessel to enable the yeast to produce alcohol
and to prevent contamination by bacteria and
moulds. Wines are preserved by their natural
acidity and raised levels of alcohol (8-13%).
Jam, Jellies and Marmalades

Cooking jams, jellies and marmalades using
fruits, sugar, pectin and edible acids is one of
the oldest food preserving processes known to
mankind and presents a way of making food
stable by increasing the content in soluble solids.

Recent trends in Milk Processing: Freshly
drawn raw milk has its own anti-microbial
defence mechanism, i.e. lactoferrin,
lactoperoxidase, lysozyme, and possibly
N-acetyl-ß-D-glucosaminidase (NAGase). But
this anti-microbial defence mechanism of milk
is temporary, which with time gets weaker,
making milk prone to microbial spoilages.
Conventionally, milk processing is done by
heating of the milk to certain temperature for
fixed duration of time, which causes significant
reduction in microbial population. Various Microfiltration (MF): The MF may be used to
levels of thermal treatments are practiced for reduce the microbial load in liquid milk and
processing milk based on the thermal harshness increase the shelf life without any changes in
of treatments, i.e. thermization, pasteurization its composition and sensorial qualities. Using
and sterilization. Thermal processing has modified membrane structures, microbial load
been widely adopted as the treated product can be reduced significantly without affecting
is recognized safe for consumption with the milk composition.
longer storage life. But with advancement of
understanding, particularly in the domain Ultraviolet light (UV): The UV light radiation
“Dairy Science”, some undesirable changes used for food processing has wavelength varying
are reported during heating of milk, such as, from 100 to 400 nm. Raw milk has UV radiation
browning, development of a cooked flavour, loss absorption coefficient of 290 cm-1 at 253.7 nm
of nutrients, inactivation of bacterial inhibitors wave length of UV radiation.
and impairment of rennet ability, etc. Therefore,
the need of non-thermal processing was realized Cold plasma: This is an emerging technology
and its practical applicability in milk processing which was earlier used in the field of bio-
was considered as an alternative to conventional medical devices, textiles and water sterilization.
heat treatment. The term non-thermal Recently this cold plasma technology is finding
processing is a novel concept of processing its applicability in food preservation due to its
which is limited not only to milk but also to other capacity of decontaminating microorganisms.
food products. Non-thermal food processing Plasma is defined as 4th stage of matter, which
targets elimination of microorganisms or is in electrically charged or ionised form, but
any other biological entities without causing without any fixed shape or volume.
significant rise in temperature, which prevents
chain of undesirable reactions in foods. 3.4 Meat and poultry products
The livestock sector of India is one of the largest
Some widely acceptable non-thermal processes in the world and accounts for 11.6% of the global
and their applications in milk processing are livestock population and stands second in cattle
discussed in brief below. & goat population and third in sheep world
over. Animal Husbandry, Dairy and Fisheries
High pressure processing (HPP): HPP is sector is the key driver of economy in terms of
the method of deactivating microorganisms contribution to GDP and employment. Total
by the application of high pressure for milk meat production stood at 7.4 MT in 2016-17.
preservation. Generally, HPP for food processing Meat processing capacity in India is estimated
refers to the application of pressure range at 1 million tonne per annum, of which only
between 100 and 1200 mega Pascal (MPa). 40-50% is utilised. Meat is one of the major
products exported from the country and 70%
Pulsed electric field (PEF): This non-thermal of buffalo meat is exported from the country.
method of processing involves flowing of short Poultry is a key contributor to India’s livestock
pulses of high electric field through fluid or sector and the industry accounts for around
semi-fluid foods, which causes break down of 3.5% of agriculture GDP, growing at 8-10% per
microbial cell membrane, causing cell rupture annum. India produces 88.14 billion eggs and
and eventual microbial cell death. 3.46 MT of broiler meat annually. Therefore,

there is good potential for this sector to grow. Meat processing can create different types of
Frozen meat and poultry products are gaining product composition that maximizes the use of
popularity due to their hygienic nature. edible livestock parts and are tasty, attractive
and nourishing.
Meat consumption in developing countries has
been continuously increasing from a modest The advantage of meat processing is the
average annual per capita consumption of 10 integration of certain animal tissues (muscle
kg in the 1960s to 26 kg in 2000 and will reach trimmings, bone scraps, skin parts or certain
37 kg around the year 2030, according to FAO internal organs which are usually not sold in
projections. This forecast suggests that in a few fresh meat marketing) into the food chain as
decades, developing countries’ consumption valuable protein-rich ingredients. Animal blood,
of meat will move towards that of developed for instance, is unfortunately often wasted
countries where meat consumption remains in developing countries largely due to the
stagnant at a high level. absence of hygienic collection and processing
methods and also because of socio-cultural
The rising demand for meat in developing restrictions that do not allow consumption of
countries is mainly a consequence of the fast products made of blood. While half of the blood
progression of urbanization and the tendency volume of a slaughtered animal remains in the
among city dwellers to spend more on food than carcass tissues and is eaten with the meat and
the lower income earning rural population. It is internal organs, the other half recovered from
generally accepted that balanced diets of meat bleeding represents 5-8% of the protein yield
and plant food are most effective for human of a slaughter animal. In the future, we cannot
nutrition. afford to waste such large amounts of animal
protein. Meat processing offers a suitable way
The greater demand for meat output will be met to integrate whole blood or separated blood
by a further shift away from pastoral systems to fractions (known as blood plasma) into human
intensive livestock production systems. As these diets.
systems cannot be expanded indefinitely due to
limited feed availability and for environmental Meat processing technology
reasons, other measures must be taken to Meat processing technologies were developed
meet growing meat demand. The only possible particularly in Europe and Asia. The European
alternatives are making better use of the technologies obviously were more successful,
meat resources available and reducing waste as they were disseminated and adopted to
of edible livestock parts to a minimum. This a considerable extent in other regions of the
is where meat processing plays a prominent world – by way of their main creations of burger
role. It fully utilizes meat resources, including patties, frankfurter-type sausages and cooked
nearly all edible livestock parts for human food ham. The traditional Asian products, many of
consumption. Meat processing, also known as them of the fermented type, are still popular
further processing of meat, is the manufacture of in their countries of origin. But Western-style
meat products from muscle meat, animal fat and products have gained the upper hand and
certain non-meat additives. Additives are used achieved a higher market share than those
to enhance product flavour and appearance. traditional products. In Asia and Africa, there
They can also be used to increase product are a number of countries where meat is very
volume. For specific meat preparations, animal popular but the majority of consumers reject
by-products such as internal organs, skin or processed meat products. This is not because
blood, are also well suited for meat processing. they dislike them but because of socio-cultural

reasons that prohibit the consumption of certain
livestock species, either pork or beef, depending
on the region. Because processed products are
mostly composed of finely comminute meat
which makes identifying the animal species
rather difficult, or are frequently produced
from mixes of meat from different animals,
consumers stay away from those products to
avoid eating the wrong thing. But, when the
demand for meat increases and a regular and
cost-effective supply can only be achieved by
fully using all edible livestock parts, consumers
will need to adjust to processed meat products, 3.6 Consumer food products
at least to those where the animal source can (RTE, packaged foods, packaged
be identified. Younger people already like to eat drinking water, alcoholic and non-
fast-food products such as beef burgers or beef alcoholic beverages)
frankfurters. Outlet chains for such products and The combined food and beverages service
other processed meat products will follow when market is worth ` 2.04 lakh crore, growing at
the demand increases. CAGR of 23-24%. The fastest growing consumer
foods include packaged foods, aerated soft
3.5 Marine Products drinks, packaged drinking water and alcoholic
Indian fisheries and aquaculture is an important beverages. According to CRISIL Research
sector of food production, providing nutritional estimates, the market size of the consumer foods
security to the food basket, contributing to industry in India is ` 780 billion in 2012-13. It is
the agricultural exports and engaging about believed that this industry will continue to grow
14 million people in different activities. With at a healthy pace over the medium term, driven
diverse resources ranging from deep seas to by a number of macroeconomic, demographic
lakes in the mountains and more than 10% of the and social factors.
global biodiversity in terms of fish and shellfish
species, the country has shown continuous and Quick Service Restaurants (QSR) and casual
sustained increments in fish production since dining are the two most popular formats that
independence. India has the largest coastline form 45% and 32% of the overall market,
with good potential for marine products. India respectively. Brands/ chains of both Indian
produces 11.40 MT of fish. Riding on a robust and MNC brands are still less penetrated and
demand for its frozen shrimp and frozen fish there exists a large opportunity in this space to
in international markets, India exported 11.35 create bigger restaurant chains. People in the
lakh MT of seafood worth an all-time high of young category are the most likely to eat out –
US$ 5.78 billion (` 37, 870 crore) in 2016-17 with around 58% of the people eating out are in the
USA and South East Asia continuing to be the age group of 18-30 years. This is the segment
major importers while the demand from the with the maximum disposable income and in
European Union grew substantially during the the demographic pyramid, the largest segment
period. Frozen shrimp maintained its position within India.
as the top item of export, accounting for 38.28%
in quantity and 64.50% of the total earnings Growth in investments in the Food and
in dollar terms. Shrimp exports increased by Beverages services sector: A large number
16.21% in terms of quantity and 20.33% in of foreign brands have entered India over the
dollar terms. Frozen fish was the second largest last 15 years – with McDonald’s, Pizza Hut,
export item, accounting for a share of 26.15% Dominos, Subway, KFC, Starbucks, Dunkin
in quantity and 11.64% in dollar earnings, Donuts among the successful ones. In the initial
registering a growth of 26.92% in terms stages, foreign brands were more concerned
of value. about Master Franchise concepts and were not

open to investment exposure in the country. The challenge: In 2005, Dominos was facing
With the success of many restaurant chains and huge losses financially. Business was highly cost
the Indian entrepreneurs wanting to balance focused, key divisions like quality and HR were
risks, newer investment led models have been operating as one or two men teams and focus on
explored including complete ownership and supply chain and operations was lacking. They
JVs. Foreign brand owners are now exploring had also opened as many as 40 new stores at a
how they can be part of the investments in frenzied pace and lacked the capability to run
India and reap a better return on investment them effectively and efficiently.
in the bargain. A case in point has been the
success of Dominos in India as a franchise unit The solution: They started by incentivising
and its valuation which at one point was much employees by offering them employee stock
higher than that of the foreign brand owner. ownership plans (ESOPs). They also made
Besides direct investments by foreign brands, major changes to their entire supply chain and
there will also be large scale investments in logistics network. They launched an IPO in 2011
the value chain – from kitchen equipment, cold which was oversubscribed by 311%. Dominos
chain, to development of a vibrant processed also altered its products to suit Indian tastes
foods market in India with the introduction of localised toppings like
“Peppy Paneer” and “Chicken Chettinad,” and it
Success story: Dominos India: was also one of the first fast food chains in India
Jubilant Food Works Limited is a Jubilant Bhartia to spread its wings into the mini-metros and tier
Group company. It was incorporated in 1995 II & III locations. What works for the company
and initiated operations in 1996. The company is that it has been successful in establishing
got listed on the Indian bourses in February a strong brand recall with the “30 minutes”
2010. The company and its subsidiary operate delivery proposition.
Dominos Pizza brand with the exclusive rights
for India, Nepal, Bangladesh and Sri Lanka. The Result: The company is the market leader in the
company is the market leader in the organised organised pizza market with a 67% share in the
pizza market in India with a 67% market share. pizza home delivery segment in India. In 2011,
Domino’s Pizza India operates 772 restaurants Jubilant was valued at par with the US brand owner,
located in 28 states and Union Territories, Dominos. Dominos India is the second largest
covering 158 cities across the country. member firm of the chain after Dominos USA.

4. Govt. Policy
4.1 Foreign Direct Investment (FDI)
4.2 Other enabling support for investment
4.3 National Food Processing Policy
4.4 Role of mega Food Park and

their linkages with FPOs in promotion
of food processing sector

4.1 Foreign Direct Investment (FDI)
 100% FDI is permitted under the automatic
route in food processing industries
 100% FDI is allowed through Government

Approval route for trading (including
e-commerce) in respect of food products
manufactured in India
4.3 National Food Processing Policy
The objective of policy is to reduce wastage,
 100% FDI is allowed for companies increase value addition, ensure better prices of
undertaking Single Brand Retail Trading farmers while ensuring availability and quality
in India (49% under Automatic route and produce to consumers. The major highlights of
approval route for beyond 49%) policy is given below:
 Up to 51% FDI is permitted under approval  Single window clearance system
route for Multi Brand Retail Trading with a
 Promote fruit processing clusters
condition that the minimum amount to be
brought-in as FDI would be USD 100 million  Strengthen agriculture marketing
and 50% of this amount to be invested in infrastructure
back-end infrastructure.
 Facilitation of land allotment
 The foreign capital invested in India is
 Promote mage food parks/food parks
generally allowed to be repatriated after
payment of taxes due, except in cases where  Support development of logistic
the sectoral or other conditions specifically infrastructure
mentions non-repatriation. The repatriation
is governed by the Foreign Exchange  Compliance with food safety regulatory
Management (Current Account Transaction) requirements
Rules, 2000, as amended from time to time.
 Support to business units having
established backward integration
4.2 Other enabling support for
investment
 Government of India facilitates the
4.4 Role of mega Food Park and
investment in the food processing sector
their linkages with FPOs in
promotion of food processing sector
through a number of incentives announced
To successful deal with a range of challenges that
from time to time. The major incentives are
confront farmers today, especially the constraint
as under: Income tax relief under sections 80
imposed by the small size of holdings of small
IB, 35 AD and 10 AA of Income Tax Act,1961
and marginal farmers, member based Farmers
 Exemption of Goods and Services Tax for 45 Producers Organisations (FPOs) offer a pathway
categories of food products and a lower rate to access financial and non-financial inputs and
of 5% for 49 categories of food products services and appropriate technologies, reduce
transaction so as cost, tap high value markets
 GST for food processing machinery ranges and enter into partnerships with private entities
from 5% (machines for cleaning, sorting or or more equitable terms.
grading, seed, grain or dried leguminous
vegetables; machinery used in milling The scheme of mega food park aim to create
industry or for the working of cereals or modern infrastructure of food processing and to
dried leguminous vegetables other than provide a mechanism to bring together farmers,
farm type machinery and parts thereof), 12% processors and retailers and link agriculture
(dairy machinery, milking machines), 18% production to the market so as to ensure
(machinery for the industrial preparation maximising value addition, minimising wastage,
or manufacture of food or drink, other than increasing farmers’ income and creating
machinery for the extraction or preparation of employment opportunity especially rural areas.
animal or fixed vegetable fats or oils) to 28% Government has operationalized 42 mega food
(freezers and refrigerating equipment, etc.) parks for setting up in the country.

5. Agencies involved
in Food Processing /
Export / R&D

There are a number of organisations working
exclusively on food related aspects and a list of
major organisations is given as under:
In addition, all State Agriculture Universities,

private universities and private colleges also
undertake R&D and offer courses / training under
food processing, food science & technology and
food engineering.
Policy Formulation Ministry of Food Processing Industries MoFPI State Nodal Agencies
Food Safety Food Safety and Standards Authority of India (FSSAI) Export Inspection Council
Agriculture and Processed Food Products Export Development Authority (APEDA)

Marine Products Export Development Authority (MPEDA) Commodity Boards under the
Promotion and Development Ministry of Commerce and the Ministry Agriculture/Food Processing; Coffee, Tea, Spice,
Grape processing, Meat and poultry processing, dairy development, etc. Federation of Indian
Chambers of Commerce and Industry (FICCI) / Confederation of Indian Industry (CII)
Central Food Technology Research Institute (CFTRI), Mysore, Karnataka

National Institute for Food Technology and Entrepreneurship Management (NIFTEM),
Kundli, Haryana
Teaching, Research
Central Institute of Crop Processing Technology, Thanjavur, Tamilnadu
Extension & Consultancy
Division of Food Science and Technology, IARI, New Delhi Indian Veterinary Research Institute,
Bareilly, UP
National Dairy Research Institute, Karnal, Haryana
Association of Industry All India Food Processors Association (AIFPA)

And Food Scientists Association of Food Scientists and Technologist of India (AFSTI)

6. Credit to Food
Processing
Industries
6.1 RBI Guidelines for Loans
to Food Industries
6.2 Credit Outstanding

6.1 RBI Guidelines for Loans to 6.1.3 Export Credit
Food Industries Export credit, which includes pre-shipment and
RBI has included the loans for post-harvest post-shipment credit, up to a specified limit as
management and food and agro processing prescribed under the extant RBI guidelines on
industries under the priority sector lending with Priority Sector Lending (Targets & Classification)
the details as under: is covered under the Priority Sector Lending.
6.1.1 Agriculture 6.2 Credit Outstanding

Farm Credit: Loans for pre-harvest and post- RBI disseminate the data relating to sectoral
harvest activities, viz. spraying, weeding, deployment of credit on a monthly basis with
harvesting, sorting, grading and transporting of the data collected from select 46 scheduled
their own farm produce. commercial banks and accounts for about
95% of the total non-food credit deployed by
Agriculture Infrastructure: Loans for all scheduled commercial banks. The status of
construction of storage facilities (warehouse, credit to food manufacturing and processing
market yards, godowns and silos), including cold industries for the last five years is as under:
storage units / cold storage chains designed to
store agricultural produce/products, irrespective During the past five years from 2011 to 2016,
of their location. the credit limit to the food processing Sector
has grown at an average annual growth rate
Ancillary Activities: Loans to food and agro of 14.59%. With this growth rate, the projected
processing up to an aggregate sanctioned limit credit limit for the year 2025 would be around
of ` 100 crore per borrower from the banking ` 11.34 lakh crore.
system.
Besides the credit offered by the banks in India,
6.1.2 Micro, Small & Medium Enterprises the food processing industry also benefits
(MSMEs) from the equity infusion through the Private
Loans for food and agro processing are classified Equity / Venture Capital investments. The total
under Micro and Small Enterprises, provided investments in the sector through PE / VC is
the units satisfy investments criteria prescribed steadily growing from USD 9500 million in
for Micro and Small Enterprises, as provided in 2012 to USD 17000 million in 2015 (MoFPI, CII &
MSMED Act, 2006. KPMG, 2017).
(` crore)
S. Year Credit Outstanding
No
1 2012 135964
2 2013 151677
3 2014 173545
4 2015 191683
5 2016 209170

Food Manufacturing & Processing Food Manufacturing & Processing-
Credit Outstanding (` Crore)
900000
800000 100000
700000
600000 80000
500000
60000
400000
300000 40000
200000
20000
100000
0 0
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
No. of Accounts Rice Mills, Flour & Dal Mills

Credit Limit (` crore) Sugar
Edible Oils & Vanaspati
Credit Outstanding (` crore) Tea Processing
Processing of Fruits & Vegetables
Others
Credit Limit Projection (` crore)

1200000
1000000
800000
600000
400000
200000
0
2017 2018 2019 2020 2021 2022 2023 2024 2025

7. Technological
Development
and Investment
Opportunities
7.1 Established Activities
7.2 Emerging technologies in Food

Processing / Food Preservation

7.1 Established Activities
The following segments / areas of food processing
industry are well established in India with number
of registered and unregistered units. However,
considering significantly high level of post-harvest
losses of various agricultural produce, low level
of value addition and processing and growing
demand for the high value products, there is
ample scope for investments in these areas.
7.2 Emerging technologies in

Food Processing / Food Preservation
The following are the emerging technologies
in food processing / preservation which have
great scope for future commercial applications
in the food processing industry. However, some
of the technologies mentioned hereunder
(e.g. individual quick freezing (IQF), aseptic
packaging, canning, controlled atmosphere
storages, ripening chambers, etc.) are already
being established in India commercially and are
gaining momentum as the modern technologies
in food processing / preservation.
S. Segments Potential areas for funding S. Segment Emerging areas for future investment
No No.
1 Grains & Pulses Rice mill, dal mill, flour mill, bakeries, 1 Food Preservation / Controlled atmosphere storages, Pre-
starch & starch products, corn / wheat Storage cooling units, ripening chambers,
flakes, fermented products, malted silos.
foods, grain based alcohol, etc. 2 Food Processing Aseptic pulping, UHT processing,
2 Fruits & Vegetables Juices, concentrates, pulp, slices, individual quick freezing, minimal
jams, jellies, purees, frozen and processing, irradiation, high pressure
dehydrated products, etc. processing, pulsed electric field
3 Dairy products Liquid milk, whole milk powder, processing, high intensity pulsed
skimmed milk powder, condensed milk, light processing, application of
ice cream, butter, ghee, cheese and ultrasound / microwave / ozone
indigenous milk products (Rasogolla, in food processing, membrane
Gulab jamun, Shrikhand etc.) processing, ohmic heating, radio
frequency processing, infrared
4 Marine products Fresh, frozen, dried and canned
heating, designer foods (functional
products.
& nutraceuticals, etc.), application of
5 Meat & Poultry Fresh meat, chilled, frozen and packed nano-technology, etc.
meat, value added meat products
3 Food Packaging Aseptic packaging, intelligent or
(Sausages, ham, bacon, nuggets etc.),
smart packaging, edible / water
egg & egg products etc.
soluble packaging, modified
6 Oils & Fats Edible oils, spice oils and oleoresins, atmospheric packaging, vacuum
lard, margarine, etc. packaging, application of radio
7 Consumer Snack food, biscuits, ready-to- frequency identification (RFID)
Products eat (RTE) food, extrusion cooked system and nano-technology in food
products, non-alcoholic beverages, packaging, etc.
etc. 4 Food safety / FSSA / HACCP / ISO 22000 / ISO 14000
8 Animal Feed Poultry, cattle feed and pet food. Quality certification etc.

8. Major GoI Schemes
and Initiatives
8.1 Central Sector Schemes
8.2 Centrally Sponsored Schemes
8.3 Other Initiatives

There are a number of central sector and centrally (NHM), Horticulture Mission for North East &
sponsored schemes operating for promotion Himalayan States (HMNEH), National Bamboo
of cold chain, agri marketing infrastructure Mission (NBM), National Horticulture Board
and food processing industries. The details are (NHB), Coconut Development Board (CDB) &
discussed in this section. Central Institute for Horticulture (CIH). The
subsidy for postharvest management and cold
8.1 Central Sector Schemes chain projects implemented through NHM and
8.1.1 Pradhan Mantri Kisan SAMPADA Yojana NHB are also part of the MIDH. Details of the
Government of India has approved a new Central scheme can be obtained from the link http://
Sector scheme – PM Kisan SAMPADA (Scheme for www.midh.gov.in/PDF/MIDH_GL(E).pdf
Agro Marine Processing and Development of Agro
Processing Clusters) with an outlay of ` 6000 crore 8.2 Centrally Sponsored Schemes
for the period 2016-20 co-terminus with the National Food Security Mission (NFSM) - GoI of
14th Finance Commission cycle. The scheme India enacted Food Security Act with a right to
will implemented by Ministry of Food Processing every targeted beneficiary belonging to eligible
Industries, GoI New Delhi. SAMPADA is the targeted public distribution system to receive
comprehensive package aimed at creation of 5 kilogram of food grains at subsidised price.
modern infrastructure from farm gate to retail outlet. The scheme is implemented through State
The scheme consists of the following sub-schemes: Government and required investment in
• Mega Food Parks post- harvest management, especially
warehousing and transport logistics.
• Integrated cold chain and preservation Details of NFSM for 2017-18 can be obtained
infrastructure from the link http://nfsm.gov.in/Circulars_
• Creation/expansion of food processing and Notifications/2016-17/ActionPlan2017_18.pdf
preservation capacities
8.3 Other Initiatives
• Infrastructure for agro processing clusters 8.3.1 Start-up India
• Creation of backward and forward linkages The programme was announced in January
2016 with an action plan for promoting the bank
• Food safety and quality assurance financing for Start-Up ventures to boost the
infrastructure entrepreneurship and encourage start-up with
• Human resources and institutions job creation. As per the Department of Industrial
Policy and Promotion (DIPP), a Start-up means
The details are available in link http://mofpi. an entity incorporated or registered in India
nic.in/sites/default/files/important_notice- not prior to seven years (for biotechnology not
sampada-19.05.2017_0.pdf prior to ten years) with an annual turnover not
exceeding ` 25 crore in any preceding financial
8.1.2 Mission for Integrated Development of year working towards innovation, development
Horticulture (MIDH) or improvement of products, processes or
MIDH has been launched by Ministry of services or if it is a scalable business model with
Agriculture, GoI by subsuming various existing a high potential of employment generation or
schemes such as National Horticulture Mission wealth creation.

and become job creators. Over 16,000 new
enterprises have come up through this scheme
in activities as diverse as food processing,
garments, diagnostic centres, etc. The scheme
offers a huge opportunity for the investors in
the food processing sector. The guidelines for
A Start-up India hub was operationalised by Stand-up India Scheme can be accessed at www.
GoI in April 2016 which acts as single point of standupmitra.in.
contact for the entire ecosystem and to enable
knowledge exchange and access to funding. The SIDBI operates and maintains the Stand-up India
hub assists the start-up through the latter’s life- portal and acts as connect centre along with
cycle with specific focus on obtaining financing, NABARD. The role of NABARD in the scheme is
feasibility testing, business structuring advisory, to arrange the handholding support for trainee
enhancement of marketing skills, technology borrowers, liaise with the banks for follow-up
commercialisation and management evaluation. in potential cases, review and monitor through
Various State Governments in India have launched District Level Committee and organise events for
specific policy and schemes for promoting start-up experience sharing, etc.
development. A Start-up India online hub was also
launched in June 2017. 8.3.3 Skill India
The skill development in food processing
Small Industries Development Bank of India industry is one of the major challenges today.
(SIDBI) has developed a SIDBI Start-up Mitra There is dearth of skilled manpower. As per a
portal wherein the details of advantages of the study conducted by National Skill Development
State-specific policies and schemes can be Corporation (NSDC) on human resources and
explored. The details of modes of financing of skill requirement in food processing sector,
Start-Ups can be accessed from https://smallb. the annual human resource requirement in
sidbi.in. GoI has established the “Fund of Funds food industry is estimated at 5.3 lakh people,
for Start-ups” with SIDBI for the purpose of including one lakh, in organised sector. Skill
contribution to Alternate Investment Fund (AIF) India programme was launched in July 2015 to
registered with Securities and Exchange Board train a minimum of 300 million people in India in
of India (SEBI), which in turn, will invest in Start- different sectors by 2022. The following are some
ups. Start-ups related to food processing / food of the flagship programmes of Government
retailing, etc. are also eligible for investment of India for promoting skill development in
from the Fund of Funds for Start-ups. the country.
NABARD also invests in Venture Capital Funds 8.3.3.1 Prime Minister Kaushal Vikas Yojana
(VCFs) to facilitate venture investments in (PMKVY)
agriculture and rural development so as The scheme was launched by GoI in July 2015
to promote technological innovations and to skill one crore youth of the country with an
technology dissemination in the sector. NABARD’s outlay of ` 12000 crore. It is being implemented
commitments in VCF have led to venture capital by the NSDC. The PMKVY (2016-2020) is being
investments to the tune of ` 650 crore in 37 implemented by the centre along with the
portfolio companies. Noteworthy innovations states which has three training formats, viz.
which may be related to the food processing Short Term Training (STT), Recognition of Prior
sector are solar operated micro cold storages and Learning (RPL) and Special project. Pradhan
solar dryers, supply chain aggregation through Mantri Kaushal Kendra (PMKK) plays a crucial
mobile application platform, etc. role in imparting vocational training to the
youth. Under PMKVY, training is imparted for
8.3.2 Stand-Up India (SUI): pickle making technician, traditional snacks
The Stand-up India scheme was launched by and savoury maker, baking technician, mixing
Government of India in April 2016 to support at technician, plant biscuit production specialist,
least one SC/ST and one women entrepreneur etc. The number of candidates trained under
per bank branch to set up greenfield enterprises the RPL and STT under food processing stood at
in manufacturing, services or the trading sector 2119 and 1038 respectively as on 24.08.2017.

The Government has set up a Food Sector
Skill Council called Food Industry Capacity &
Skill Initiatives (FICSI) in Federation of Indian
Chambers of Commerce and Industry (FICCI)
which is promoted by FICCI with financial
support by NSDC. It has 46 affiliated Training
Partners and 192 Training Centres across
26 States in the country. FICSI is working on
identification of job roles and competencies
required for each job role so as to develop
National Occupational Standards for different
sectors of food processing. The two institutions
under the administrative control of MoFPI,
i.e. National Institute of Food Technology policies, fiscal incentives, etc. are shared with
Entrepreneurship and Management (NIFTEM), potential investors to attract investments in
Haryana and Indian Institute of Crop Processing the food processing sector. Further, Ministry
Technology (IICPT), Tanjavur, Tamil Nadu are is collaborating with Invest India to help the
conducting regular trainings in food processing investors in terms of locating joint venture
on self-financing basis & sponsored funds from partners, extending handholding services,
others sources including under PMKSY. expedite regulatory approvals, etc. The investors
can put their query in the Investors Portal for
8.3.3.2 Udaan obtaining the necessary information.
It is the Special Industry Initiative (SII) for
Jammu & Kashmir to train 40000 unemployed 8.3.6 Ease of Doing Business
youth in J&K over a period of 6 years. It is funded Various reforms / flagship programmes being
by the Ministry of Home Affairs and implemented implemented by India for holistic development
by the NSDC of India. Increasing investments in of the Industrial, infrastructure sectors have
the sector have led to higher demand for more resulted in improvement in the investment
qualified people. climate. As per the World Bank’s Report on doing
business, India’ s rank for ease of doing business
8.3.4 Make in India has improved to 130 in 2017 (from 131 in 2016) out
The programme was launched by GoI in of a total of 190 countries. India has performed
September 2014. Under this initiative, 25 thrust better in many of the indicators namely getting
sectors, including manufacturing as well as electricity, trading across borders, paying
relevant services sectors, have been identified. taxes, registering property, enforcing contracts,
The major objective of the scheme is to improve resolving insolvency, protecting the minority
the competitiveness of the private and public investors, etc. Between April 2000 and June
sector firms operating in the country, facilitating 2017, India has attracted approximately USD
their integration into the global value chains and 342.40 billion of FDI, of which USD 7.81 billion
enabling them to compete better in the global was in food processing sector, making it the 13th
markets. The various objectives of the scheme largest sector receiving FDI in India and almost
also include investor facilitation, ease of doing 80% of sectors’ FDI since April 2000 has been
business, overall amplification of investment received since April 20124.
promotion and outreach, etc. The initiative has
made a tremendous impact on the investment For ease of doing business, FSSAI has introduced
climate of the country which can be evidenced initiatives such as online application for
by significant growth of 46% in FDI equity inflows registration and licensing of food business,
and highest ever FDI inflows at UD 55.5 billion single window clearance for imported food
in 2015-16. products, trainings for food safety professionals,
constitution of scientific panels and committees
8.3.5 Investors’ Portal for review, updating and enactment of new
MoFPI is having a dedicated investor portal standards and implementation of IT interfaces
in which a range of information like resource to minimise visits of food business operators to
base, availability of land, state specific FSSAI offices.

9. Quality Control
& Regulatory
Environment
9.1 Food Safety and Standards Act, 2006
9.2 HACCP
9.3 ISSO 22000 Food Safety Management

Systems

9.1 Food Safety and Standards hygiene requirements for Food Business Operators
Act, 2006 (FBOs). Further, FSSAI requires every food business
The FSS Act was enacted by the Government of operator to have a documented Food Safety
India in 2006 which was operationalised with Management System (FSMS) plan, which includes
notification of Food Safety and Standards Rules, sector-specific Good Hygienic Practices (GHPs)
2011 and six regulations w.e.f 05 August 2011. and Good Manufacturing Practices (GMPs).
The Act envisages regulation of manufacture,
storage, distribution, sale and import of foods FSSAI has created an online Food Licensing and
to ensure availability of wholesome and Registration System (FLRS) and all States/UTs
hygienic food for human consumption. The (except Nagaland) are issuing Food Licenses /
Food Safety and Standards Authority of India Registrations through online mode. Common
(FSSAI) was established in 2008 under the aegis Service Centres (CSCs) are also authorized to
of Ministry of Health and Family Welfare to register food businesses, which has particularly
enforce the provisions of the new law. Under benefitted petty food businesses.
the FSS Act, FSSAI is the regulatory body for all
matters related to food safety and standards 9.2 HACCP
in the country. FSSAI & State Food Authorities Hazard Analysis and Critical Control Point
are jointly responsible for implementation (HACCP) is a management system in which
an enforcement of FSS Act, 2006. States/ UT food safety is addressed through the analysis
Governments have appointed Commissioners and control of biological, chemical, and
of Food Safety, notified Adjudicating Officers, physical hazards from raw material production,
Designated Officers and Food Safety Officers for procurement and handling, to manufacturing,
their respective jurisdictions to perform various distribution and consumption of the finished
functions mandated under the Act. product. For successful implementation of a
HACCP plan, management must be strongly
All food businesses in India across the food value committed to the HACCP concept. A firm
chain are required to be licensed or registered commitment to HACCP by top management
under the provisions of the FSS Act 2006. FSSAI provides company employees with a sense of
has laid down general and specific food safety and the importance of producing safe food.
HACCP
Hazard Analysis Critical Control Points
Danger to health Investigation Crucial for Handling of Position in

of the hazard containment conditions the process

HACCP is designed for use in all segments of distribution and related operations. This food
the food industry from growing, harvesting, safety management system harmonises various
processing, manufacturing, distributing, exiting national and industry certification
and merchandising to preparing food for schemes. The food industry can implement
consumption. Prerequisite programmes, such as this food management system to export their
current Good Manufacturing Practices (cGMPs), products successfully.
are an essential foundation for the development
and implementation of successful HACCP plans. 9.4 International Food Standards
The Codex Alimentarius of “Food Code” is a
9.3 ISSO 22000 Food Safety collection of standard guidelines and codes of
Management Systems proactive adopted by the Codex Alimentarius
ISSO 22000 is an international standard that Commission. Codex has worked since 1963 to
specifies the requirement for a food-safety create harmonised International Food Standards
management system and combines the following to protect the health of consumer all s and ensure
generally recognised key elements to ensure fair trade practices. The Codex Alimentarius covers
food safety along the food chain to the point of all foods, whether processed or semi-processed
final consumption interactive communication, or raw. In addition to standard for specific foods,
system management, prerequisite programmes, the Codex Alimentarius contain general standard
and HACCP principles. It delivers a common covering matters such as food labelling, food
global framework of safety requirements for hygiene, food additive and pesticide residue,
all organisations in the food supply chain, and producers’ for assessing the safety of foods
including crop production, processing, derived from modern biotechnology.

10. SWOT Analysis
of Indian Food–
Processing
Industry
10.1 Strengths
10.2 Weaknesses
10.3 Opportunities
10.4 Threats

10.1 Strengths 10.3 Opportunities
• Abundant availability of diverse types of raw • Diversification into cultivation of high value
material and varied agro-climatic zones agricultural crops by the farmers
• Leading producer of various agricultural • Setting up of Special Economic Zones

commodities such as milk, fruits and (SEZs), Agri-Export Zones (AEZs) and
vegetables, marine products, etc. mega food parks for providing the needed
infrastructure for small scale units.
• Priority sector status for agro-processing
given by the central Government • Rising income levels and changing
consumption patterns of Indian population
• Growing domestic market
• Emerging scope for functional foods,
• Proximity to growing international markets geriatric foods, low fat foods, etc.
like Gulf, Middle East etc. with a sea route.
• Opening of global markets
10.2 Weaknesses
• Lack of adequate infrastructural facilities, viz., • Rationalisation of food laws and enabling
Power, Road & Rail connectivity, Storage, etc. policies of GoI & State Governments for
development of the sector.
• Large number of intermediaries in the
supply chain leading to wastage and price • Increased demand for ethnic food in most
rise at each level. of the countries due to increased NRI
population in those countries.
• Capital intensive - High requirement of
working capital because of the seasonal 10.4 Threats
nature of raw material • Preferences for fresh food than chilled or
frozen
• Lack of established linkages between R&D
labs and the industry. • Competition from other countries / players

11. Issues and
Challenges

The following are the illustrative list of issues and innovations. There is also lack of applied
bottlenecks for steady growth of food processing research on processes and technology.
sector in the country.
 High cost of manufacturing and packaging
 Lack of comprehensive national food making the products as luxury items and
processing policy leading to inconsistency unaffordable to common population.
in Central and State policies.
 Fluctuation of raw material prices leading
 Delays in land acquisition due to to viability issues in food industries.
requirement of conversion of land use Sudden rise in the prices of raw materials
(non-agricultural use permission). have resulted in temporary or complete
shutdown of food factories in the past.
 Lengthy procedures for Government
clearance - The clearances from Government  Inadequate flow of credit, especially
apartments like Municipal/ Town Planning for working capital requirement. The
Authorities, Pollution Control Board, State assessment on working capital cycle
Electricity Department, Boiler Inspector, etc. followed by banks does not hold good due
usually delay project implementation. to seasonal availability of raw materials.
 Dominance of unorganized sector (42%)  Non-availability of skilled man power

& small scale (28%) in the food industry for food processing is a big challenge.
operating at low scale and high cost of Industrial training institutions providing
production. skill-based training / diploma courses are
limited.
 Organised production of raw materials for
processing, leading to low recovery rate,  Poor adoption of quality standards by food
high cost of raw materials and low quality industry leading to lowering of brand value
products. of Indian Food Industry.
 Inadequate facilities for mentoring of Start  Lack of market intelligence and brand
Ups & pilot testing of technologies and building of Indian Food Processing Industries.

12. Policy
Interventions /
Suggested
Action Plan

The following are few interventions among working capital finance to food industry,
various stakeholders which may facilitate the especially considering the recent initiatives
steady growth of the food processing sector in of the GoI such as Make in India, etc.
the country.
 Providing affordable credit to food
 A National Food Processing Policy may be processing Industry to promote creation of
formulated to follow a uniform approach investments in the sector.
for food processing sector on Pan-India
basis.  Enlarging the scope of credit guarantee
fund / creation of a risk fund will help in
 Relax non-agricultural land use permission mitigating stress on banking industry on
for food industry procuring raw materials financing the sector which is mostly of
directly from the farmers and to Farmer seasonal nature and capital and labour
Producer Organisations intensive.
 The Single Window approach for  Infrastructure for setting up food research
Government clearances may need to be in and testing facilities, traceability may
place in all the States. be promoted in a big way to provide safe
food in domestic market and also remain
 Exclusive Food Technology Skilling Mission competitive in world market.
for bridging the skill gap in food in view of
the emerging food safety systems and food  Creation of a National Brand Equity Fund
standards which require GHP & GMP. for Food Industry with a contribution from
Industry Associations, GoI, etc. to India
 The Model Contract Farming Facilitation Act brands internationally.
2017 under consideration of Government
may need to be expedited.  Make in India to give focus on manufacture
of plant and machinery and packaging
 Constituting a task force to study the materials locally to reduce cost of
working capital requirement, adequacy of production.

13. Financial support
from NABARD
13.1 Refinance
13.2 Direct Finance

13.1 Refinance
NABARD provides refinance by way of short
term and long term credit to Commercial Banks,
Cooperative Banks, Regional Rural Banks (RRBs)
and non-banking finance companies (NBFCs)
to meet the credit and financial needs of the
food processing industry. The short term credit
(production credit) assists the rural financial
institutions to meet the production and working
capital needs of farmers, while the long term
credit (investment credit) supports the asset
creation and capital formation. Refinance is
available for various agriculture and allied
activities and off-farm activities including food
and agro processing. NABARD also identifies
thrust areas from time to time to boost the credit
flow to a particular sector, wherein up to 100%
refinance would be available to the eligible result in providing diversified and much needed
institutions. core processing infrastructure viz., 1.6 lakh MT
of dry warehouse, 83500 MT of silos, 49300 MT
13.2 Direct Finance of old storage, 11800 MT of freezer capacity,
Besides refinance, NABARD also provides direct 11 MT per hour of Individual Quick Freezing
finance to the eligible entities under its different facility, 123 MT per hour of sorting and grading,
loan products for establishment of infrastructure 2040 MT of controlled ripening chambers and
related to food processing industry. 36.50 MT per hour of pulping and aseptic packing
of fruit, 12 Effluent Treatment Plants, 12 Food
13.2.1 Food Processing Fund Testing Laboratories, etc.
One of the major constraints faced by food
industry is high cost of credit. To address the 13.2.2 Rural Infrastructure Development
issue, GoI created a special fund (Food Processing Fund (RIDF)
Fund) in NABARD with corpus of ` 2000 crore for NABARD provides loans to State Governments
providing affordable credit to Designated Food for creation of rural infrastructure from RIDF set
Parks (DFPs) & the units set up in these designated up from out of shortfall in priority sector lending
food parks. This Fund is operationalized in close by scheduled commercial banks. Thirty six
coordination with Ministry of Food Processing infrastructure activities are eligible for funding
Industries (MoFPI), GoI. The financial assistance under RIDF. The eligible activities are classified
in the form of capital grant available under under three broad categories i.e. (i) Agriculture
various schemes of MoFPI is dovetailed with FPF, and related sectors, which are eligible for loans
wherever applicable. Financial assistance from up to 95% of eligible project cost (ii) Social
FPF is available to State Governments, entities sector, where loan eligibility can be up to 90%
promoted by State Governments, Joint Ventures, of eligible project cost in North eastern and hilly
Cooperatives, Federation of Cooperatives, SPVs, States and 85% of project cost in all other States
Farmers’ Producers Organizations, Corporates, and (iii) Rural connectivity projects, where loans
Companies, Entrepreneurs, etc. are extended up to 90% of eligible project cost
in North eastern and hilly States and 80% in all
NABARD has sanctioned a total of 11 mega other States. Major activities related to food
food park projects from the Fund wherein an preservation / processing / storage financed
area of 840 acres would be developed by the from the Fund are establishment of market
Implementing Agencies which act as Central yards, godowns, marketing infrastructure,
Processing Centres (CPCs). These CPCs would cold storages, grading, sorting / certifying
be supported by 40 PPCs and several collection mechanisms, testing/ certifying laboratories,
centres to be established at suitable places in animal husbandry, including dairy, modern
the catchment zone of the respective mega abattoirs, etc. The institutions eligible for
food parks. These projects on completion would RIDF finance are State Governments/Union

Territories, State Owned Corporations / and social and commercial infrastructure
State Govt. Undertakings, State Government largely benefiting rural population are eligible
Sponsored Organisations and Panchayat Raj for funding from NIDA. Under agriculture,
Institutions/SHGs/ NGOs. irrigation agriculture production infrastructure,
agriculture storage and marketing
13.2.3 Producers Organization Development infrastructure, agriculture extension, agro
Fund (PODF) processing, agro services, custom hiring and
NABARD created a dedicated fund “Producers farm mechanization and other allied activities
Organization Development Fund” (PODF) are given preference. The eligible Institutions are
out of its own profits during 2011, to support State/Central Govt. companies, corporations,
Producers’ Organizations on 3 levels, i.e. credit other Govt. Institutions. The quantum of loan
support, capacity building and market linkage will be maximum 90% of the eligible project cost
support. The objective of the fund is to meet end considered for funding. The margin from the
to end requirements of Producers Organizations borrower shall be minimum 10%.
(POs) as well as to ensure their sustainability &
economic viability. Major activities of the POs 13.2.5 Credit Facility to Federations (CFF)
assisted by NABARD include dairy activities, Credit facility to federations provides short-
spices processing units and bio-processed and term credit support (less than 12 months)
commercial production of fish. available for the marketing of agricultural
commodities, input supply, value chain and
13.2.4 NABARD Infrastructure Development supply chain management by the corporations,
Assistance (NIDA) cooperatives, registered companies etc. NABARD
Infrastructure projects under agriculture, has supported a number of state warehousing
transport, energy, drinking water & sanitation corporations under this facility.

Farm Sector Policy Department
Plot C-24, G Block,
Bandra Kurla complex,
Bandra East, Mumbai 400051.
Tel.: 022 – 26539895, 26539896, 26539899
Website: www.nabard.org
2018
The Banyan is great, not because of its trunk, but because of its offshoots.
We take pride in our partners, because it is they who enable us to reach out to rural India.
Talking Rural India >> Forward

Food and Agro Processing

Uploaded by

Copyright:

Available Formats

Food and Agro Processing

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Food and Agro Processing

Uploaded by

Copyright:

Available Formats

Sectoral Paper

Title : Sector Paper on Food Processing

Farm Sector Policy Department

Harsh Kumar Bhanwala

2 Overall Industry Status 03

5 Agencies involved in Food

6 Credit to Food Processing

8 Major GoI Schemes and

9 Quality Control & Regulatory

11 Issues and Challenges 32

13 Financial support from NABARD 36

Sectoral Paper on Food Processing | 1

2 | Sectoral Paper on Food Processing

Sectoral Paper on Food Processing | 3

4 | Sectoral Paper on Food Processing

3.2 Horticultural products

3.3 Milk and milk products

3.4 Meat and poultry products

3.5 Marine Products

3.6 Consumer food products (RTE, packaged

Sectoral Paper on Food Processing | 5

6 | Sectoral Paper on Food Processing

Flaking: Flaked cereals are partially cooked

Fermentation: Doughs made from cereal flour

Baking: Doughs and batters made from cereal

Extrusion: Extrusion involves heating and

3.2 Horticultural products

Vegetables are less acidic than fruits and food

Sectoral Paper on Food Processing | 7

8 | Sectoral Paper on Food Processing

Jam, Jellies and Marmalades

Sectoral Paper on Food Processing | 9

10 | Sectoral Paper on Food Processing

Sectoral Paper on Food Processing | 11

12 | Sectoral Paper on Food Processing

Sectoral Paper on Food Processing | 13

4.2 Other enabling support for investment

4.3 National Food Processing Policy

4.4 Role of mega Food Park and

14 | Sectoral Paper on Food Processing

 100% FDI is allowed through Government

Sectoral Paper on Food Processing | 15

16 | Sectoral Paper on Food Processing

In addition, all State Agriculture Universities,

Agriculture and Processed Food Products Export Development Authority (APEDA)

Central Food Technology Research Institute (CFTRI), Mysore, Karnataka

Association of Industry All India Food Processors Association (AIFPA)

Sectoral Paper on Food Processing | 17

6.2 Credit Outstanding

18 | Sectoral Paper on Food Processing

6.1.1 Agriculture 6.2 Credit Outstanding

Sectoral Paper on Food Processing | 19

No. of Accounts Rice Mills, Flour & Dal Mills

Credit Limit Projection (` crore)

20 | Sectoral Paper on Food Processing

7.2 Emerging technologies in Food

Sectoral Paper on Food Processing | 21

7.2 Emerging technologies in

22 | Sectoral Paper on Food Processing

8.2 Centrally Sponsored Schemes

3.6 Consumer food products (RTE, packaged

4.4 Role of mega Food Park and

 100% FDI is allowed through Government

7.2 Emerging technologies in Food

9.3 ISSO 22000 Food Safety Management

• Leading producer of various agricultural • Setting up of Special Economic Zones

 Dominance of unorganized sector (42%)  Non-availability of skilled man power