The Changing Face of the Food Industry in India

The food industry is the complex, global collective of diverse businesses that together supply much of the food energy consumed by the world population. The food processing industry is one of the largest industries in India. It is ranked fifth in terms of production, consumption, export, and expected growth. Food Processing Industry is widely recognized as a 'sunrise industry' in India having huge potential for the uplifting agricultural economy, creation of large-scale processed food manufacturing and food chain facilities, and the resultant generation of employment and export earnings. India has enormous growth potential from its current status of being the world's second-largest food producer to be the world's number one producer. Food processing covers a spectrum of products from sub-sector comprising agriculture, horticulture, Plantation, animal husbandry, and fisheries. Essentially, the food industry involves the commercial movement of food from field to fork.

India’s culinary tradition is constantly changing. With urbanization, rising incomes, more working women, and a proliferation of fast food outlets, the acceptance of packaged and ready-to-eat food products is increasing, especially among the urban middle class. Demand for specialty and high-value processed or packaged and ready to serve/ready to cook or reconstitute food items has increased.

India is the world’s second-largest producer of food next to China. India, with diverse agro-climatic conditions, has a production advantage in many agricultural goods, with the potential to cultivate a large range of agricultural raw materials required by the food-processing industry. India is a major producer of spices, spice oils, essential oils, condiments, and fruit pulps.

Significant variations in food habits and culinary traditions across the country translate into a competitive advantage for small and medium local players, who are familiar with local food habits and markets. Some Indian food-processing companies have increased market share by decreasing product prices. High import duties on processed food and food ingredients make imports relatively costlier.

The total food production in India is likely to double in the next ten years and there is an opportunity for large investments in food processing, especially in areas of canning, dairy processing, specialty processing, packaging, frozen food/refrigeration, and thermal processing. The industry has witnessed fast growth in most of the segments. In India, the food processing sector is one of the largest in terms of production, consumption, export, and growth prospects.

The turnover of the total food market is approximately Rs.250,000 crores (the US $ 69.4 billion) out of which value-added food products comprise Rs. 80,000 crores (US $ 22.2 billion). Primary food processing is a major industry with lakhs of rice-mills/hullers, flour mills, pulse mills, and oil-seed mills.

There are several thousands of bakeries, traditional food units viz. fruit, vegetable, and spice processing units in the unorganized sector. The size of the semi-processed and ready to eat packaged food industry is over Rs. 4000 crores (the US $ 1 billion) and is growing at over 20 percent.

In the organized sector, there are over 820 flour mills, 418 fish processing units, 5198 fruits and vegetable processing units, 171 meat processing units, and 668 dairy processing units. India is the world’s second-largest producer of fruits and vegetables, but hardly 2 percent of the produce is processed.

India is the land of spices producing all varieties worth over Rs. 3500 crores (the US $ 900 million) amounting to 25-30 percent of world production, which is processed for value-addition and export. It grows 22 million tonnes of oilseeds covering most of the varieties. Other important plantation products include tea, coffee, cocoa, and cashew, etc.

India is the world's second-largest producer of food next to China and has the potential of being the biggest with the food and agricultural sector contributing around 26% of India’s GDP. The total food production in India is likely to double in the next ten years and there is an opportunity for large investments in food and food processing technologies, skills and equipment, especially in areas of Canning, Dairy and Food Processing, Specialty Processing, Packaging, Frozen Food/Refrigeration, and Thermo Processing. Fruits & Vegetables, Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods, Alcoholic Beverages & Soft Drinks, and Grains are important sub-sectors of the food processing industry. Health food and health food supplements are another rapidly rising segment of this industry which is gaining vast popularity amongst the health-conscious.

The important sub-sectors in food processing industries are fruit and vegetable processing, fish- processing, milk processing, meat and poultry processing, packaged/convenience foods, alcoholic beverages and soft drinks and grain processing etc. The government has also accorded it a high priority to encourage commercialization and value addition to agricultural produce for minimizing post-harvest wastage, generating employment and export growth.

The food processing industry is of enormous significance for India's development because of the vital linkages and synergies that it promotes between the two pillars of our economy, industry, and agriculture. Fast growth in the food processing sector and progressive improvement in the value addition chain are also of great importance for achieving favorable terms of the trade for Indian agriculture both in the domestic and international markets.

Even more important is the crucial contribution that an efficient food processing industry could make in the nation's food security. The simple fact that the post-harvest losses are about 25 to 30 percent in our country should serve as an eye-opener for all of us. Even marginal reductions in these losses are bound to give us great relief on the food security front as well as improve the income level of the farmers.

In the last decade, India moved from an era of scarcity to surplus in regards to Food. The Food Processing Industry in India is on an assured track of growth and profitability over the coming decades. It is estimated that it will attract phenomenal investment, capital, human, technological, and financial of over Rs 1,40,000 crores in the next decade.

The packaged food segment has been reporting double-digit growth in 2018 with edible oils and dairy products accounting for a major share. Sale of packaged flatbread (Chapattis, naans, roti, paratha, kulcha) have also increased, backed on a lower tax bracket with the introduction of GST and variable serve packs. Packed dessert mixes and other premium packaged bakery goods (croissants, filled muffins, etc.) have also been witnessing increasing consumer demand. Meanwhile, repositioned as a healthy snack, the breakfast cereals segment is becoming more competitive with new entrants as well as innovative variants targeting the health-conscious consumers.

Interestingly, the demand for frozen vegetables is declining in retail outlets with the year-round availability of fresh produce; however, demand for frozen vegetables is picking up among foodservice players. With policy barriers on slaughtering and selling beef fresh, processed meat sales were impacted in 2018. However, the frozen processed seafood segment gained popularity and witnessed an increase in demand for international seafood. Growth in the seafood1 segment is also fueled by internet retailing channels, increasing focus on nutritious food, and the convenience of long-term storage 

Consumer preference trends show an increasing focus on nutritious food and the convenience of long-term storage. While in cereals, the introduction of variants such as muesli and granola have impacted the traditional breakfast cereal product, flakes; in edible oils, a shift towards olive oil, and rapeseed oil as preferred edible oil was witnessed in 2018. Meanwhile, naturally healthy beverages and Ayurveda-based juices continued to witness significant value growth in 2018. Organic packaged food witnessed double-digit growth in retail volume and current value sales in 2018. 

Other food segments which are showing high growth include sauces, soups, noodles & pasta, Chocolate confectionary, specialized cheese (Mozzarella, Cheddar, and Parmesan), etc

Dairy Processing: 

It is a matter of pride that India is the number one milk-producing country in the world, maintaining the top position since 1988, thanks to the successful implementation of Operation Flood Programmes. World milk production is estimated at 613 million tons growing at a CAGR of 1.3 percent. Indian production stands at 100 million tons growing at a CAGR of 4-5 percent. 

Hence, India contributes 4 million tones to the world’s incremental production of 7.5 million tonnes. Despite a higher growth rate, the per capita availability of milk in India (229 grams per day) is lower than the world average (285 grams per day). Buffalo milk is now estimated to account for 57 percent of the total milk production in India.

India has a unique pattern of production, processing, and marketing/consumption of milk, which is unparalleled. About 70 million rural households (primarily, small and marginal farmers and landless laborers) in the country are engaged in milk production to change the dairy sector into a viable self-sustaining organized sector. About 35 percent of milk production, over 11 million farmers are organized into about 0.1 million village dairy cooperative societies (DCS).

Many countries are increasingly eying upon India for food. Even multinational companies are banking on India to meet global food needs today. Corporations and large investors, both domestic and global, are cashing in on India’s agribusiness as a promising market with dual prospects - to provide for the swelling Indian middle- class and export-oriented premium quality processed food.

Health Food: 

Health food and health food supplements are another rapidly rising segment of the food industry which is gaining vast popularity amongst the health-conscious. India is one of the world’s major food producers but accounts for less than 1.5 percent of international food trade. This indicates a vast scope for both investors and exporters.

Food exports in 1998 stood at US $5.8 billion whereas the world total was the US $438 billion. The Indian food industry's sales turnover is Rs 140,000 crore (1 crore = 10 million) annually as at the start of the year 2000. The industry has the highest number of plants approved by the US Food and Drug Administration (FDA) outside the USA.

Value-Added Food Product:

Although India is a world leader in the production of milk, rice, wheat, fruits and vegetables, livestock, fish and seafood, and eggs, India’s current food processing capabilities are very small compared with its agricultural output. Only 8 percent of total agricultural output is processed into value-added products. However, the production of value-added products in India is forecast to grow by 27 percent by 2025.

Fruits and Vegetable Processing: 

The installed capacity of the fruits and vegetables processing industry has increased from 11.08 lakh tons (1993) to 24.74 lakh tons (2007). The utilization of fruits and vegetable processing is estimated to be around 2.20 percent of the total production. Over the last few years, there has been positive growth in ready to serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, pickles, convenience veg-spice pastes, processed mushrooms, and curried vegetables. 

The domestic consumption of value-added fruits and vegetable products is also low compared to the primarily processed food in general and fresh fruits and vegetables in particular. Hardly 2 percent of fruits and vegetables produced in India is processed.

Meat and Meat Processing: 

India’s livestock population is largest in the world with 50 percent of the world’s buffaloes and 20 percent of cattle, but only about 1 percent of total meat production is converted to value-added products. In the meat and meat processing sector, poultry meat is the fastest-growing animal protein in India. The estimated production is 1500 thousand tones growing at a CAGR of 13 percent through 1991-2005. Per capita consumption has grown from 870 grams in 2000 to about 1.68 kg in 2005. 

This is expected to grow to 2Kg in 2009. Buffalo meat production has been growing relatively less rapidly at a CAGR of 5 percent in the last 6 years. The current production levels are estimated at 1.9 million MT. Of this about 21 percent is exported. Mutton and lamb is a relatively small segment where demand is outstripping supply, which explains the high prices in the domestic market. The production levels have been almost constant at 950,000 MT with annual exports of less than 10,000 MT.

This has restricted large processing companies from developing business interests in this sector. Indian consumer prefers to buy freshly cut meat from the wet market, rather than processed or frozen meat. A mere 6 percent of production (about 100,000 MT) of poultry meat is sold in processed form. Of this, only about 1 percent undergoes processing into value-added products (Ready to- eat/Ready-to-cook). The processing of large animals is largely for the purpose of exports.

The total processing capacity in India is over 1 million MT per annum, of which 40-50 percent is utilized. India exports more than 500,000 MT of meat of which major share is buffalo meat. Indian buffalo meat is witnessing strong demand in international markets due to its lean character and near organic nature. India is the 5th largest exporter of bovine meat in the world. Indian buffalo meat exports have the potential to grow significantly.

Due to emerging health threats of the diseases communicable to humans through meat, the meat consumers are more vigilant towards the wholesomeness of the meat and demanding meat and poultry products processed in a clean and sanitary environment. In metros and urban areas there are upcoming demands for “convenience items” such as semi-cooked, ready-to-eat, ready-to-cook meat food products. Processing of meat products is licensed under the Meat Food Products Order (MFPO) 1973.

The main objectives of the MFPO, 1973 are to regulate production and sale of meat food products through licensing of manufacturers, enforce sanitary and hygienic conditions prescribed for production of wholesome meat food products, exercise strict quality control at all stages of production of meat food products, fish products including chilled poultry etc.

Fisheries Processing:

India has large marine products and processing potential with varied fish resources along the 8041 km. the long coastline, 28000 km. of rivers and millions of hectares of reservoirs and brackish water. At present, there are over 369 freezing units with a daily processing capacity of 10266 tons out of which 150 units are approved for export to EU. 499 units are engaged in the production of frozen fish with a total storage capacity of 134767 tons. Apart from the above there are 12 surimi units, 5 canning units, and 473 units are engaged in pre-processing and dry fish storage.

However, in 2004-05, the export of marine products achieved a record 12 percent increase in volume and 11 percent increase in US$. Frozen shrimps constitute 63.5 percent of total value of exports. USA is the largest importer of Indian marine products contributing 13.21 percent in quantity and 29.8 percent in value of total exports importing mainly frozen shrimps – HL Black tiger shrimps.

Ethnic Food/Street Food: 

The concept of traditional food street has now been given a new meaning in developed countries, with food streets emerging as new tourist attractions. Major tourist destinations invariably have food streets offering exotic local foods. Street food in India has always been popular because of its affordability and convenient availability. 

This is an area with huge potential for increased income generation for vendors and for giving a boost to the tourism sector. This may also lead to the popularity of local food traditions, offering fast food, which is very popular among Indians.

Top 7 challenges of the food and beverage industry to watch out for 

Tagged as one of the largest marketplaces of the 21st century, the food and beverage industry, in the last couple of decades, has truly come into its own. The last ten years specifically chart out a rather distinguished portrayal of the F&B space – the industry having undergone a spate of changes owing to ever-changing consumer demands and massive innovations. What comes to notice here is the rapid increase in the number of challenges of food and beverage industry.

A behemoth in itself, this consumer-driven, multi-billion-dollar business vertical industry, while showing a commendable, excessive growth pace, is also plagued with a series of obstacles. While some of current issues in the food industry have been rather commonplace for a while now, many other challenges of F&B market that have cropped up in recent times can be attributed to the changing demands of customers and the presence of a stringent regulatory landscape.

 A paradigm shift has been observed in the perspective of the masses with respect to the food and beverage industry. People are now more nutrition-friendly, prefer fat-free and sugar-free products, and are generally more inclined towards maintaining robust health. Supporting this school of thought is the fact that food products are judged based on not just the quality, but also the nutritional content. This dynamic thought process has coerced food producers to bring about surplus changes in the existing manufacturing process and efficiently tackle some of the major challenges of the food and beverage market.  

1. The ‘Plastic ban’

The enforcement of the ‘plastic ban’ is rooted in an ideology that has lasted several years amid discussions on international platforms and has now come to fruition. The consistent growth pace of industrialization, of which the F&B sector is a major arm, has had a disastrous impact on the environment and has led to eco-friendliness becoming the next big mantra out there. Knowingly or unknowingly, the excess consumption and improper disposal of plastic have come up as one of the major challenges faced by food and beverage managers today. 

In this scenario, a product that is tagged as ‘eco-friendly’, quite naturally, has more of a consumer connection and is likely to accrue lucrative sales than a product that is popularized to harm the environment. Food and beverage manufacturers and retailers are now striving toward making the food manufacturing process highly conducive to the environment through the adoption of numerous recycling practices. The deployment of green business practices – right from the production to the packaging and supply chain management is a crucial solution to tackling the current issues in the food industry.

Another environment-related constituent that forms a part of the present challenges of the food and beverage industry is the issue of waste management. Undeniably, the food industry generates a considerable amount of waste, right from sourcing the raw material to food retailing and distribution. The negative impact of the same has been identified as one of the most crucial environmental issues in the food and beverage industry that needs to be dealt with as soon as possible. In response, manufacturers have been striving to bring about eco-friendly manufacturing practices, waste management programs, recycling techniques, and more.

A major example of how F&B industry contenders have been complying with the plastic ban is that of Nestle. Last year, Nestle declared its decision to use 100% recyclable/reusable packaging by 2025. Additionally, retailers such as Asda, Café Coffee Day, and McDonald’s have also announced their commitment to go plastic-free and bring about sustainable practices in production and packaging.

2. The rise of health-consciousness among consumers

The increasing incidences of food-related disorders have prompted consumers to bring about vital changes in their diet and lifestyle, making them more health-conscious than ever. Automatically, the train of thought is diverted towards purchasing foods without added preservatives that might hamper one’s health. The demand for products that do not carry the ‘healthy’ label is then bound to reduce, and to stay at the top, the need to eliminate artificial constituents from products has come to the fore as one of the major challenges faced by food and beverage managers.

One of the major factors that have led to increased diabetes prevalence is obesity, linked to a major intake of sugar via processed foods and cereals. This realization has, for the last half a decade, led to consumers shying away from products containing artificial sweeteners and other added preservatives.

Thus, one of the biggest challenges of the food and beverage industry is for manufacturers to come up with healthy products that provide ample nutrients; yet, at the same time, do not take away from the aesthetics of the brand. This has led to a variety of nutrient-rich foods making it to supermarket aisles, labeled ‘gluten-free’, ‘dairy-free’, ‘sugar-free’, and the like. The widespread expansion of the food supplement ingredients market is an apt example justifying the aforesaid.

As consumers tend to purchase products with value addition, food products reinforced with proteins, vitamins, and other nutrients have better chances of a massive sale, fueling food additives market, which is slated to register revenues over USD 115 billion by 2024. Adding value to food products without diminishing their quality or compromising on taste, and yet maintaining the cost-effectiveness, adds to the long list of current issues in the food industry.

Yet another trend that forms the crux of the challenges faced by food and beverage managers is the rising demand for organic food. The drastic reduction in the demand for processed foods has fueled the organic food market, increasing awareness levels regarding natural foods and their positive health impact. This has favored the demand for natural, healthy, food products, pushing organic rice protein market trends. 

The dramatic no-show of consumers from the ‘center of store’ aisle products also demonstrates that consumers prefer to stay away from packaged goods, which is why brainstorming strategies to combat the increasing demand for organic products is one of the major challenges faced by food and beverage managers today. A recent example of how beverage manufacturers have been tackling this challenge is that of Coca Cola, which has recently launched the first sugar-free flavored water in Japan, under the brand “I LOHAS”.

3. The rising concerns about product traceability

Traceability is one of the pivotal challenges in the food and beverage industry, not just for record management but also to fulfill the bottom line – generating revenue for every sector. Of late, consumers have been taking increasing interest to know what goes into their food, which has led ‘ingredient labeling’ forming a major part of the packaging process. With public trust in food supply chains reducing drastically and awareness pertaining to glitches in the F&B supply chain since the last decade or so, end-to-end traceability has emerged as one of the latest trends in the food and beverage industry.

Having recognized the significance of maintaining precise data records, food processing companies are now on their way to deploy advanced technology, such as IoT, AI, and the blockchain, for tasks such as supply chain analysis, weight measurement, temperature monitoring, etc. Say for example, Global retail giant Auchan, toward the end of 2018, planned to expand TE-FOOD’s blockchain solution in a bid to improve food transparency.

4. The ascent of meat-free & veganism trend 

The growing concern toward animals is ushering in a change in the food patterns of the masses. With more and more consumers vying for vegetarian and vegan products, the demand for meat and other products has observed a significant decline, posing as one of the major challenges in the food and beverage industry. Social platforms and online information portals have paved the way for animal abuse awareness, and people prefer purchasing products with labels such as “humane-certified” and “cage-free”.

Last year, in August, nine Japanese companies vowed to end testing on animals, post discussions with the PETA U.S. Manufacturing products that vouch for animal safety has become one of the prime challenges for food and beverage industry, as food manufacturers must maintain their reputation with regards to ethical treatment of animal concern. On this note, companies have come up with meat-free alternatives to keep the retail chains running. Say for example, Sainsbury, Aldi, and Nestle have recently come up with the idea of launching meat-free products at retail outlets.

5. The optimum level of stringency in the regulatory landscape

While it may be construed as stating the obvious – the fact is, that the F&B space is very stringently governed by regulations. Organizations such as the FDA, EPA, OSHA, and FTC have been rather diligent in enforcing norms pertaining to the launch of healthy products, regulating food labels, maintaining a clean, hygienic environment, and the like.

While most companies are known to perfunctorily adhere to the norms, the periodic changes subject to waste disposal, food quality, raw material, surplus production, documentation, etc., have cropped up to be one of the major challenges faced by food and beverage managers. Often, the continuously changing reforms have led to companies recalling food products from their stores.

Say, for instance, Tyson Foods recently recalled over 190,000 pounds of ready-to-eat chicken fritters post order from the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS), while grocery store chain Kroger recalled three frozen berry varieties after the FDA discovered that some of them tested positive for hepatitis A. In order to deal with the same, companies are required to bring about utmost accuracy and precision in their business operations – right from the manufacturing to the distribution processes.

6. The increasing complications of inventory management

Given the limited shelf life of food products, inventory management has come up to be one of the current issues in the food industry. The perishability factor is responsible for the fact that F&B inventory is highly susceptible to foodborne pathogens and more, if not stored hygienically. This has prompted manufacturers to adopt new software to alleviate these issues, given that the presence of foodborne bacteria may have a disastrous impact on the company’s reputation. Amid this backdrop, the food pathogen testing market will stand tall as one of the most profitable arms of the global F&B industry.

The F&B space is also highly machine-controlled, given its expanding growth pace, and is likely to continue adopting advanced technology to keep up with consumer trends and latest innovations. The demand for enhanced inventory management software in food processing, canning goods, and packaging products forms a vital part of the challenges of the food and beverage market, and numerous companies are making efforts to help the F&B sector deal with the crisis. Say for example, toward the end of 2018, United Overseas Bank declared that it has upsized UOB BizSmart – it's cloud-based, integrated digital solution to help small businesses in the F&B industry.

7. The pervasive presence of eCommerce

An online presence is one of the major challenges of the food and beverage industry, considering that consumers are more tech-savvy and socially informed, thanks to the Internet. While core industries, like appliances, electronics, textiles, and other domestic products have already established their presence in the commerce domain, this sector has been relatively slow on the upkeep.

Of late though, wholesalers and retail companies have already begun to invest in grocery e-commerce, however, it is important that most manufacturers have a presence on the World Wide Web, in order to tackle what seems to be one of the most crucial challenges of food and beverage industry. Citing an instance of the same, Reliance Industries’ retail arm, Reliance Retail Ltd., has made it to the headlines for planning to test its food and grocery app prior to the venture’s commercial launch.

Undeniably, the challenges faced by food and beverage managers are dime a dozen, owing to the ridiculously fierce competition and the fact that a single change is bound to affect the entire supply chain. Newer markets, changing consumer spending, increasing food prices, global appetite, and advanced technology are slated to bring about extensive changes in this sector in the next few years. Despite the consistent challenges of the food and beverage industry, it is predicted to show healthy gains in the future. It remains to be seen how the global F&B market will fare in the forthcoming years, driven by disposable income levels, changing lifestyles, and favorable government reforms.

Opportunities of Indian Food Industry:

Processed foods that have done well in the market include cheese, butter, ice cream, bakery products, ready-to-make foods, biscuits, chocolate, tea, and milk products. Other processed foods that have good market potential in India include condiments and sauces such as ketchup, jams, jellies, and pickles, in addition to healthy foods and beverages, fruit juices, cereals, confectionery, snack foods, and curry powders.

Opportunities also exist for the export of processing and packaging technologies and storage and transportation alternatives as the Indian food processing industry strives to capitalize on current food surpluses and to increase its food processing capabilities to become a more prominent player in the global food market. However, the processed food market is expected to grow with the continued strengthening of India’s economy. 

India’s significant economic growth of 8.2 percent is forecast to continue to rise another 6.5 percent in 2022-23. Furthermore, increased urbanization, rising incomes, and changing lifestyles in which time and convenience are valued will drive demand for packaged foods and easy-to-prepare meals. Expected with this increased demand is a corresponding demand for healthy ready-to-eat foods.

The market for semi-processed/cooked ready-to-eat meals in India grew 20 percent during the 2018-2019 fiscal year. Between 2020 and 2023, demand for snack foods will increase each year by 10 percent. India’s market for processed foods is expected to more than double its value by 2025, amounting to almost $540 billion.

Several multinational companies, including US-based companies like Pepsi, Coca Cola, ConAgra, Cargill, Heinz, Kellogg’s, IFF, and Mars (pet food only) have entered the Indian food-processing industry with significant investments. Indian food and beverage companies are expanding their operations to neighboring countries like Bangladesh, Nepal, Sri Lanka, Commonwealth of Independent States countries, and the Middle East. Takeovers and mergers are beginning to occur in the Indian food-processing sector, leading to consolidation.

NEW OPPORTUNITIES FOR FOOD PROCESSING INDUSTRY IN INDIA 

India's homogeneous market size endowed with growing incomes and changing lifestyles have created incredible market opportunities for food producers, machinery makers, and food technology and service providers. The food processing industry has great export and employment potential. The policies are investor-friendly and more importantly technological and human resources are available aplenty in the country. The competitive edge enjoyed in terms of raw material and labor offers lucrative opportunities. However poor perception of quality and the indifferent image of Indian products is preventing Indian food products to penetrate global markets in a big way. While developing countries like Thailand have exploited the global markets in a big way by fine-tuning quality management aspects of their food processing industry, India is yet to make headway on this front. 

Production of high-quality processed foods meeting international quality standards & regulations may very well open new frontiers for Indian food products. This will not only create a dynamic and competitive domestic food processing industry but will also enable India to become a major player in the global food market. An attitudinal change towards quality is essential. Several thousand crore worths of farm produce are lost every year due to inefficient post-harvest practices for storage and processing.

On one hand is the growing demand for food products, which are difficult to meet due to limited resources and on the other, there exists abnormally high wastage in the farm sector due to inefficient technology in storage, processing, and handling. It is, therefore, imperative to introduce state-of-the-art technology in the food-processing sector to minimize post-harvest losses. It also calls for concerted attention to a few selected food products where India has or can develop a competitive edge over other countries.

FDI

The sector has been attracting substantial FDI also and is among the top ten sectors getting FDI equity. FDI up to 100 percent equity is permitted under the automatic route in food and infrastructure like food parks and cold chains. There are many areas for investment in this sector which include mega food parks, agri-infrastructure, supply chain aggregation, logistics, and cold chain infrastructure, fruit and vegetable products, animal products, meat and dairy, fisheries and seafood cereals, consumer foods/ready to eat foods, wine, and beer, machinery/packaging.

Productivity and progress

It is essential to understand the dynamic relationship that exists between productivity and progress. The basic fact is that until both the farmers as well as the processors are convinced of benefits that accrue through productivity, the productivity campaigns will remain ineffective. So the main challenge is to introduce the concepts of productivity and make it work under a variety of constraints for the sustainable growth of the industry. In the process of globalization, the Indian food processing industry will be facing increased competition, particularly in domestic markets in addition to the uncertainties prevailing in the international markets. It is in this context that emphasis must be given to improve productivity and quality. Undoubtedly, better performing firms will have a competitive edge over others. In order to maintain the tempo of productivity and quality, the National Productivity Awards have thus assumed much greater significance.

The ministry of food processing industries on its part, is leaving no stone unturned to achieve the multiple objectives of stepping up the growth, higher farmer income, reduction in wastage, providing nutritious and safe food, and enhancing employment opportunities. It has initiated measures to deal with the major constraints being faced by the industry such as affordability and cost of processed foods, linking farmers and processors, supply chain and post-harvest technology, infrastructure, finance, food safety, hygiene, and taxes. With the active support and cooperation of all the stakeholders the ministry is confident of providing the necessary momentum for the rapid growth of the food processing sector and usher in a new era in the Indian economy.

Vision 2025

Given the strengths and opportunities of the food processing sector, a Vision 2025 has been developed by the ministry of food processing industries, together with an appropriate strategy and implementable action plan so as to enhance farmer income, generate employment opportunities, provide choice to consumers at an affordable price and contribute to overall national growth by increasing: the level of processing of perishables from six percent to 20 percent, value addition from 20 percent to 35 percent and share in global food trade from 1.5 percent to three percent.

Vision 2025 aims at enhancing and stabilizing the income level of the farmers by assuring wider and better choice by enhancing dynamism, competitiveness, by ensuring safety and quality of food by introducing a transparent and scientific system of standards. To achieve these aims a transparent and industry-friendly regulatory regime is proposed to be established:

* Making the sector attractive for both domestic and foreign investors.

* Achieving integration of the food processing infrastructure from farm to market.

* Having a transparent and industry-friendly regulatory regime. Putting in place a transparent system of standards-based on science.

Main initiatives

Cold chain: To address the situation and with a view to creating a modern cold chain for preservation and value addition of perishables, during the 11th Plan, the ministry is launching a revamped comprehensive Cold Chain Infrastructure Scheme for creating integrated cold chain infrastructure at different levels - farm level primary processing center-cum-cold chain, collection/aggregation centers, and Strategic Distribution Centres (SDC). The SDCs will have integrated infrastructure facilities like material handling equipment, refrigeration, IQF/Blast freezing facility, Frozen/CA/MA Storage, modern packaging facilities, ancillary equipment like X-ray, weighbridge, etc. The SDCs will be linked to retail supermarkets.

Mega food parks: A new scheme of Mega Food Parks in the country is proposed which is envisaged to be a well-defined Agri/horticultural processing zone containing state-of-the-art processing facilities with support infrastructure and well-established supply chain. The proposed scheme aims to provide a mechanism to bring together farmers, processors, and retailers and link agricultural production to the market so as to ensure maximization of value addition, minimize wastages and improve farmers' income. The Mega Food Park is designed ultimately to link the farmers with the retail markets with minimizing the intermediaries. These food parks will function as sourcing hubs for retail outlets.

Abattoirs: Hygienic and scientific slaughtering as well as optimum utilization of by-products are issues of grave concern of the Indian meat industry. It results in tremendous waste, contamination, and avoidable cruelty to animals. The ministry is launching a comprehensive scheme for modernization of existing abattoirs/establishment of modern abattoirs at 100 locations across the country on a PPP model.

Capacity building: The ministry has also taken up quality assurance, R&D, HACCP, Human Resource Development, and establishment of laboratories to support the Food Safety and Standards Act. The ministry of food processing industries has taken many steps to give impetus to this sector which includes virtual delicensing of the sector, inclusion in the priority sector for lending, allowing 100 percent FDI except in alcoholic beverages and retail, several duty, and tax reliefs, financial assistance for infrastructure building, setting up of food processing units, etc. In the case of export-oriented units, foreign investment is permitted even in case of items reserved for small scale sector. In addition, the export-oriented units are given a number of incentives and concessions under the export-import policy, such as, duty-free import of capital goods, raw materials, and intermediates, export income being exempt from corporate tax, etc. FDI inflow in food processing is becoming stronger.

Food Parks

In a bid to boost the food sector, the Government is working on agrizones and the concept of mega food parks. Twenty such mega parks will come up across the country in various cities to attract Foreign Direct Investment (FDI) in the food processing sector. The Government approved 105 proposals between January 2002 and May 2005 from foreign industrialists to set up food processing industries in India involving Rs.643.47 crore (US$ 144 million). The ministry has released total assistance of Rs.105.22 crore (US$ 23 million) to implement the Food Parks Scheme. It has so far approved 50 food parks for assistance across the country. The Centre also plans Rs.100 crore (US$ 22 billion) subsidy for mega food processing parks.

It is very important that the food available is safe/hygiene, wholesome with the right nutritional content, free from infection/bacterial contamination, intoxication, contamination, and adulteration. Changes have been brought about habits-resulting due to developments in technology and for socio-economic reasons; food is in increasing demand for a range of food products.

Therefore, Food Regulations and standards have become a sensitive subject and the regulation of the quality of the food products the object of increasing public interest. Quality is being the first consideration for the Consumer acceptance, which in turn is linked with recognized national and international standards, reflecting the national and international markets which are essential for the manufacturer to be able to design products and market products embracing the Consumer’s needs of quality features and using up to date technologies. Compliance with these standards is ensured through the use of regulatory standards and quality assurance systems.

Equipment for Processing 

In India the gross value of plant and machinery deployed in the food processing sector, is estimated to reach USD 51.19 billion by the year 2024-25. This growth is attributed to factors such as the increasing demand for convenience food and the increasingly busy lifestyles of consumers.

In terms of import of Food Processing and Dairy Equipment, during 2018-19 the highest valued imports were of machinery for manufacturing food/drink (Rs14.8 billion), bakery machinery (Rs2.4 billion), parts of other food processing machinery (Rs 2 billion) and machinery for manufacturing confectionary cocoa or chocolate (Rs 1.9 billion).

While the consumer is shifting towards more advanced value-added food categories, there is also a growing demand for processing basic products such as fruits, vegetables, and grains which require technologically advanced equipment. Thus, there is a huge demand for advanced methods, technology, and machinery with the least impact on sensory qualities such as color and texture.

In addition to the availability of processing machinery, the next phase of the growth of the food processing sector will also require equipment and machinery that support infrastructure creation across the value chain. There is a massive requirement for pack houses at the farm gate, cold storage facilities across the value chain, multi-modal logistics, infrastructure at port gateways with phytosanitary facilitation, etc. Thus, equipment manufacturers specializing in manufacturing equipment for these infrastructural facilities have an edge.

Thirdly, as the industry landscape shifts, many food processing companies are attempting to expand their product line-up without making significant changes to their production process. Thus, versatile equipment that can produce many different product types, allowing companies to increase their output without major changes to their facilities will be a preference.

 Fourthly, the automation requirement in food processing equipment is quite advanced and sophisticated. Lastly, food processing requires high precision in the equipment for quality, safety, and hygiene.

The cumulative milk handled by DCS across the country is about 18 million kg of milk per day. These cooperatives form part of a national milk grid that links the milk producers throughout India with consumers in more than 700 towns and cities bridging the gaps on account of seasonal and regional variations in the availability of milk.

 In India, the current annual growth rate in milk production is pegged between 4 to 6 percent. This is primarily due to the initiatives taken by the operation flood programs in organizing milk producers into cooperatives to turn the dairy sector into a viable self-sustaining organized sector. About 35 percent of milk products in India is processed. The organized sector processes about 13 million tons annually, while the unorganized sector (hallways and vendors) processes about 22 million tons per annum.

In the organized sector, there are 676 dairy plants in the cooperative, private, and government sectors registered. There is huge potential for processing and value addition, particularly in traditional milk products, which are largely sold in unbranded form in the market. 

The key differences between the organized and the unorganized sector are with respect to investments in preserving the quality of milk, the technology used for processing and compliance with food standards. The solution lies in promoting investment in quality control and developing scalable efficient technologies for the unorganized sector. 

Various measures like food parks, government subsidies, tax breaks, public-private partnerships in investment, increased FDI, modern retail structure, and strengthening supply-chain infrastructure, along with worldwide roadshows have thrust the industry's growth.

The passage of food tech new companies has prompted a monstrous change of the activities of the Indian food industry. Developing discretionary cashflow and occupied way of life of the youthful and working populace, combined with expanding web entrance and rising cell phone clients, will keep on driving India's food-tech showcase trough 2021. 

As companies within the sector embrace these opportunities, they must be prepared to take a structured approach aligned around three key principles: where to play, how to play, and when to play. The right combination, along with suitable enablers, will create a recipe for the sector’s sustained success in the years ahead.

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