• Marketing of processed food: It is a major problem faced by food processors particularly for Student Notes:

the micro and small processors. Given the scale of operation, individual units are unable to
invest in marketing and branding impacting performance of the sector.
• Lack of awareness: Processors face difficulty in availing benefits under schemes being
implemented by different agencies of central and state governments Due to lack of
awareness and absence of appropriate knowledge sharing & guidance forum.
• Inadequate training: Sector specific Entrepreneurship Development training and Incubation
Services are weak inhibiting growth of the sector.
• Seasonality Of operations- These industries do not operate the entire year due to seasonality
of agriculture. But in developed countries, industries run all year round due to technological
advancement which enables storage of produce.
• Co-ordination in Research: A number of research institutes are undertaking R&D for
product, process, and technology improvement & development, however,there is lack of
coordinated action on research and information dissemination of research output to the
industry.
• Limited ability to control quality and safety: The sheer number of players, especially in the
large unorganized segment, involved in the food value-chain, makes implementation of
quality and safety norms difficult. This has led to practices such as milk adulteration and use
of carbide for fruit ripening etc.

8. Policy Initiatives and Measures taken by the Government

In order to facilitate and harness the growth potential of this sector, the government has initiated
extensive reforms.
• Most of the processed food items have been exempted from the purview of licensing under
the Industries (Development and regulation) Act, 1951, except items reserved for small-scale
sector and alcoholic beverages.
• Food processing industries were included in the list of priority sector for bank lending in 1999.
• The Government of India has relaxed foreign direct investment (FDI) norms for the sector,
allowing up to 100 per cent FDI in food product e-commerce through automatic route.
o Automatic approval for foreign equity up to 100 per cent is available for most of the
processed food items except alcohol, beer and those reserved for small-scale sector
subject to certain conditions.
• Full repatriation of profits and capital has been allowed.
• Zero duty import of capital goods and raw material for 100 per cent export oriented units.
• Full duty exemption on all imports for units in export processing zones has been done.
• In the Interim Budget 2024-25, the Ministry of Food Processing Industries was allocated a
total Budget of Rs. 3,290 crores (~US$ 396 million), an increase of ~13% over revised
estimates for fiscal year 2024.
• Food map of India has been uploaded on the website of the ministry of FPI to indicate surplus
and deficit areas. Further, Investor’s portal has been launched by the ministry to promote
investment in FPI to give information about potential areas.
• APMC Reforms have been brought for promotion of contract farming which subsequently
will boost supply of raw materials to the FPIs.
• Agriculture Export Zones are being established since 2001. They will function similar to
Special Economic Zones (SEZs) but only for agriculture products. 16 AEZs have been
established with an objective to export agri-products. Tax rebates are more in AEZs as
compared to in Mega Food Parks.o In all 60 Agri Export Zones (AEZ) were notified
by the Government till 2004 - 05.
• The Food Safety and Standards Authority of India (FSSAI) is investing to strengthen the food
testing infrastructure in India, by upgrading 59 existing food testing laboratories and setting
up 62 new mobile testing labs across the country.

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 o FSSAI under the Ministry of Health and Family Welfare has issued the Food Safety and Student Notes:
Standards (Food Product Standards and Food Additives) Regulations, 2011 and the Food
Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011 which
prescribe the quality and safety standards respectively for food products.
o Also, it has issued new rules for importing products, to address concerns over the entry
of sub-standard items and simplify the process by setting shelf-life norms and relaxing
labeling guidelines.
• The Indian Council for Fertilizer and Nutrient Research (ICFNR) has adopted international best
practices for research in fertilizer sector, which will enable farmers to get good quality
fertilizers at affordable rates and thereby achieve food security for the common man.

8.1. Schemes related to Food Processing Industries:

PM Kisan SAMPADA Yojana
It is a comprehensive package which will result in creation of modern infrastructure with efficient
supply chain management from farm gate to retail outlet. It will not only provide a big boost to
the growth of food processing sector in the country but also help in providing better returns to
farmers and is a big step towards doubling of farmers income, creating huge employment
opportunities especially in the rural areas, reducing wastage of agricultural produce, increasing
the processing level and enhancing the export of the processed foods.
The following schemes will be implemented under PM Kisan SAMPADA Yojana:
• Mega Food Parks
• Integrated Cold Chain and Value Addition Infrastructure
• Creation / Expansion of Food Processing & Preservation Capacities
• Infrastructure for Agro-processing Clusters
• Creation of Backward and Forward Linkages
• Food Safety and Quality Assurance Infrastructure
• Human Resources and Institutions
• Operation Greens
The Agro Processing Cluster Scheme under PMKSY
It is aimed at developing modern infrastructure and common facilities to facilitate the
establishment of food processing units based on a cluster approach. This involves connecting
groups of producers/farmers with processors and markets through a well-equipped supply chain.
Each agro-processing cluster includes Basic Enabling Infrastructure (such as roads, water supply,
power supply, drainage, ETP) and Core Infrastructure/Common facilities (including warehouses,
cold storages, IQF, tetra pack, sorting, grading) along with at least 5 food processing units
requiring a minimum investment of Rs. 25 crore (-US$ 3 million). The units are established
simultaneously with the creation of common infrastructure, requiring at least 10 acres of land
arranged either through purchase or lease for a minimum of 50 years.
Integrated Cold Chain and Value Addition Infrastructure" Scheme under PMKSY
It was launched to establish uninterrupted cold chain facilities from farm to consumer, including
pre-cooling, storage, and distribution. It encompasses various temperature-controlled storage,
packing, and transportation facilities for diverse products like horticulture, dairy, and meat.
Operation Greens
In the Union Budget 2018-19, a new initiative called "Operation Greens" was introduced,
modeled after "Operation Flood," with a budget of Rs. 500 crore (US$ 71.5 million). This scheme
was launched to boost Farmer Producers Organizations (FPOs), agri-logistics, processing facilities,
and professional management, focusing initially on Tomato, Onion, and Potato (TOP) value chains
since November 2018.

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As part of the "Aatmanirbhar Bharat Package" to revive the economy post the COVID-19 supply Student Notes:
chain disruptions, short-term measures under the scheme were extended from TOP crops to all
fruits and vegetables (TOTAL). Furthermore, in the Union Budget 2021-22 speech, the coverage
of long-term interventions, specifically Integrated Value Chain Development Projects initially
targeting TOP crops, was expanded to include 22 perishable crops.
Mega Food Park Scheme:
• Mega Food Parks Scheme was launched by the government in 2008. It provides financial
assistance up to 50 crores to setup modern infrastructure facilities for food processing
called Mega Food Parks. The primary objective of the Scheme is to provide modern
infrastructure facilities for the food processing along the value chain from the farm to the
market with a cluster based approach based on a hub and spokes model.
• It has 3 layers:
o At the centre, there is central processing centre (CPC) which is 80-100 acres. From here
the value-added product will either go to the domestic market or for exports.
o Around CPC, there are PPC (Primary Processing Centre) where works like sorting, grading,
pre-cooling, packaging etc. are done.
o Around PPC, CCs (Collection centres) are there working as aggregation and storage
centres which collect from farmers, middle-men, mandis etc.
• The Mega Food Park project is implemented by a Special Purpose Vehicle (SPV), which is a
Body Corporate, registered under the Companies Act. The government has sanctioned 41
food parks funded under the Mega Food Parks Scheme, 24 are operational and 17 are under
implementation as of Dec 2023.
However, the Mega Food Park Scheme has, however, been discontinued w.e.f. 01.04.2021
with provision for committed liabilities only.

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 Student Notes:

Scheme for formalization of Micro Food Processing Enterprises

The Union Cabinet has given its approval to a new Centrally Sponsored Scheme – “Scheme for
Formalization of Micro food processing Enterprises” for the Unorganized Sector on All India basis.
The Union Cabinet has sanctioned an outlay of Rs.10000 crore.
• The objective of the scheme is to
o Support the creation of global food manufacturing champions;
o Promote Indian brands of food products; I
o Increase employment opportunities for off-farm jobs;
o Ensure remunerative prices of farm produce and higher income to farmers.
• Features of the scheme
o Expenditure to be shared by the Government of India and States at 60:40.
o 2 lakhs of micro-enterprises are to be assisted with credit linked subsidy.
o The scheme will be implemented over a 5 year period from 2020-21 to 2024-25.
o It will follow a cluster approach.
o It will have special focus on perishables.
• Support for Individual micro-units:
o Micro enterprises will get credit-linked subsidy @ 35% of the eligible project cost with a
ceiling of Rs.10 lakh.
o The beneficiary contribution will be a minimum of 10% and balance from the loan.
o On-site skill training & Handholding for DPR and technical up-gradation.

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• Implementation strategy: Student Notes:
o Seed capital of Rs. 4 lakh per SHG will be given for the loan to members for working
capital and small tools.
o Grant will be provided to FPOs for backward/forward linkages, common infrastructure,
packaging, marketing & branding.
• Administrative and Implementation Mechanisms
o The Scheme would be monitored at Centre by an Inter-Ministerial Empowered
Committee (IMEC) under the Chairmanship of Minister, FPI.
o A State/ UT Level Committee (SLC) chaired by the Chief Secretary will monitor and
sanction/ recommend proposals for expansion of micro-units and setting up of new units
by the SHGs/ FPOs/ Cooperatives.
o The States/ UTs will prepare Annual Action Plans covering various activities for
implementation of the scheme, which will be approved by the Government of India.
o A third-party evaluation and mid-term review mechanism would be built in the
programme.
o The State/ UT Government will notify a Nodal Department and Agency for
implementation of the Scheme.
• Establishment of a National Portal & MIS
o A National level portal would be set-up wherein the applicants/ individual enterprise
could apply to participate in the Scheme.
o All the scheme activities would be undertaken on the National portal.
• Benefits catered by the Scheme
o Nearly eight lakh micro-enterprises will benefit through access to information, better
exposure and formalization.
o Credit linked subsidy support and hand-holding will be extended to 2 lakh micro-
enterprises for expansion and up-gradation.
o It will enable them to formalize, grow and become competitive.
o The project is likely to generate nine lakh skilled and semi-skilled jobs.
o The scheme envisages increased access to credit by existing micro food processing
entrepreneurs, women entrepreneurs and entrepreneurs in the Aspirational Districts.
o Better integration with organized markets.
o Increased access to common services like sorting, grading, processing, packaging,
storage etc.
Gram Samriddhi Yojna:
• It aims to bolster the unorganized food processing sector concentrated in rural areas. About
66% of unorganized food processing units are in rural areas and of these, 80% were family
run.
• The Rs. 3,000 crore scheme funded by the World Bank and the centre will help cottage
industry, farmer producers’ organization and individual food processors to increase capacity,
upgrade technology besides skill improvement, entrepreneurship development and
strengthening the farm-to market supply chain.
Scheme for Cold Chain, Value Addition and Preservation Infrastructure:
The objective of the scheme is to facilitate creation of integrated cold chain and preservation
infrastructure facilities without any break from farm to consumer. It intends to address the
shortage of cold storage capacity. The scheme mentions three types of facilities to be created
such as:
• Minimal processing centre at the farm gate level having facilities like weighing, sorting,
grading, pre-cooling, CA/MA storage, IQF and normal storage facilities
• Mobile pre- cooling vans and reefer trucks

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• Distribution hubs having facilities such as multi-purpose cold stores, variable humidity stores, Student Notes:
Quick Freezing and blast freezing etc.
Modernization of Abattoirs:
The objective is to modernize existing abattoirs or establish modern abattoirs promoting scientific
and hygienic slaughtering, application of modern technology for waste management, better by
product utilization, provision of chilling facility, retail cold chain management etc. under PPP
mode with the involvement of local bodies (panchayats or municipalities) on build-own-
operate/build-operate-transfer (BOT)/Joint venture (JV) basis.
Make In India:
As part of the Make in India campaign, food processing sector was identified as one of the 25
focus areas. Also, under Make in India campaign, 31 Sector Skill Councils (SSCs) were established
by the government along with FICCI of which 1 is for FPI.
TRIFOOD Project:
Ministry of Tribal Affairs, Ministry of FPI along with TRIFED have initiated the project with aim to
enhance the income of tribals through better utilization of and value addition to the Minor Forest
Produce (MFP) collected by the tribal forest gatherers.
Food Processing Fund:
A special fund in the NABARD worth INR 2,000 crore, designated as the Food Processing Fund,
was set up in the FY 2014-15 for providing affordable credit to food processing units in Mega &
Designated Food Parks.
One District One Product (ODOP):
The scheme was launched by the Government of Uttar Pradesh to encourage and revive
aboriginals’ arts and craft products. It would help Micro, Small and Medium Enterprises (MSMEs)
to produce and promote products that are unique in Uttar Pradesh. The programme aims to
encourage more visibility and sale of indigenous and specialized products/crafts of Uttar Pradesh,
generating employment at the district level.
The main objectives of the One District One Product Programme are as follows:
• Preservation and development of local crafts/skills and promotion of the art.
• Increase in the incomes and local employment (resulting in a decline in migration for
employment).
• Improvement in product quality and skill development.
• Transforming the products in an artistic way (through packaging, branding).
• To connect the production with tourism (Live demo and sales outlet – gifts and souvenir).
• To resolve the issues of economic difference and regional imbalance.
• To take the concept of ODOP to national and international level after successful
implementation at the State level.

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 Student Notes:

Under this project, one particular product is selected from every district. The selected product
under ODOP needs to be traditionally famous for its production and manufacturing from that
particular district. For instance: Lucknow is famous for zari-zardozi and chikankari. Many of these
products are GI-tagged, which means they are certified as being specific to that region.
The manufacturing process of a lot of these products is are being revived through modernization
and publicization. Under the ODOP programme, artisans, production units and associations
which are related to the selected products are promoted by lending loan, establishing Common
Facility Centers, providing marketing assistance so these products can be popularized and
employment can be generated at the district level.
Sub-schemes under the ODOP are:
• Common Facility Centre Scheme
• Marketing Development Assistance Scheme
• Finance Assistance Scheme (Margin Money Scheme)
• Skill Development Scheme.

8.2. Recent Developments

• The Ministry of Food Processing Industries hosted ‘World Food India’ event, in November
2023, in New Delhi. The event provided a distinctive platform to all the stakeholders in the
food value chain including food processors, equipment manufacturers, producers, cold chain
players, technology providers, logistics players, researchers, start-ups and innovators, food
retailers etc. to engage and demonstrate their capabilities.
• The United Nation’s General Assembly (UNGA) declared 2023 as the International Year of
Millets. The Union Budget 2023-24 included a special focus on millet, highlighting the
aspirations to make India a Global Hub for Millets (Shree Anna).
• During the Presidency of G20 summit, India had organized a two-day Global Millets
Conference in March 2023 in New Delhi bringing together participants from more than 102
countries facilitating discourse on important issues related to millets, including its production,
consumption, nutritional benefits, value chain development, market linkages, and research
and development.

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• The Indian Institute of Millets Research in Hyderabad was declared as a Centre of Excellence Student Notes:
for sharing best practices, research, and technology at national and international level.
• In 2022, a Special Food Processing Fund of US$ 263 million (Rs. 2,000 crore) was set up with
National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit
for investments in setting up units under Mega Food Parks (MFP) and Designated Food Parks
(DFP).
• The Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) was approved
in March 2021, with a budget of US$ 1.3 billion (Rs. 10,900 crore) to be implemented from
2021-22 to 2026-27. It is aimed at incentivizing manufacturing, promoting innovative/organic
SME products, and endorsing Indian brands internationally. Additionally, a PLI Scheme for
Millet-based Products (PLISMBP) was launched in FY23 with an outlay of ~US$ 96 million (Rs.
800 crore).

8.3. Challenges that still remain despite Government Initiatives

The challenges for the food processing sector are diverse and demanding, and need to be
addressed to boost FPI in India. A combination of uncontrollable and controllable factors has
affected the growth of the sector and has acted as a hindrance in achieving its potential.
Uncontrollable factors:
• Fragmentation of land holdings which has resulted in lack of scale and has made investments
in automation unviable;
• Regional climatic variations which impact the production;

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• The constraints in land availability due to competing pressure from urbanization, Student Notes:
constructions and industrialization.
Controllable factors: which can be addressed by intervention of Government and private
enterprises.
• It includes issues of quality and quantity of raw produce,
• Low labor productivity with slow adoption of technology.
• Low levels of value addition and safety/quality of processed food etc.
• Lack of access to credit;
• Inconsistency in state and central polices, which requires both the Center and the State to
work as one single cohesive unit.
• Lack of cold chain and storage- India has inadequate cold storage and transportation facilities.
This results in severe loss of post-harvest perishable goods.
• Fragmented supply chain leading to inefficiencies and increased costs.
• Businesses find it difficult to navigate the complex web of licenses, regulations and permits.
Indian food-processing industry is poised for explosive growth driven by changing demographics,
growing population and rapid urbanization along with increased government support. These
factors will increase the demand for value added products and thus improve the prospects of
food-processing industry in India.
The government’s focus towards food processing industry as a priority sector will ensure policies
to support investment in this sector and attract more FDI. India with its vast pool of natural
resources and growing technical knowledge base has strong comparative advantages over other
nations. According to CII estimates, food-processing sector has the potential of attracting US $33
billion of investment in 10 years and generate employment of 9 million person-days. The food
processing sector in India is clearly an attractive sector for investment and offers significant
growth potential to investors.
8.4. Suggestions and Way Forward
The need of the hour is to adopt an integrated approach to address the above mentioned
tailbacks with a clear-cut focus on improving the quality and value of the output, reducing the
cost of raw material for the processors, while improving the farmers' income levels.
To promote this sector, attempts are required to be made to promote farmer–producer
interaction, provide appropriate tax incentives and holidays for setting up food processing
industries, taking care of expenses on market promotion and ancillary activities.
Policy initiatives to plug supply side and infrastructure bottlenecks
• Foster development of backward linkages by evolving conducive regulatory framework for
contract and corporate farming
• The North Eastern Region, the Hilly States (J&K, HP and Western UP), the Islands (A&N,
Lakshadweep) areas in the country should be given special consideration as they are naturally
conducive for FPIs. In this direction, Zoram Mega Food Park, Mizoram’s 1st such park was set
up by MoFPI.
• Encourage commodity clusters and intensive livestock rearing.
• Promote private sector participation with well-defined roles of the participants, risk sharing
mechanisms, fiscal incentives and partnership models for creation of infrastructure for
logistics, storage and processing.
• Encourage technology up gradation of existing facilities and investment in development of
ancillary industries like research and development, packaging, food processing equipment
manufacturing, food safety certifying agencies by extending fiscal incentives to investors.

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