In terms of consumption, production, and exports, the Food Processing Industry (FPI) is the fifth-largest industry in our country. The ratio of food retail sales to GDP from agriculture in India is relatively low when compared with other developed economies. It gives us an opportunity to scale up the food processing industry.
In a recent interview ET Now with Anand Ramanathan, a Partner at Deloitte, he talked about the food processing industry and development in India. He began by emphasising on how the food processing share in India is much lower than the world and even compared to the Asian countries, food processing in India is 10% of all the products that are grown.
Looking at the current scenario he feels that there is a huge growth potential for India in the food processing industry. The progress will be directed by demand in retail and also the need for convenience & safe food.
Presently, the size of the Indian FPI is 1.5x that of the agricultural industry while in the technologically advanced countries it is around 4-5x which depicts the opportunity of growth for India in the sector.
Speaking of Covid-19 and its part in pushing rural demand he accepted that it has put back the focus on agriculture. He even added that the attention which comes in from the government and the extent of the consumption market in rural areas is where the big difference was made in the food processing industry. Another thing that Covid-19 gave rise to was moving the focus from cereals to proteins and fresh produces. There has been an increase in demand for horticulture as well due to Covid-19.
A number of policies have been put forward to modify in APMC Act, solidifying farm gate infrastructure, etc. He even remarked that this is only the beginning; the major challenge is on the implementation front while converting the policy changes at the central government into actions at the local level.
At this time, the Indian food processing industry is subjugated by MSMEs. Anand believes that what will help the MSME sector in FPI will be if states have a crop value chain and then concentrate on offering both funding and capability building. Lastly, he added that technology will also play a significant part in MSMEs and the food processing sector.
In the list of global investors, India is positioned very well and can also focus on growing in the Middle East. Moreover, India can shape its food processing industry on natural ingredients with the backbone of Ayurveda and yoga.