Food Processing Industry (FPI) makes up 32 per cent of the total food market, 11.6 per cent of employment, 4.09 per cent of output and is the thirteenth-largest recipient of FDI in India. The sector constitutes as much as 9.87 per cent of Gross Value Added (GVA) in manufacturing and 11.38 per cent GVA in agriculture in 2019-20 at 2011-12 prices. India is ranked fifth in production, consumption, investment and export growth and is the second-largest producer of fruits and vegetables in the world. India’s gourmet food market and organic food market is valued at $ 1.3 Bn and $ 815 Mn with a Compound Annual Growth Rate (CAGR) of 20 per cent and 24 per cent, respectively. With 100 per cent FDI allowed by the government through automatic route and the expanded Ease of Doing Business measures, India’s food processing sector received FDI of $ 904.70 Mn in 2019-20. 

The sector, however, faces key challenges such as delays in market access, institutional gaps, lack of standardisation, supply chain gaps etc. To address these challenges and promote unhindered growth in FPI, the government had earlier released a draft National Food Processing Policy to increase investment in this sector and promote international competitiveness.  

To further this vision, Finance Minister Nirmala Sitharaman announced the provision of a comprehensive package “to help farmers select suitable varieties of fruits and vegetables, and to use appropriate production and harvesting techniques”. The Budget also proposed an allocation of INR 2,941.99 crores, 2.25 times or 126 per cent higher than last year, as can be seen from Table 1. 

Table 1: Budgetary allocation to the Ministry of Food Processing Industries (in crores)

This article was authored by Bhavya Tyagi.