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Q1. Why should one invest in a business that processes food? Describe the government of India’s initiative for the expansion of the country’s food processing businesses. (250 words, 15 Marks)
Approach:
- Introduction: Explain the potential of food process industries in India.
- Body:
- Explain the benefits of investing in a food processing company.
- Highlight the government of India’s initiative for the expansion of the country’s food processing businesses.
- Conclusion: Conclude by stating that changing food habits require the need for expansion of the food processing industry.
Answer:
The Indian food business is expected to experience rapid expansion, boosting its annual contribution to the global food trade. India is the biggest nation in the world in terms of food supply, demand, production, and processing. With 70% of global sales and fifth-place rankings in production, consumption, and export, India’s food market is placed sixth in the world. India exports 6% of its industrial investment and 13% of its total manufacturing output.
- The Gross Value Addition of manufacturing and agriculture in India is 8.80% and 8.39%, respectively. The Indian food sector is expected to produce $535 billion in US dollars by 2025, with a CAGR of 11%.
Benefits of Investing in a Food Processing Company:
- There is always a demand for locally processed food, notwithstanding the emergence of major MNC players in the industry of food processing.
- Better government policies and a surplus of raw materials are further enabling elements for food processing plants.
- Only a local brand can satisfy regional taste preferences, which has led to the emergence of numerous local players with sizable market shares in smaller locations, particularly Tier 2 and 3 cities.
- The existence of effective D2C marketing channels has aided in promoting regional brands to national prominence.
- Food preferences, consumption patterns, cheap production costs, and changing eating habits have all significantly fueled the growth of the food processing sector.
Government of India’s Initiative for the Expansion of Food Processing Businesses:
- In the FY 2014–15, a unique NABARD fund worth Rs. 2,000 crores, dubbed the Food Processing Fund, was established for the purpose of offering credit at reasonable rates to food processing businesses in Mega & Designated Food Parks.
- One of the 25 key areas for the Make In India programme was the food processing industry. In order to draw in more financial, technological, and human resources, the policy ecosystem has been updated. Another important step in this direction is to permit 100% FDI via the automatic route.
- The Modernisation of Abattoirs Scheme aims to increase processing levels, add value, and reduce waste by building new processing and preservation facilities, as well as modernising and expanding existing food processing facilities.
- The goal of the cold chain, value addition, and preservation infrastructure scheme is to offer seamless, integrated cold chain and preservation infrastructure facilities from the farm gate to the consumer.
- By bringing together farmers, processors, and retailers to maximise value addition, minimise waste, increase farmers’ income, and provide employment possibilities, particularly in the rural sector, the Mega Food Parks Scheme intends to provide a method to link agricultural production to the market.
- The Pradhan Mantri Kisan Sampada Yojana (PMKSY) is an umbrella programme that unifies a number of active programmes, including Mega Food Parks, Integrated Cold Chain, Infrastructure for Agro-processing Clusters, and Infrastructure for Value Addition.
The rise in middle-class disposable income, shifting dietary preferences toward processed and packaged foods, rising urbanisation, and changing food habits all need the expansion of the food processing industry.
