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Poor infrastructure creates big hurdle in front of food processing sector ASSOCHAM

ASSOCHAM has urged the government to fill prevailing gaps in infrastructure availability, awareness and efficiency of value chain that have hampered the growth of food processing sector in India.
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Industry body ASSOCHAM has urged the government to fill prevailing gaps in infrastructure availability, awareness and efficiency of value chain that have hampered the growth of food processing sector in India.

With Union Food Processing Minister Harsimrat Kaur Badal set to discuss various issues facing food processing sector, including foreign investments, with various government departments and other stakeholders today, ASSOCHAM has highlighted that inefficiencies in supply chain, absence of economies of scale, technology up-gradation and quality issues are certain key challenges dogging India’s Rs 600,000 crore worth food processing industry.

“There is a need to lure more investments in infrastructure to bring in more organised sector investments into food processing as currently unorganised sector forms major part with a share of about 42 percent,” said DS Rawat, secretary general of ASSOCHAM.

“Just over two percent of annual production is processed in India, an abysmally low figure when compared to countries like Malaysia, US and China, where around 83 percent, 65 percent and 23 percent of produce is processed restively,” said Rawat.

Growing at a compounded annual growth rate (CAGR) of about 10 percent, India’s food processing industry accounts for almost 32 percent of total food market and contributes 9-10 percent to gross domestic product (GDP) in agriculture and manufacturing sector and ranks fifth in terms of production, consumption and exports.

Grains processing occupies maximum share in food processing sector accounting for 40 percent of the industry size followed by horticulture and oil seed processing.

With over 9,000 registered factories in food processing sector, Andhra Pradesh accounts for over 25 percent share in over 35,800 total registered food processing factories across states in India followed by Tamil Nadu with 14.5 percent share, Maharashtra with 8.2 percent share, Punjab with 7.7 percent share and Uttar Pradesh with 5.7 percent share.

Stumbling Blocks

Due to proliferation of unorganised players in the processed food segment and as the processing activity being highly diffused in India, achieving economies of scale to increase output is constrained.

Besides, small scale of most food processors in India prevents any timely up-gradation of technology, which is vital to improve quality of product.

Though many quality norms and measures for domestic and international trade have been laid out for processed food, many small scale processors lack necessary monitoring mechanisms to implement these quality norms.

Ensuring a more efficient supply chain network to boost linkages between food processing industries and farmers, promoting crop planning, extending advisory to farmers to produce top quality processed food, promoting agricultural export zones, encouraging contract farming, developing robust cold storage infrastructure and other related factors can help drive growth and development of food processing industry in India.

Despite production strengths, climatic advantages and availability of cheap labour force, there are major challenges that have stood underway the potential development of the sector in the country.

Unlike farm level skill development, food processing sector requires a more intensive capacity building accompanied by specific skill sets.

Augmenting knowledge and skill levels of the workforce, and youth in particular, is essential to enhance resource productivity, boost innovation, manage finance, mitigate risks and improve decision making ability.

Areas need to be focused

Targeted training programmes for different segments of food processing industry like dairy, confectionery, frozen foods, beverages that enable improved learning outcomes among the trainees.

While there is utmost need to map and identify the job roles and their respective skill set requirement, training needs assessment from the ‘trainee/employer perspective’ to be made pre-requisite for designing and implementing the training programmes.

Synergy between public-private-partnerships (PPP) including universities to be effectively used, harvesting the domains of expertise of various stakeholders. For example, the research expertise of the research centers and universities, the commercialisation and market orientation methods of the private sector may be synergised for training effectiveness. 

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