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FoodProcessingIndustry:Concepts,IssuesandItsScenarioin
IndiaandtheWorld
insightsonindia.com/2014/11/22/foodprocessingindustryconceptsissuesscenarioindiaworld/

INSIGHTS

11/23/2014

Whatisfoodprocessingindustry(FPI)?
Rightfromthecultivationandharvestofcrop,uptotheconsumptionofproductbyconsumer,thereiscertaindegree
ofvalueadditionineveryproduct.Thisvalueadditioncanbeofnumeroustypes.Asitgoesfromproducer,to
wholesaler,toretailerandfinallytoconsumer,everystageaddssomevaluetotheproduct.Inthisvaluechainthere
maybevalueadditionbySorting,grading,packaging,brandingetc.Theseactivitiesnotmakesproductattractive,
moreusable,giveschoiceandawarenesstocustomersandalsoenhancesshelflifeofproducts.Apartfromthis
servicerenderedbyintermediariestopassonproductfromproducertocustomerisalsovaluable.
Mostoftheagriculturalproductsarenotconsumableintheiroriginalform,forwhichtheyareprocessed.Wheatis
convertedintoflour,Paddyintorice,sugarcaneintojagery,Sugar,ethanol,alcoholetc.Theseproductscanbe
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furtherprocessedsuchasflourintobread.Apartfromthis,leftoverpartofcropsuchasriskhuskcanalsobe
processedtogetsomeusefulproductfore.g.RiceBranoil,cattlefeed,Sugarcanebagassecanbeusedforpower
cogeneration.
Hence,foodprocessingnotmerelyaddsvaluetotheagroproducts,butalsoincreasestheirutility.Weknowthat
activitiesinaneconomyarebroadlydividedintoAgriculture,industryandServices.FoodprocessingIndustryisthe
productofagricultureandIndustry.
WhereIndiastandsandwhyfoodprocessingisimportant?
IndiaFoodProcessingIndustryisestimatedat$135billionindustrywhichisgrowingatabout8%annually.This
growthrateissignificantlymorethanagriculturalgrowthratewhichremainsaround4%.Thesesignalsindicate
towardphenomenalshifttowardfoodprocessingfromtraditionalways.GDPbyprocessingconstituteabout10%
thatofagriculture.ButgivenpotentialofIndia,thisisanunderachievement.
Indiahasabout26typesofdifferentclimaticconditions,46varietiesofsoilsarethereinIndiaoutoftotal60typesof
soilsworldwide.127agroclimaticzoneshavebeenidentifiedinIndia.Also,Indianfoodisknownworldwideforits
uniquetasteandaroma.
Indiasregionalandculturaldiversityisperfectlyreflectedinfood.EverystateinIndiahassomethinguniquetooffer.
Fore.g.SouthIndian,Gujrati,Bengali,RajasthaniandPunjabidelicaciesaredifferentandareadmiredinmany
partsoftheworld.ButtheyhaventbeenabletomakeinroadsinothercountriesthewayMcDonalds,Dominos
etc.hasdoneinIndia.Thisisbecauselackofcreativeness,innovation,brandingandmostimportantlyshallow
pocketsofIndianmanufacturers.
IndiaislargestproducerofPulses,Mangoes,Banana,Milk,ginger,Buffalomeatand2ndlargestproducerofrice,
wheat,potato,garlic,cashewnut,groundnut,dryonion,greenpeas,pumpkin,gourds,cauliflowers,sugarcane,and
teaintheworld.Weproduce17percentoftheglobaltotalofvegetablesand14percentinthecaseoffruits.About
40percentoftheworldsmangoesand30percentoftheworldsbananasandpapayasareproducedinIndia.
Further,IndiahasmanyuniquethingstooffersuchasAlphonsoMangoesandwheatofMadhyaPradeshis
uniquelyproteinrich.
Nosurprise,thatIndiaisnetexporterofagriculturalproducts.ButvalueadditionofIndianproductremainsquite
low.IndianManufacturershaventmovedmuchaheadinvaluechain.SayIfmangoesareprocessedintoMango
Juiceorpulpitwillresultinmorevalueaddition,industry,employment,GDPandforeignexchange,butweexport
mainlymangoesasitis.
Indianagricultureisinfestedwithpostharvestwastageproblem.Incategoryoffruitsandvegetablesitisabout
3040%.Overall,costofwastageisestimatedatabout18%rangingfrom50000croresto1lakhcrore.Wastageis
attributabletoseveralfactorsincludingnonavailabilityoffacilitiesforsorting,grading,packaging,storage,
transportation,coldchainandlowlevelofprocessingofagriculturalproduce.Foodprocessingcanhalvethisloss.
Consequentlyfarmerwillabletogetmorevalueandconsumerwillgetproductscheaper.
ConsumptionpatternsinIndiaarerapidlyshiftingfromcerealstoproteinrichfoodsandhorticulture.AlsoIndiahas
significantproportionofpopulationwhichisundernutrition(1/3ofpopulation),stuntedandwasted.Horticulture
andfruitsaremuchdesirableforthisproblemandwastagereductionwillhavedecisiveimpacthere.
Foodprocessinghaspotentialtoturnaroundwholeeconomy.Indianeconomyisstillagrarian,becauseabout
55%populationisdirectlydependentuponagriculture.FPIdirectlytargetsfarmingsectorasitattemptstocreate
moretypesofproductsoutofsinglecrop.Thiswillincreasedemandforfarmersandhencemoreremunerative
prices.
IndiasdemographicdividendismuchtalkedaboutandmostofthisliesinruralIndia.Indianyouthisturningaway
fromagriculturebecauseoflowprofitability.FPIisperhapsbestbettoseizeopportunityofdemographicdividend.It
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cangiveusagenreofprogressiveruralentrepreneurs.Prosperouscountrysidewillhavemultiplierpositiveimpact
onsocioeconomicandpoliticalproblems.Inshort,FPIcannarrowgapbetweenruralandurbanIndia.
ApartfromthisIndiaseconomyisundertransition,Incomeclassesaremovingupward.Everyyearmillionsof
householdsarecomingoutofpovertytobepartofmiddleclass.PercapitaincomeisIncreasingasGDPgrowth
rateismuchhigherthanpopulationgrowthrate.Thisiscomplimentedbygrowingurbanculture,nuclearfamilies,
workingcouples.Thismakescaseforprocessedfoodcompelling.ConsumptioninIndiaisgraduallytiltingtowards
packagedandreadytoeatfoods.Demandisboundtoincrease,butithastobeseenthattowhatextent
opportunityisseizedbyIndianindustryandhowmuchisleftforforeigncompanies.
FPIisemploymentintensiveindustryitcanbeananswertojoblessgrowthofpastdecade.Currently,only3%
ofemploymentisinFPI,whileindevelopedcountriesithandles14%population.Again,muchoftheemployment
willbecreatedintoruralIndia.Thiscanremedyproblemofdistressmigration.Growthindirectemploymentinthe
organizedfoodprocessingsectorstandsat6%between201112.
Also,strategicgeographiclocationandproximitytofoodimportingnations(MiddleEastandAfrica)makesIndia
favorablefortheexportofprocessedfoods.
Lastbutnottheleast,worldeconomiesareintegratingevenrapidlyyearbyyear.Soacountryhasnooptionbutto
remaincompetitive.
Globalscenario
Foodprocessingisoneofthelargestglobalsectorsat$7trillionannualproduction.Lookaroundandyoullfind
companiesofColddrinks,Waferchips,Juice,restaurantchainstobeamongbiggestones.Italianpastaandpizza
isnowconsumedinalmostallcountries,soaretheburgersandsandwiches.Sugarfreeproducts,cornflakes,oats,
ketchupsetc.areamongmostdemandedconsumergoods.Currentlyonly2%ofIndiasvegetableandfruits
productionisprocessed.IncomparisonUSAandChinaprocessestheir90%and40%produce.Otherdeveloping
countries,suchasThailand,Philippines,andBrazilareprocessingashighas30,78and70%oftheirproduce.
Indiasfoodprocessingsectorranksfifthintheworldinexports,productionandconsumption.
Importanceofthissectorissignificantanditdeservesaprioritytreatmentbygovernment.Accordinglysectorhas
beenmadepartofambitiousMakeinIndiainitiative.
Infrastructure
SupplyChainAnyproductismobilizedfromproducertoconsumertobeconsumed.Thisrouteiscalledsupply
chain.Thismovementinvolvesbothtimeandcosts.Lengthiersupplychainswillpushpricesupwardandresultin
morewastage.Inlastarticlesregardingmarketingofagroproductswecameacrossvariousgovernmentpolicies
andinstitutions,whichamongotherthings,increasenumberofintermediaries.Adequatestoragefacilities,direct
farming,contractfarmingandnegotiablewarehousereceiptsystemaremechanismstostreamline,strengthenand
shortenthesupplychain.
Apartfromtheseissuesothermajorinterventionsandinvestmentsareneededininfrastructuresector,whichis
backboneoffoodprocessingindustry.WehaveseenthatIndiaisbiggestproducerofnumerousfruitsand
vegetable.Mostoftheseareperishableandhaveverylowshelflife.Thisisthemajorreasonforhighpercentageof
wastage.Theirshelflifecanbeincreasedbyadequateinvestmentininfrasuchascoldstorage,reefervans,
radiationplantsetc.
StorageoffoodgrainsFCIdealsonlyinfoodgrainsandabout67percentofthestoragecapacityis
concentratedinthesixmajorprocuringstatesnamely,Punjab,Haryana,UttarPradesh,AndhraPradesh,Rajasthan
andUttrakhand.SeveralStateshaveemergedinrecentyearsasimportantstatesforfoodgrainsprocurement,

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namely,Bihar,Odisha,Jharkhand,WestBengal,MadhyaPradeshandChhattisgarhpresentlyaccountfor13per
centofthecurrentstoragecapacity.
UndertheNationalStoragePolicy,thebulkgrainhandlingfacilitiesarenowbeingcreatedontheBuiltOwnOperate
(BOO)basisatidentifiedlocationsinthecountry.
Muchoftheproblemherecanberelievedbytimelyoffloadingofstocks.
StorageofHorticultureproductsMainlyNAFEDitalsoownsgodownsandcoldstores.
Indiaiscurrentlyhavingsevereshortageofcoldstoragefacilities.Significantmajorityofcoldstoragefacilitieswere
createdbetween2000and2011,assistedtosomeextentbyinterventionsfromNationalHorticulturalBoard(NHB),
NationalHorticulturalMission(NHM),HorticultureMissioninNorthEastandHimalayanStates,Agriculturaland
ProcessedFoodProductsExportDevelopmentAuthority(APEDA),MinistryofFoodProcessingIndustriesand
DepartmentofAnimalHusbandry&Fisheries.
Coldstoresaretosomeextentproductspecific.MajorityofthecoldstoresinIndiaarededicatedtopotatoes.There
aresomethatprovidestoragesforchilies,dryfruits,spices,vegetablesetc.Coldstorageformeat,fish,milkand
milkproductsandforothercommoditiessuchasspicesaccountforonly1percentofthetotalcoldstoragecapacity.
Thesecoldstoragesarealsousuallysmallerincapacity.
Nearly96percentofcoldstoragesareintheprivatesectorandabout75percentcapacityofcoldstoragesisused
tostoreonlypotatoeswhileanother23percentfallunderthemultiproductcategory.

Valueaddition
Upstreamanddownstream/forwardbackwardintegration(insupplychain)
Supplierstoaproducersortraderlieonupstreamside,whereascustomersliesondownstreamside.Thiswill
changeaccordingpersonunderobservation.Forafarmer,supplierofseedsandfertilizerslieonupstream,while
coldstoreowners,farmcontractors,millowners,tradersinagrooutputliesondownstream.
Whenaparticularpersoninsupplychainassumeroleoftwolevelsitissaidintegration.IfPepsiCoinsteadof
procuringpotatoes(forchips)fromfarmersgetpotatoescaptivelyfromitsownlands,itwillbecalledbackward
integration.Onotherhandiffarmerputsupaprocessingplantforchips,oracoldstorage,thiswillbecalledforward
integration.Directfarmingisalsoaforwardintegration,wherefarmerassumesrolewhichwasplayedby
commissionagentinAPMC.
Forwardandbackwardintegration,alsocalledverticalintegration,iscommoninanybusinessanditsavesthecosts
associatedwithsupplychain.Businesswhichpursuesintegrationstrategy,earnsacompetitiveedge.Forexample
RelianceIndustriesownsoilandexplorationbusiness,refiningbusiness,retailoutletsforpetroproducts,andis
Indiasbiggestpolyestermanufacturer.ConsequentlyRILhasalmostmonopolyinthesesectors.
Infarmingandfoodprocessing,verticalintegrationcanworkwonders.Forthisfarmerneedsfinancialandtechnical
support.AgricultureinIndiaalreadyisoveremployed.Thiswithseasonalnatureofmajorityoffarmingcropsgives
farmersacompellingreasontogetintofoodprocessingbusiness.
Institutions
1.MinistryofFoodProcessingIndustries(MOFPI)
formedin1988
a)TheMinistryisnodalagencyforFPIandisconcernedwithformulationandimplementationofthe
policies&plansforthefoodprocessingindustrieswithintheoverallnationalprioritiesandobjectives.
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b)Facilitatingcreationofaconduciveenvironmentforhealthygrowthofthefoodprocessingsector.
c)CreationofWorldClassInfrastructure
d)PromotionofR&DinFoodProcessingsector
e)HumanResourceDevelopmenttomeetthegrowingrequirementofmanagers,entrepreneursandskilled
workers
f)Assistanceforsettingupanalyticalandtestinglaboratories,activeparticipationinthelayingdownof
foodstandardsandtheirharmonizationwithinternationalstandards.
g)Continueintensiveconsultationwithindustry,academia,scientistsandrepresentativesofState
Governments
h)HassetupanationallevelinstituteofInternationalstandardNationalInstituteofFoodTechnology
EntrepreneurshipandManagement(NIFTEM)atKundliinHaryana
i)DecentralisationintheimplementationofvariousschemeswithgreaterinvolvementoftheStates/UTs.
TheMinistryhaslaunchedanewCentrallySponsoredSchemeNationalMissiononFoodProcessing(NMFP)
witheffectfrom01.04.2012.
2.AgriculturalandProcessedFoodProductsExportDevelopmentAuthority(APEDA)anapex
organizationundertheMinistryofCommerceandIndustryfocusonexportof
scheduledproducts
Authoritywasestablishedin1985,byanactpassedinparliament.Mainfunctionsare
a)Developmentofindustriesforexportbywayofprovidingfinancialassistanceorforundertaking
surveysandfeasibilitystudies,participationthroughjointventuresandothersubsidyschemes
b)Registrationofpersonsasexporters
c)Fixingofstandardsandspecificationsfortheproductsforthepurposeofexports
d)Carryingoutinspectionofmeatandmeatproductsinslaughterhouses,processingplants,storage
premises,conveyancesorotherplaceswheresuchproductsarekeptorhandledforthepurposeofensuring
thequalityofsuchproducts
e)Improvingofpackagingoftheproducts
f)ImprovingofmarketingoftheproductsoutsideIndia
g)Promotionofexportorientedproductionanddevelopmentoftheproducts
h)Traininginvariousaspectsoftheindustriesconnectedwiththeproducts
APEDA
hassetupcommoninfrastructurefacilitieslikecentreforperishablecargoatvariousinternationalairports.
FacilitiessuchasVaporHeatTreatmentplants,irradiationfacilities,integratedpackhouses,precooling
facilities,andhighhumiditycoldstoresforspecifichorticultureproductsarealsothere.
Additionally,itprovidesfinancialsupporttoexportersforinstallingfacilitiessuchasReeferVansandinhouse
abovementionedfacilities.

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Similarly,MarineProductsExportDevelopmentAuthority(MPEDA)isthereforfisheryproductionandrelated
activities.
3.DepartmentofAnimalHusbandry,Draying&Fisheries
TheDepartmentisresponsibleformattersrelatingtolivestockproduction,preservation,andprotectionfrom
diseaseandimprovementofstocksanddairydevelopment,andalsoformattersrelatingtotheDelhiMilk
SchemeandtheNationalDairyDevelopmentBoard.Italsolooksafterallmatterspertainingtofishingand
fisheries,inlandandmarine.
TheDepartmentadvisesStateGovernments/UnionTerritoriesintheformulationofpoliciesandprogramsin
thefieldofAnimalHusbandry,DairyDevelopmentandFisheries.
4.NationalHorticulturalBoard(NHB)underMinistryofAgriculture
Thebroadaims&objectivesofalltheabovementionedschemesareasunder:

1.Developmentofhitechcommercialhorticultureinidentifiedbelts

b)Developmentofmodernpostharvestmanagementinfrastructureasintegralpartofarea
expansionprojectsorascommonfacilityforclusterofprojects
c)Developmentofintegrated,energyefficientcoldchaininfrastructureforfreshhorticulture
produce,
d)Popularizationofidentifiednewtechnologies/tools/techniquesforcommercialization/adoption,
aftercarryingouttechnologyneedassessment,
e)SettingupCommonFacilityCentersinHorticultureParksandAgriExportZones
1.Transferoftechnologytoproducers/farmersandserviceproviderssuchasgardeners,farm
levelskilledworkers,operatorsincoldstorages,workforcecarryingoutpostharvest
managementetc.

FDIinfoodprocessing

5.100%FDIispermittedintheautomaticrouteformostfoodproductsexceptforitemsreservedformicroand
smallenterprises.
6.100%FDIispermittedforalcoholicbeverages,withtherequirementofanindustriallicense.
7.Forpickles,mustardoil,groundnutoilandbreaditemsreservedforthemicrosmallandmediumsector,
24%foreigndirectinvestmentisallowedundertheautomaticroute,withtherequirementofpriorapproval
fromtheForeignInvestmentPromotionBoardforFDIamountingtomorethan24%.
Vision2015
Vision2015whichwasadoptedin2010providesforenhancingthelevelofprocessingofperishableto20%,
enhancingvalueadditionfrom20%to35%andincreasingIndiasshareinglobalfoodtradefrom1.5%to3%
bytheyear2015.Toachievethesetargets,investmentofRs.100thousandcroreswasestimatedbyyear2015,out
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ofwhichRs.10000croreswastocomefromtheGovernment.Vision2015providesforestablishmentof30Mega
FoodParksinpublicprivatepartnership,sofar21suchprojectshavebeenapprovedandapprovalof4projectsis
pending.Listcanbeaccessedhere.1stMegaFoodParktoopenwasinsirnifoodparkinAndhra.RecentlyTumkur
IntegratedFoodParkwasinauguratedinKarnataka.Thisisthefirstintegratedfoodparkwhichhasbeen
developedwithpartnershipfromtheMinistryofFoodProcessingIndustries,andtheStategovernment.Nowlistof
megafoodparkstobesetuphasgoneupto42,sincemakeinIndiainitiative.
MegaFoodPark
Scheme
Asenvisagedbyvision2015,MegaFoodParks,aretobebasedonclusterapproach.InIndiathereareregional
horticulturalcrops,whicharedominantlygrowninaparticulararea.Intheseareasthereisgenerallyclusterof
similarfarmers,factories,andtradersetc.whodominantlydealinsameagroproduct.Schemeaimstostrengthen
suchclustersbyprovidingworldclassinfrastructurefacilities.ThiswillresultinsmootheningofsupplychainFarm
toMarket.
Hubandspokemodelisadopted,asperwhichtherewillbeastrongCentralProcessingUnit,whichwillcater
needsofsurroundingareas.Insurroundingareas,therewillbesmaller,primaryprocessingcenterswhichwillbe
fedfromnumerouscollectioncenters.Thesecollectioncenterswillhavedirectinterfacewiththefarmer,farmer
groups,orselfhelpgroups.
Thiswillleadtoverticalintegration(backwardandforwardintegration)inactivitiesofthatparticulararea.
CentralProcessingunitsaretobebuiltunderpublicprivatepartnership.Areaforwillrangefrom50100acres,
thoughtheactualrequirementoflandwoulddependuponthebusinessplan,whichmayvaryfromregiontoregion.
Onetimecapitalgrantof50%oftheprojectcost(excludinglandcost)subjecttoamaximumofRs.50crorein
generalareasand75%oftheprojectcostsubjecttoaceilingofRs.50croreindifficultandhillyareas,isavailable.
ProgramManagementAgencyisappointedbytheMinistrytoprovidemanagement,capacitybuilding,
coordinationandmonitoringsupport.Formeetingthecostoftheaboveandalsootherpromotionalactivitiesby
theMinistry,aseparateamount,totheextentof5%oftheoverallgrantsavailable,isearmarked.
Itisexpectedthatonanaverage,eachprojectwillhavearound3035foodprocessingunitswithacollective
investmentofRs.250croresthatwouldeventuallyleadtoanannualturnoverofaboutRs.450500croresand
creationofdirectandindirectemploymenttotheextentofabout30,000persons.

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SpecialPurposeVehicle
Theexecution,ownershipandmanagementoftheMegaFoodParkarevestedwithaSpecialPurposeVehicle
(SPV).SPVshallbeabodycorporate(company)registeredundercompaniesact.Fordetailssee
SpecialPurposeVehicleistermcommonlyusedincorporateworld.Itmobilizesfunds,expertiseandexperienceof
morethanoneorganizationtowardacommongoal.Forexampleacompanywillbeformedbypoolingfundsof
interestedpartiesandthiscompanywillbecalledSPV.
Definition,functionsetc.ofSPVcandifferfromcasetocase.Inthiscaseitisresponsibleforexecution,ownership
andmanagementofMegaFoodParks.
SpecialFundinNABARD
GovernmentofIndiainstitutedaSpecialFundinNationalBankforAgricultureandRuralDevelopment(NABARD)
withacorpusofRs.2000Croreduring201415forprovidingdirecttermloanstoestablishinfrastructureinthe
MegaFoodParksasalsototheindividualprocessingunitstobesetupinthedesignatedFoodParks,at
affordablerateofinterestofaround10%p.a.ThedesignatedFoodParkswouldincludeFoodParkspromoted
bytheMinistryofFoodProcessingIndustries(MoFPI)orStateGovernmentsMegaFoodParkspromotedby
MoFPIfoodprocessingunitssetupintheSpecialEconomicZonesoranyotherareashavingdeveloped
enablinginfrastructureanddesignatedasFoodParkbytheMoFPI
SchemeofColdChain,ValueAdditionandPreservationInfrastructure(Coldchainfacility)
Itaimstofacilitatetheestablishmentofastrongcoldchainfacilityforagricultural,horticultural,dairy,fish&
marine,poultry&meatproductsbyestablishinglinkagefromfarmgatetotheconsumer,endtoend,toreduce
lossesthroughefficientstorage,transportationandminimalprocessing.
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Itscomponentsare:
1.ProcessingCentreatthefarmlevelandcentersistohavefacilityforweighing,sorting,gradingwaxing,
packing,precooling,ControlAtmosphere(CA)/ModifiedAtmosphere(MA)coldstorage,normalstorageand
IndividualQuickFreezing(IQF).
2.Mobileprecoolingvansandreefertrucks.
3.DistributionhubswithmultiproductsandmultiControlAtmosphere(CA)/ModifiedAtmosphere(MA)
chambers/coldstorage/VariableHumidityChambers,Packingfacility,CleaninginProcess(CIP)Fog
treatment,IndividualQuickFreezing(IQF)andblastfreezing.
4.Irradiationfacility

Financialassistanceof50%thetotalcostofplantandmachineryandtechnicalcivilworksinGeneralareas
and75%forNEregionincludingSikkimanddifficultareas(J&K,HimachalPradeshandUttrakhand)subjecttoa
maximumofRs.10crore.
ColdChainforNonHorticultureProductsisalsobeingfundedunderNationalMissiononFoodProcessing
whichprovidesCapitalsubsidyof35%ofcostofprojectorInterestsubventionby6%(max5crore).Alsosubsidyof
50%isavailableoninvestmentinreefervehicles(max.50lakhs).
NABARDtooprovidesconcessionalfinanceforconstructionofwarehouses,godowns,silosandcoldstorageunits.
ModernizationofAbattoirs(slaughterhouse)
Thisisacomprehensivescheme,whichincludesestablishmentofmodernabattoirsandmodernizationof
existingabattoirs.Modernizationofabattoirswillalsoincludeupscalingofinfrastructureofexistingabattoirs.The
schemeisimplementedwiththeinvolvementoflocalbodiesandhasflexibilityforinvolvementofprivateinvestors
onPPPbasis.

Theschemeenvisagesagrantof50%ofthecostofplantandmachineryandtechnicalcivilworkssubjecttoa
maximumofRs.15.00Croresingeneralareasand75%ofthecostofplantandmachineryandtechnicalcivilwork
andothereligibleitemssubjecttoamaximumofRs.15.00Croresindifficultareas.
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AgriExportZones
Togivethrusttoexportofagroproducts,newconceptofAgriExportZoneswasbroughtin2001.APEDAhasbeen
nominatedastheNodalAgencytocoordinatetheeffortsonthepartofCentralGovt.negotiations.
Entireeffortiscenteredonthe
1.clusterapproachofidentifyingthepotentialproducts,
2.thegeographicalregioninwhichtheseproductsaregrownand
3.Adoptinganendtoendapproachofintegratingtheentireprocessrightfromthestageofproductiontillit
reachesthemarket.(farmtomarket)
4.Therewouldalsobeaneedtoidentify/enlistdifficulties/problemsencounteredateachstage
Identificationofsuchpotentialcropsisresponsibilityofstategovernments.Projectsinsuchareasforidentifiedcrops
willbeeligibleforfinancialassistanceandcertainfiscalincentives.
FinancialAssistanceexample
TheseextendfromprovidingfinancialassistanceforTrainingandExtension,R&D,QualityUpgradations,
InfrastructureandMarketingetc.
FiscalIncentivesexample
ThebenefitsunderExportPromotionCapitalGoodsScheme,whichwerehithertoavailableonlytodirect
exporters,havenowbeenextendedtoserviceexportersintheAgriExportzones.
Underthisschemeimportofcapitalmachinerywillbeallowedatconcessionalcustomduty,providedimportingunits
commitstoexportofcertainquantityofagroproductsaftercommencementofproduction.
Currentlythereareabout60AgriExportZone.Checkoutwhichoneisinyourregionhere

ApartfromthisNationalMissiononFoodProcessingisinplacesince2012,whichsubsumedanumberof
schemes.Mainobjectiveofthemissionistodecentralizeimplementationoffoodprocessingrelatedschemesto
States.
Otherinitiativesbygovernment
1.NationalFoodProcessingPolicyTarget2025increasefoodprocessingto25%ofagroproduce.
2.FoodProcessingisrecognizedasaprioritysectorforBanklending.

Roleofsmallscalesector
Thesmallscaleandunorganizedsectorconstitutesabout70%ofthefoodprocessingsector.Employmentintensity
issignificantlyhigherinthissectorascomparedtotheorganizedsectorforthesamelevelofinvestment.
Unfortunately,sectorsuffersfromlowefficiencyduetothelackofaccesstocredit,managerialknowledge,
efficienttools/technology,marketingnetworketc.Intensecompetitionfromlargescaleplayershasalsoaffectedit.
Further,inexporttoodominanceisofsmallscalesector.Duetofinancialconstraintstheyfailtoaddmuchvalueto
theproducts.Realvalueaddingprocessinghappenstomostexportedproductsabroad.Theseproductshavevery

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lowbrandvalue.Lastly,smallscaleindustryisextremelyriskaverse,afraidoftryingnewproducts,technologies,
markets.
IncontrastglobalcompaniesincompetitionaregiantssuchasPepsi,Kelloggsetc.Thesecompanieshavehuge
economiesofscale,influenceinInternationalpoliticsandinvestssubstantialamountinR&D.
Attheprocessingstagesmallscaleindustryneedstargetedprogramstoimproveproductivity,accesstotechnology,
creditanddownstreammarkets.Thiswillalsoenablereducedwastageandnutritionlossesinprocessing.Potential
programscouldincludefinancialassistanceforprocurementofmachinery,credit,technicaladviceon
productivityimprovementandmachineryselectionandtrainingsonadoptingstandardizedprocesses.Manyof
theseinitiativesarealreadythereonpartofthegovernment,butinformationdeficitandriskavoidancecomesinthe
way.
Toachievetheseobjectivestosomeextent,itisimperativethatsupplychaininfrastructurebebuilt.Organized
sectorhascapacitytobuildthisInfra,whichcanalsocatertoneedsofSmallscalesector.
GovernmenthasreservedcertainItemsexclusivelyforsmallscaleindustrieswhichincludespickles,chutneys,
bread,confectionery,rapeseed,mustard,sesameoils,groundnutoils,groundandprocessedspices,sweetened
cashewnutproducts,tapiocasagoandtapiocaflour.
Cooperativesectorexperimentscanalsobringsmallscalesectorsintoorganizedformaswasseeninsuccessof
AMULandLijjatPapadmanagedbycooperativenamedShriMahilaGrihaUdyogLijjatPapad.

Safety,Hygieneandregulations
Extensiveuseoffertilizers,pesticidesandotherchemicalshasraisedconcernsaboutqualityoffood.Further,
protectionisneededfromunfairandhazardouspracticessuchadulteration,Syntheticmilkandmilkproductsetc.
ForthisFoodSafetyandStandardsActwasenactedin2006priortowhichtherewereplethoraoflawsunder
differentministries,whichwereoverlappingandconfusing.FSSAwasaimedatprovidingsinglepointreferencefor
allmattersrelatingtofoodsafetyandstandards.
FoodSafetyandStandardsAct2006
MinistryofHealth&FamilyWelfarehasbeendesignatedasthenodalMinistryforadministrationand
implementationoftheAct
ActestablishedanindependentstatutoryAuthoritytheFoodSafetyandStandardsAuthorityofIndiawithhead
officeatDelhi.ThesealongwithStateFSSAssecurecomplianceofvariousprovisionsoftheact.
FramingofRegulationstolaydowntheStandardsandguidelinesforarticlesoffoodandspecifying
appropriatesystemofenforcingvariousstandardssolaid.
Layingdownmechanismsandguidelinesforaccreditationofcertificationbodiesengagedincertification
offoodsafetymanagementsystemforfoodbusinesses.
Layingdownprocedureandguidelinesforaccreditationoflaboratoriesandnotificationoftheaccredited
laboratories.
ToprovidescientificadviceandtechnicalsupporttoCentralGovernmentandStateGovernmentsinthe
mattersofframingthepolicyandrulesinareaswhichhaveadirectorindirectbearingoffoodsafetyand
nutrition.
Collectandcollatedataregardingfoodconsumption,incidenceandprevalenceofbiologicalrisk,
contaminantsinfood,residuesofvarious,andcontaminantsinfoodsproducts,identificationofemerging
risksandintroductionofrapidalertsystem.
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Creatinganinformationnetworkacrossthecountrysothatthepublic,consumers,Panchayatsetc.
receiverapid,reliableandobjectiveinformationaboutfoodsafetyandissuesofconcern.
Providetrainingprogramforpersonswhoareinvolvedorintendtogetinvolvedinfoodbusinesses.
Contributetothedevelopmentofinternationaltechnicalstandardsforfood,sanitaryandphytosanitary
standards.
Promotegeneralawarenessaboutfoodsafetyandfoodstandards.
TheSanitaryandPhytosanitaryMeasuresAgreement(SPSagreement)
ThisagreementwasoneoftheresultsofUruguayRoundofnegotiationenteredintoforcewiththeestablishmentof
theWorldTradeOrganizationon1January1995.TheAgreementsetsoutthebasicrulesfor
foodsafetyandanimalandplanthealthstandards.Itallowscountriestosettheirownstandards.Butitalso
saysregulationsmustbebasedonscience.Theyshouldbeappliedonlytotheextentnecessarytoprotect
human,animalorplantlifeorhealth.Andtheyshouldnotarbitrarilyorunjustifiablydiscriminatebetweencountries
whereidenticalorsimilarconditionsprevail.
CODEX
CodexAlimentariusCommissionisaninternationalagencyonfoodstandardsinwhichalmostallmembersofWHO,
andFoodandAgricultureOrganizationofUnitedNations(FAO)aremembers.Thesemembersagreetoadopt
standardsonfoodestablishedbyCODEX.Thereisalsoreference,endorsinguseofCODEXstandards,inWTOs
SPSagreement.
AnymembernationwillingtosetstandardsoverandaboveCODEXwillhavetogivescientificjustificationand
explanationforthatmatter.
HazardAnalysisandControlCriticalPoint(HACCP)
HACCPisamanagementsysteminwhichfoodsafetyisaddressedthroughtheanalysisandcontrolof
biological,chemical,andphysicalhazardsfromrawmaterialproduction,procurementandhandling,to
manufacturing,distributionandconsumptionofthefinishedproduct.
ThissystemisrecommendedbyCODEXandusedbyitforsettingstandards.
InternationalStandardsOrganization(ISO)
ISOisinternationalindependentorganization,engagedinformulationandsettingupofstandardsfordifferent
productsincludingprocessedfoodproducts.IthasovertimebecomeabrandandproductsmarkedwithISOenjoys
premiuminmarkets.ItshouldbenotedthatISOstandardsarenotsomethingwhichisenforcedbygovernment,
WTO,WHOetc.Itispurelyvoluntaryonpartofmanufacturer.
ISOdoesntcertifyitselfthereareotherentitieswhichcertify.ISOjustsetstandards.
ISO22000dealswithfoodsafetymanagementandISO14000dealswithenvironmentalimpact
Foodsafetyandhygieneiscriticalfordevelopmentofsector.Ineraofintenseglobalcompetitioncountries
implementthesestandardsjealouslytoguardtheirdomesticindustries.Thesesometimesgetconvertedintonon
tariffbarriers.
Recently,IndiaAlphonsomangoeswerebannedbyEuropeanUnionduetothepresenceofharmfulpestsanda
lackofcertificationbeforeexport.
ToovercomethisproblemMOFPIrunsschemeofR&D,quality,CODEXandpromotionalactivities
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Thisschemeincludesfinancialassistanceandtechnicalsupportfor
1.Settingup/upgradationofqualitycontrolcentersorFoodtestinglabs
2.Implementationofqualityassurancemechanismssuchas
TotalQty.Management(TQM)includingISO14000,ISO22000,HACCP,GMP,GHP
3.R&Disfoodprocessingsector
4.Otherpromotionalactivities
FoodIrradiation(theapplicationofionizingradiationtofood)isatechnologythatimprovesthesafetyand
extendstheshelflifeoffoodsbyreducingoreliminatingmicroorganismsandinsects.Likepasteurizing
milkandcanningfruitsandvegetables,irradiationcanmakefoodsaferfortheconsumer.

THEBENEFITSANDLIMITATIONSOFRADIATIONPROCESSINGOFFOOD
Benefits

Limitations

Radiationprocessingisacoldprocessand
therefore,unlikeheat,itcanbeusedon
agriculturalcommoditieswithoutchangingtheir
freshlikecharacter

Radiationprocessingisaneedbasedtechnologyand
cannotbeappliedtoallkindsoffoods

Radiationprocessingdosenotaltersignificantly
nutritionalvalue,flavor,textureandappearance
offood

Radiationprocessingcannotmakeabadorspoiledfood
lookgood

RadiationusingCobalt60cannotinduceany
radioactivityinfoodanddoesnotleaveany
harmfulortoxicradioactiveresiduesonfoods
asisthecasewithchemicalfumigantsd

Itcannotdestroyalreadypresentpesticidesandtoxinsin
foods

Duetothehighlypenetratingnatureofthe
radiationenergy,itisaveryeffectivemethod

Amenabilityofaparticularfoodcommoditytoradiation
processinghastobetestedinalaboratory

Prepackagedfoodscanbetreatedfor
hygienizationandimprovingshelflife

Onlythosefoodsforwhichspecificbenefitsareachieved
byapplyingappropriatedoses,andthosedulypermitted
underthePreventionofFoodAdulterationAct(PFA)
Rules,1955,canbeprocessedbyradiation.

Theradiationprocessingfacilitiesare
environmentfriendlyandaresafetoworkers
andpublicaround

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Interestingly,BhabhaAtomicResearchCenter(BARC)offersAKRUTITechnologyPackageforRuraldevelopment
whichprovidesinfraandknowhowforradiationfacilities.
Foodprocessingseemstohavepromisingfuture,providedadequategovernmentsupportisthere.Foodisthe
biggestexpenseforanurbanIndianhousehold.About38%ofthetotalconsumptionexpenditureofhouseholdsis
generallyspentonfood.Thisshareisdecliningconsistently.Asmentioned,foodprocessinghasnumerous
advantageswhicharespecifictoIndiancontext.Ithascapacitytoliftmillionsoutofundernutrition.Governmenthas
challengetodevelopindustryinawaywhichtakescareofsmallscaleindustryalongwithattractingbigticket
domesticandforeigninvestments.
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