“The Food Processing Sector, often termed as a Sunrise Sector, has great potential to contribute to Indian economy, including in growth, employment generation and investment”. Explain. (15 marks)

 

Approach:

  • Introduce the Food Processing Sector as a Sunrise sector
  • Highlight its potential to contribute in growth, employment generation and investment in Indian economy
  • Mention some government steps to promote the Food Processing Sector.
  • Conclude appropriately

Telegram: https://t.me/SimplifiedIAS

Model Answer :

Food processing industry in India is a sunrise sector that has gained prominence in recent years. This sector serves as a vital link between the agriculture and industrial segments of the economy.

The Economic potential of the food processing industry are as follows:

  1. Growth:
  • The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.
  • It contributes around 14 per cent of manufacturing Gross Domestic Product (GDP), 13 per cent of India’s exports and six per cent of total industrial investment.
  • India’s exports of processed food-related products have been growing at a CAGR of 23.3%.
  1. Employment generation:
  • Food Processing is one of the major employment intensive industries constituting 12.77% per cent of employment generated in all factories
  • As per a report by ASSOCHAM, It can generate employment of 9 million person days by 2024.
  1. Investment:
  • Indian food processing sector has the potential to attract US$ 33 billion of investment by 2024 according to an ASSOCHAM report.
  • Sops for private sector participation include 100 per cent FDI under automatic route.
  • Liberalisation and growth of organised retail have made the Indian market more attractive for global players. With a large agriculture sector, abundant livestock, and cost competitiveness, India is fast emerging as a sourcing hub of processed food.

Some steps taken by the government to boost Food processing industry in India are:

  • A new umbrella Central Sector Scheme – SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) – covering Mega Food Parks, Cold chains, Infrastructure for agro-processing clusters, backward and forward linkages etc.
  • The Government has provided various fiscal incentives in terms of reduction and exemption of taxes. A fund of Rs. 2000 crore has also been constituted with NABARD to provide loans at concessional rate to Mega Food Parks and units established therein.
  • Loans to food & agro-based processing units and Cold Chain have been classified under Agriculture activities for Priority Sector lending (PSL).

Other than economic benefits, well-developed food processing sector reduces wastage, ensures value addition, promotes crop diversification as well as export earnings. Thus, we need to ensure  healthy development of the food processing sector.

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