Food Processing Industries in India

By BYJU'S Exam Prep

Updated on: September 13th, 2023

Nowadays Food Processing Industry is one such topic which is commonly being asked in several central and state-level examinations like UPSC, State PCS and other government exams. Here in the article, all aspects of the Food Processing industry are dealt with in detail. 

Food Processing Industries in India

  • The process in which raw ingredients are changed into food and made more attractive and marketable is termed as Food Processing.
  • The sector is inclusive of different sectors based on agriculture, animal husbandry, and horticulture.
  • One of the fastest-growing economies of the world, the food processing sector has been a significant contributor to the GDP of the country along with employment and investment.
  • According to IBEF, the food processing sector contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of India’s exports and six per cent of total industrial investment. The Indian gourmet food market is currently valued at US$ 1.3 billion and is growing at a Compound Annual Growth Rate (CAGR) of 20 per cent. India’s organic food market is expected to increase by three times by 2020#. 

Why does the food processing industry need to be tapped?

  • India is among the world’s top producers in terms of Rice, wheat and several other fruits and vegetables. If we tap this surplus production both inside and outside the country, there lies a greater possibility for the growth of this sector if cereals and poultry and vegetables are processed and marketed well.
  • Post-liberalisation period has brought in the cult of urbanisation. This is followed by a change in the food habits of the people and an inclination towards value-added foods or more commonly known as processed food.
  • Due to rapid urbanization, food habits are changing rapidly towards value-added foods. The change is accentuated by the fact that over 65% of India’s population is 35 or under, who are inclined to have processed food.
  • India jumped 23 ranks in the World Bank’s Ease of Doing Business Index 2018 to 77. This indicates the lucrative environment for business in India and is expected to attract FDI into this sector.
  • The food processing industry generates several direct and indirect employment opportunities by connecting agriculture with manufacturing (backward and forward linkages). Harnessing this sector is important as in the coming years there will be a good demand for modern food products.
  • All this will create jobs, help better the prospect of doubling farmer’s income and in turn, will create a bigger market for farm produce. But India can fit in the global supply chain only when its own domestic market along with its strength in the food sector is well anchored.

The government has launched several centrally sponsored schemes to give an impetus to the food processing sector. 

List of government schemes related to FPI:

  • SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters). This is an umbrella scheme that brings under its ambit various other schemes like the Mega Food Parks, Integrated Cold Chain, Food Safety and Quality Assurance Infrastructure, Creation of Backward and Forward Linkages and Creation etc.
  • Food parks aim at proving a link between agricultural production and the market and bring the farmers together in an effort to maximise the value addition and minimise their losses and wastages A Mega Food Park entails an area of a minimum of 50 acres and works in a cluster-based approach based on a hub and spokesmodel.
  • Make in India project identifies the food processing sector as one of the key areas under its ambit. The policy area has been revamped to accommodate and attract various investments and resources in this sector. Allowing 100% investment in this sector is a remarkable step in this regard.
  • NBARAD has allocated 2000 crore to the Food Processing Fund to help provide affordable credit to the food processing units and mega food parks.
  • Food and Agro-based industry have been brought under the ambit of Priority Sector Lending (PSL) to provide additional credit for giving a push to this sector.
  • Mega Food Parks Scheme launched by the government in 2008 provides financial assistance upto 50 crores to set up modern infrastructure facilities for food processing called Mega Food Parks. Recently Mega food park for assistance to farmers has opened in – Rajasthan, Gujarat, Uttarakhand and Maharashtra.


  • Barriers in terms of TBT (Technical Barriers to Trade) and SPS (Sanitary/Phyto-Sanitary) measures
  • The sector needs to streamline to minimise wastage and scale up its benefits.
  • Use of inorganic chemicals in agriculture needs to be replaced using organic chemicals as at the advanced stage of monitoring, the pesticides, once identified are hampering our export and trade.
  • The unproductive cattle must be harnessed to give the canned meat industry a push. There must be a rational political and administrative focus on this area.
  • The government needs to create a positive image for this sector by removing discriminatory taxes and laws that have been imposed to protect consumer interest only by overlooking the farmer’s plight.
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