“Just over two per cent of annual production is processed in India, an abysmally low figure when compared to countries like Malaysia, the US and China, where around 83 per cent, 65 per cent and 23 per cent of produce, respectively, is processed,” said Assocham Secretary General D.S. Rawat.
The Associated Chambers of Commerce of India asked the government to fill up gaps in its infrastructure availability, create awareness and improve efficiency of value chain that were hampering the growth of the sector.
It said the inefficiencies in supply chain, absence of economies of scale, technology up-gradation and quality issues were certain key challenges hindering India’s Rs six lakh crore worth food processing industry.
Union Food Processing Minister Harsimrat Kaur Badal also held a meeting with various stakeholders on Thursday in an effort to identify the obstacles in business in the sector.
“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 per cent,” Rawat said.
Growing at a compounded annual growth rate (CAGR) of about 10 per cent India’s food processing industry accounts for almost 32 per cent of total food market and contributes 9 to 10 per cent to gross domestic product (GDP) in agriculture and manufacturing sector, ranking fifth in terms of production, consumption and exports.
Grains processing occupies maximum share in food processing sector accounting for 40 per cent of the industry size followed by horticulture and oil seed processing.
The industry body listed various challenges faced by the food processing sector including proliferation of unorganised players leading to a constraint in achieving economies of scale to increase output.
It also pointed out that the sector lacked necessary monitoring mechanisms to implement quality norms.
Assocham proposed augmenting knowledge and skill levels of the workforce — youth in particular, which is essential to enhance resource productivity. Besides, boosting innovation, managing finance, mitigating risks and improving decision making ability.
It also suggested that the government should introduce measures like targeted training programs for different segments of food processing industry and effective use of synergy between public private partnerships including universities to promote the food processing sector.