Food processing was recognised as a priority sector in the manufacturing policy back in 2011. In fact government has set up a special fund called “Food Processing Fund” of USD 300 million (at Rs. 67.25 to 1 USD) in National Bank for Agriculture and Rural Development (NABARD) for the purpose of extending cheap credit to certain designated food parks, including some individual food processing units in the designated food parks. Large parts of the fund has been sanctioned to 12 mega food parks projects. The RBI has classified some loans given out to the agro-based processing units including some Cold Chains under agro based activities for Priority Sector Lending (PSL) subject to aggregate sanctioned limit of USD 15.38 million per borrower from the banking system. This will result in greater flow of credit to entrepreneurs for setting up of food processing units, as well as, attract investment in the sector.
Reasons to invest in this sector
With a rich agriculture resource base-India has maintained its No. I rank in the world since 2013, when it comes to production of Arecanut, Bananas, Castor oil seed, Chick peas, Chillies & Peppers dry, Mangoes, Mangosteens, guavas, Millet, Okra, Papayas, Pigeon peas, Ginger, Lemons & limes, Meat- buffalo, Milk-whole fresh buffalo & goat, Ghee, butter oil of cow milk, Ghee of buffalo milk, sesame seed.
India continues to occupy second rank in the world when it comes to production of Anise, fennel, coriander, beans-dry, cabbages and other brassicas, cauliflower & broccoli, Groundnuts with shell, Lentil, Onions dry, Peas green, Egg plants (aubergines), Garlic, Potatoes, Pumpkins, Squash and Gourds, Rice/Paddy, Safflower seed, Sugar cane, Tea, Tomatoes, Wheat, Meat-goat, Milk whole fresh cow. To add to this, India is at third position when it comes to production of Cashew nuts, with shell, Coconuts, Lettuce and chicory, Nutmeg, mace and cardamoms, Pepper, Rapeseed.
India’s gross cropped area amounts to 194.39 million Hectares, with cropping intensity of 139%. The net irrigated area is 66.10 million hectare as of 2012- 13.
127 agro-climatic zones have been identified in India itself.
Strategic geographic location along with proximity to food-importing nations makes India favourable place for the export of processed foods.
An extensive network of food processing training, academic and research institutes is already there in India.
42 Mega Food Parks are being setup with a net investment of USD 2.38 billion. The parks have approximately 1250 developed plots with proper infrastructure that entrepreneurs can take on lease for the setting up of food processing, as well as, ancillary units.
The cost of skilled manpower is much lower in comparison to other countries with large scale food processing industry.
A host of attractive fiscal incentives have been instated by central and state governments. These include a list of capital subsidies, tax rebates, depreciation benefits & lowered custom and excise duties for processed food and machinery.
Some of the biggest global players within the food domain are already have a presence in India.
134 cold chain projects are being setup in order to develop supply chain infrastructure.
A typical example of a player taking advantage of this booming food processing industry in India is Rishta. They have a come up with an innovative solution to produce readymade idli dosa batter for the Indian households.