The Contribution of Food Processing Sector in GDP

The contribution of the food processing sector has increased continuously with Gross Value Added (GVA) in food processing sector from Rs.1.34 lakh crore in 2014-15 to Rs. 2.37 lakh crore in 2020-21 at a Compound Annual Growth Rate (CAGR) of 9.97%.

The Ministry of Food Processing Industries (MoFPI) implements various schemes with an objective of overall growth and development of the food processing sector, creation of off-farm employment and entrepreneurial opportunities whose details are as under:

(i)MoFPI implements the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) which, inter–alia, aims at creation of modern post-harvest infrastructure, value addition, providing better returns to farmers, creation of off-farm employment opportunities etc.

(ii) In addition, the Ministry is also implementing the PM- Formalization of Micro Food Processing Enterprises (PMFME) Scheme for providing financial, technical and business support for setting up/upgradation of two lakh existing micro food processing enterprises across the country on One District One Product (ODOP) approach.

(iii) A new Production Linked Incentive scheme (PLIS) for Food Processing Sector is being implemented to support creation of global food manufacturing champions. The scheme incentivizes investment and will promote exports and employment in the sector.

To attract Foreign Direct Investment (FDI) in the food processing sector, the Government has put in place an investor-friendly policy wherein 100% FDI is allowed for food products’ manufacturing under the automatic route, and 100% FDI under Government approval route is allowed for retail trading, including through e-commerce, in respect of food products manufactured and/or produced in India. Also, to facilitate all investment interests, MoFPI has set up a dedicated Nivesh Bandhu Portal as well as an Investment Facilitation Cell with Invest India. The total FDI inflow in the food processing sector during last 5 years ending 2021-22 is USD 3.54 billion.

As per the latest Annual Survey of Industries (ASI) 2018-19, released by Ministry of Statistics and Programme Implementation, 40579 food processing units are in the registered sector.

The Government has taken various policy measures and reforms to support food processing sector as indicated below:

  1. Inclusion of food & agro-based processing units and cold chain as agricultural activity under Priority Sector Lending (PSL) norms in April 2015.
  2. As a measure towards of ease of doing business, the Food Safety and Standards Authority of India (FSSAI) through notifications in 2016 has shifted from product-by-product approval to an ingredient and additive based approval process.
  3. A Special Food Processing Fund of Rs. 2000 crore was set up with National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit for investments in setting up Mega Food Parks (MFP) as well as processing units in the MFPs. In 2019, the coverage of the fund was extended to setting up of Agro Processing Clusters and individual manufacturing units within them.
  4. 100 percent Foreign Direct Investment (FDI) approval under automatic route has been permitted for the food processing sector.

The Government has put in place a liberal and transparent policy for attracting Foreign Direct Investment (FDI), wherein most of the sectors are open to FDI under the automatic route. The intent is to make the FDI policy more investor friendly and remove the policy bottlenecks that have been hindering the investment inflows into the country. 100% FDI is permitted under the automatic route in the food processing sector and 100% FDI under Government approval route is allowed for retail trading, including through e-commerce, in respect of food products manufactured and/or produced in India. Allowing 100% FDI through automatic route helps to attract more FDI as under the automatic route, the investment does not require the prior approval.

Source: PIB

Categories: POINT IAS

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