FOOD PROCESSING INDUSTRIES IN INDIA: A STUDY FOR INCREASING RURAL INCOME

Manoj Suryavanshi

No 2023-45-06, Working papers from Voice of Research

Abstract: Globally all major economies have advanced food processing ecosystems with high levels of processing (70-80 per cent against 10 per cent in India) and correspondingly higher value added per worker in agriculture. India, despite being the leader in production of several agricultural commodities, lags behind several countries in terms of value added per worker in agriculture. India’s food sector attracted $ 4.18 Bn in foreign direct investment between April 2014-March 2020. Currently, India is processing less than 10% of its agricultural output, thus, presenting immense opportunities for increasing these processing levels and leading to investments in this sector. With agriculture and its allied sectors being the largest source of livelihoods in India, 70% of its rural households still depend primarily on agriculture for their livelihood. Thus, this sector provides a huge employment generation potential as well. With the government’s focus and a favorable policy ecosystem, the food processing sector has been growing at an Average Annual Growth Rate (AAGR) of around 8.41 % between 2014-18. The sector constitutes 8.83% and 10.66% of gross value added in manufacturing and agriculture sector respectively. The Indian food industry’s output is expected to reach $ 535 Bn by 2025-26. Rising household incomes, urbanization and the growth of organized retail are currently some of the major drivers of this market. According to the latest Annual Survey of Industries (2016-17), food processing accounted for 15.95% of the total number of factories, Employment to 11.36 % of the workforce, 14.09% of the output and 16.78% of the operational factories. The Indian market is fast evolving and has seen some major changes in terms of changing consumption patterns due to urbanization, changes in the gender composition of the workforce, and growing consumption rates. The growing consumption of food is expected to reach $ 1.2 Trn by 2025-26, owing to these factors. Key words: food, processing, Industry, opportunities, development

Date: 2023-03
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