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Food processing, cornerstone of the nation’s economy
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Wednesday, 01 January, 2025, 08 : 00 AM [IST]
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Gowrishankar L
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The food processing industry holds immense significance in India’s economy, contributing to employment, income generation, and export potential. With abundant agricultural resources and strategic geographic positioning, India has the potential to become a global processed food export leader. Recent growth trends, technological advancements, and foreign investments underscore the industry’s importance. However, when comparing technology standards, India is catching up with developed nations like the United States and the UK. While India aligns with international norms, collaboration and knowledge exchange remain crucial for enhancing competitiveness on the global stage.
India’s food processing industry is a cornerstone of the nation’s economy, encompassing a diverse array of sectors crucial for meeting consumer demands. Fruits and vegetables processing, which transforms fresh produce into products like juices, jams, and frozen items, constitutes approximately 30% of India's processed food market, reflecting steady growth driven by consumer preferences for convenient and nutritious options. The poultry and meat processing sector, accounting for around 20%, is rapidly expanding due to urbanisation and changing dietary habits. Fisheries processing, contributing about 10%, benefits from coastal regions and abundant marine resources. Dairy processing, which includes milk collection, pasteurisation, and the production of butter, cheese, and yogurt, holds a substantial 25% share, supported by consistent domestic demand. Beverages processing, driven by India's tea and coffee production, contributes around 15% to the market, with specialty varieties further enhancing growth. These segments collectively highlight the industry's robust growth potential, fuelled by agricultural abundance and bolstered by government initiatives like PMKSY and PLISFPI, which promote investment and facilitate export-oriented growth opportunities.
The food processing industry in India faces several critical challenges that hinder its growth and operational efficiency. Infrastructure and logistics deficiencies, including inadequate storage and transportation facilities, contribute to significant food wastage and increased costs throughout the supply chain. Furthermore, the industry lags in technology adoption and innovation, relying on outdated equipment and processes that limit productivity and quality consistency. Ensuring adherence to stringent quality and safety standards poses another hurdle, requiring substantial investment and expertise. Supply chain fragmentation further complicates efficient operations, from farm to processing units to market, impacting overall competitiveness. Addressing these challenges necessitates focused efforts in skill development to cultivate a qualified workforce and enhance industry capabilities. Moreover, navigating international market access remains complex, despite India's export potential, requiring robust policies and support mechanisms to overcome trade barriers and promote global competitiveness. By addressing these issues comprehensively through strategic investments, technological advancements, and supportive policies, India's food processing industry can realise its full potential and contribute significantly to economic growth and food security objectives.
Modern food processing industries offer significant advantages over their predecessors, including enhanced food safety and quality, increased efficiency and productivity, and extended shelf life due to advanced preservation techniques. These industries provide a wide variety of convenient foods that cater to diverse tastes and dietary needs, contributing to job creation and economic growth. Nutritional enhancements through food fortification and the development of functional foods targeting specific health needs are also notable benefits. Additionally, many companies in the industry are adopting sustainability initiatives, such as eco-friendly practices and improved waste management.
However, there are drawbacks to modern food processing industries. Processing can lead to nutritional loss, and unhealthy ingredients such as preservatives and excessive sugar are often added. The environmental impact of these industries is considerable, with high energy consumption, a substantial carbon footprint, and pollution from industrial waste and packaging materials. Over-reliance on processed foods can contribute to obesity and other lifestyle diseases. Economic disparities exist, as small-scale producers struggle to compete with large corporations, leading to reduced diversity and higher prices. The homogenisation of food products can erode traditional and local food practices, and complex supply chains increase the risk of disruptions affecting food availability.
In comparison to olden food processing industries, modern methods involve advanced technologies and automation, resulting in larger-scale production and global distribution networks. While food safety and quality control have improved with stringent standards and regulatory oversight, the overall environmental impact is higher due to increased waste and pollution. Consumer access and choice have expanded, with a wide variety of processed foods available today, contrasting with the limited variety and focus on seasonal produce in the past. Despite the advancements, understanding and addressing the challenges of modern food processing is crucial for ensuring sustainable growth and balancing the benefits with the potential drawbacks.
The current scenario of the food processing industry is marked by significant changes and challenges compared to the past. Modern food processing is heavily influenced by advancements in technology, sustainability concerns, and shifts in consumer preferences. Consumers today demand transparency, health-conscious options, and sustainable practices from food manufacturers. This shift is reflected in the rise of plant-based foods, with the global market for plant-based meat products projected to double by 2025. Health and wellness trends have also gained momentum, with a significant portion of consumers seeking foods that support immune health and overall well-being.
However, the industry faces notable challenges. Supply chain disruptions, exacerbated by the Covid-19 pandemic, continue to affect the availability of ingredients and labour. This has led many companies to hold more stock, moving away from just-in-time supply models to ensure stability. Additionally, food inflation remains a concern, with significant price increases affecting consumer affordability and brand reputation. The emphasis on sustainability is also driving changes, with initiatives like the Food and Agriculture for Sustainable Transformation (FAST) aiming to reduce the environmental impact of food processing. Starting and maintaining a new food processing business involves navigating these complexities. The failure rate for new food processing ventures remains high due to stringent regulatory requirements, competition, and the need for substantial capital investment. Data on the exact rates of new industry entries, closures, and failures are less specific, but the trends suggest that businesses must be highly adaptive and innovative to survive in this evolving landscape? (Unleashed Software)?? (World Economic Forum).
In conclusion, India's food processing industry plays a pivotal role in the nation's economic landscape, driving employment, income generation, and exports. With abundant agricultural resources and strategic geographic advantages, India is on the path to becoming a global leader in processed food exports, fueled by technological advancements and foreign investments. Although India is catching up with developed nations in technology standards, ongoing collaboration and knowledge exchange are essential for enhancing global competitiveness.
(The author is assistant professor senior grade & head, department of food technology, Bannari Amman Institute of Technology, Sathyamangalam, Erode, Tamil Nadu. He can be contacted at gowrishankar628@gmail.com)
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