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Opportunities & challenges in food processing machinery
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Friday, 16 February, 2018, 08 : 00 AM [IST]
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Abhishek Hans
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Industry Scenario
Food processing is one of the fastest growing industries in India. The growth of the industry is supported by the availability of a large domestic produced raw material base. India is the largest producer of milk, bananas, mangoes, guavas, papaya, ginger, and okra, second-largest producer of wheat, rice, fruits, vegetables, tea, sugarcane and cashew nut and the third-largest producer of cereals, coconut, lettuce, chicory, nutmeg, mace, cardamom and pepper globally.
According to Indian Brand Equity Foundation, the Indian ministry of commerce, the Indian food processing industry accounts for 32% of the country’s total food market, 14% of manufacturing GDP, 13% of India’s exports and 6% of total industrial investment. This has led to the requirement of newer methods, technology, and machinery for the food processing industry in India.
Equipment Industry in India
The food processing equipment industry mainly includes raw material preparation, processing equipment and packaging equipment. The food processing equipment covers the manufacturing sectors such as dairy, fruits & vegetables, cereal processing, vegetable and animal oil processing, meat products, beverages, sugar, other foods, and animal feed. The growth in the processing equipment market in India is driven mainly by the increasing demand for processed food products. The gross value of plant and machinery in food processing sector is US$140.6 billion (2016) in comparison to US$126 billion (2015).
The consumers are shifting towards more value-added food categories such as yoghurt, cheese, processed meat and ready-to-eat food products along with increasing demand for processed basic products such as fruits, vegetables and grains which require need to adopt new methods, technology, and machinery for the food processing industry. Such advanced technological requirement in the food processing sector makes India one of the largest importers of plant and machinery in the sector.
During the year 2016-17, out of the total import of US$168 million for food processing equipment, import for dairy sector equipment was US$16.75 million and for all other sub-sectors in food processing was US$151.63 million. China, Germany and Italy are the top three countries from where India imported its food processing equipment in 2016-17. Sector-wise, bakery and cereal processing is the single-largest segment in terms of import of machinery.
The increasing growth of food processing also requires massive requirement of infrastructure, packhouses at the farm gate, cold storage facilities across the value chain, latest technology for processing of food products while retaining its nutritional value, multi-modal logistics, infrastructure at port gateways and so on.
Opportunities
It is estimated that the gross value of plant and machinery deployed in food processing sector, by the year 2024-25 will be US$51.19 billion. Large contribution to this market size comprises cereals processing, dairy processing, prepared meals and all other food products.
Enormous opportunities under food processing equipment manufacturing are there in following sectors: i. Dairy (Milk and Milk Products);
ii. Fruits and Vegetable Processing; iii. Cereal Processing; iv. Vegetable Oil, Animal Oil and Fat Processing; v. Meat and Meat Products; vi. Soft Drinks, Mineral Water and other Beverages; vii. Prepared Meals and other Food; viii. Sugar and Sugar-based Confectioneries including Cocoa; ix. Animal Feed Processing.
The Industry Requirements
- High precision in the equipment for quality, safety and hygiene. Stainless steel fabrication is must for any machinery that comes in direct contact with the food product and must be free of cracks and crevices that might retain food particles.
- Advanced and sophisticated. Largely, the machines used in the industry have similar automation and motion control needs, such as material conveying and positioning, heating, drying and cooling.
- Replace older machines with new ones for the food processing companies.
- Supply chain infrastructure, establishment of food parks, cold storage facilities etc.
Government Policies
The Indian government has formulated an extensive promotion policy and taken a number of initiatives to increase production productivity in food processing machinery manufacturing in India. Following are the reforms:
- Allowed 100 per cent FDI in food processing comprising sub-sectors like warehousing, storage and transportation for cold chains, trading comprising e-commerce, with respect to food products manufactured and / or produced in India.
- Food processing is recognised as a priority sector in the new manufacturing policy in 2011.
- Set up a special fund called "Food Processing Fund" of approximately US$300 million in National Bank for Agriculture and Rural Development (NABARD) for extending affordable credit to designated food parks and the individual food processing units in the designated food parks. As on May 31, 2016, about a quarter of the fund as term loan has been sanctioned to 12 Mega Food Parks projects.
- Approved a new Central Sector Scheme - SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) for the period 2016 to 2020. It is expected to facilitate handling of 334 lakh MT agro-produce by the year 2019-20.
- Subsidies in cold storage, dairy business, MSME on procurement of plant and machineries.
- Income tax deduction in the specified businesses.
Challenges
The food processing equipment industry in India is witnessing a transition phase. Barring few, most of the players in food processing have just started showing interest towards sophisticated and advanced machineries. The major challenges in the industry are as follows:
- The challenges due to lack of adequate capital & technology in the food processing, cold storage & farmer to retailer chain. The large and medium business houses (15% in number) normally import the advanced technology machineries, however, the smaller business houses (85% in number) due to constraint in capital require to fabricate machineries locally with lack of advanced technology.
- Technology deficiency compared to other parts of the world. Currently the equipment manufactured in India is less efficient due to lack of advanced technology owing to limited research and development facilities available for local manufacturers. The technologies for food processing in India are not at par with the global standards. There is a lack of in-house quality control and testing facilities in conformity with the international standards.
- Poor infrastructure facilities such as irregular power supply, high inland transportation cost, warehouses etc.
- The industry is also facing the challenge of automising ethnic Indian food products for a consistent, hygienic, high volume production without changing the taste profile of the product.
(The author is director, ILO Consulting)
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