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Small scale food processing industries in Maharashtra
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Wednesday, 30 June, 2021, 12 : 00 PM [IST]
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Sagar Neve
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The Indian food industry is projected to grow from $100 billion to $300 billion by 2015, according to a report by a leading industry body and Technopak. During the period, the share of processed food in terms of value is expected to increase from 43 per cent to 50 per cent of the total food production.
The food processing industry is of enormous significance for India's development, as it has efficiently and effectively linked the nation’s economy, industry and agriculture. The linking of these three pillars has synergised the development process and promoted the growth of the nation to a great extent.
There are 25,367 registered food processing units in the country, with total invested capital of Rs 84,094 crore ($17.81 billion), as per a competitiveness report of the National Manufacturing Competitiveness Council. The food processing sector is presently growing at an average rate of 13.5 per cent per annum. The Vision Document 2015 envisages increasing the value addition from 20 per cent to 35 per cent by 2015.
The food processing industry is one of the largest industries operating in India and is divided into several segments, including fruit and vegetables, meat and poultry, dairy, marine products, and grains and consumer foods.
The fruit and vegetable processing industry is highly decentralised, but a large number of units are in the cottage, household and small-scale sectors, having small capacities of upto 250 tonne per annum. Since 2000, the food processing industry has seen large growth in ready-to-serve beverages, fruit juices and pulps, dehydrated and frozen fruit and vegetable products, pickles, mushrooms and ready-mix vegetables. These small-scale units engaged in these segments of processing are export-oriented. The value-addition of food products is expected to increase from eight per cent to 35 per cent by 2025. Fruit and vegetable processing is also expected to increase from the current level of four per cent to 25 per cent of total production by 2025, as per the CCI report.
The dairy sector, which has the highest share in processed food market, has large unexploited potential. The report revealed that 37 per cent of the total dairy produce is processed, of which only 15 per cent is done by the organised sector. Hence, there are abundant opportunities for investment and development.
The food processing industry in India attracted foreign direct investment (FDI) worth $1,273.96 million between April 2000 and June 2011, according to data provided by the Department of Industrial Policy and Promotion (DIPP).
Already food products and beverages industry has emerged as one of the major industries in Maharashtra, and has contributed 9.7% in terms of total value of output in 2007-08. More so the industry has attracted Rs 1,039 crore worth of Foreign Direct Investment (FDI) through 173 projects that is 4.1% of the total proposals since 1991. According to the statistics of the ministry of food processing Industries (MoFPI), Maharashtra has 16,512 small- and medium- and 322 large-scale food processing units. An investment amount of Rs 1,039 crore is expected, which is 1.2% of the total investment.
There are around 13 mega projects (not including textiles), which have also been approved under the Package Scheme of Incentives since 2005. These projects have an investment of nearly Rs 2,600 crore. In fact, Maharashtra has more than 45,000 agro processing cooperatives. This makes the state as one of the country’s leaders in agro-industry in general, and in food processing industries in particular.
The economic survey, Government of India 2012 page 220 says, “Food Processing is one of the most heterogeneous sectors of manufacturing covering marine products, dairy products, grain, meat products, fruits and vegetables, sugar, edible oils and beverages.” This sector has been one of the fastest growing segments in manufacturing that contributes 27% average industrial growth more than three times its weight in the IIP. In view of this sector generating employment and income, particularly for the poor, Indian government has introduced several schemes.
According to the National Mission on Food Processing (NMFP), there is a Centrally- sponsored scheme to create additional food grain storage capacity in the country. For this, subsidies are given for effective administration of the processed food security legislation. Also the government gives incentives to investment-linked tax incentive of 100% deduction of capital expenditure for setting up and operating cold chain facilities and operating warehousing facilities.
The food processing industry relies less on the institutional source of financing. Only about 1% of the firms availed government assistance. Among the institutional sources, 18% of Pune establishments used nationalised banks and 15% used cooperative banks to meet their loan requirement. It is seen personal funds rate the highest at 61% in this sector.
According to MoFPI, the following items within the food and agro-based processing sector would be eligible for priority sector lending by banks, Fruit and vegetable processing industry, Food grain milling industry, Dairy products, Processing of poultry and eggs, meat products, Fish processing, Aerated water/soft drinks and other processed foods; Special packaging for food processing industries, and Technical assistance and advice to food processing industries.
This detailed accounting of items include bread, oilseeds, meals (edible), breakfast foods, biscuits, confectionery (including cocoa processing and chocolate), malt extract, protein isolate, high protein food, weaning food and extruded/other ready-to-eat food products as well.
Based on the recommendations of an Internal Working Group, the Reserve Bank of India (RBI) has come out with revised guidelines on priority sector lending which take into account the revised definition of small and micro enterprises as per the Micro, Small and Medium Enterprises Development Act, 2006. As per the revised guidelines, RBI will allow banks to include direct finance to companies for agriculture and allied activity of up to Rs 1 crore as priority sector lending (PSL) exposure as against the earlier exposure of Rs 20 lakh.
(The author is owner of Neve Hospitality)
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