Reporting on growth in her segment, Union Minister for Food Processing Industries Harsimrat Kaur Badal said food processing urgently needs to gain the ability to integrate the gap between farmers and the consumer.
In spite of its well-documented difficulties in moving goods efficiently, food processing’s growth rate of 8.4% is one of the fastest in India’s economy.
The food processing industry is one of the major employment-intensive segments, constituting over 13% of employment generated in all registered factory sectors in 2012-13, said Badal.
A crumbling network
India’s supply chain woes include outdated warehousing, unscrupulous middle-men, massive delays at interstate weighbridges and enormous levels of wastage.
In 2013, FoodNavigator-Asia reported that a quantity of wheat equivalent to the entire production of Australia goes to waste each year in the country, with 21m tonnes of the crop perishing annually. The cold chain is similarly affected.
According to Assocham, India’s cold chain network is highly fragmented with more than 5,000 facilities across the country. The chambers of commerce representative body estimates that the temperature controlled warehouse market will reach Rs624bn (US$9.8bn) by 2017 with an approximate capacity of 46.6 million tonnes.
“However, most equipment in use is out dated and based on single commodities contributing to the below-capacity utilisation of the stores,” Assocham said.
Slowly improving, given the tools
The sector is not without its developments. Last week, Danfoss India set up an innovative and environmentally friendly model cold-storage facility in Haryana.
Technology firm Dearman, meanwhile, is targeting countries with fast-developing cold chains like India for its liquid nitrogen engines to tackle the “environmental challenge” caused by more vehicles on the road. (A report commissioned by Dearman predicted the number of refrigerated vehicles on the road in Asia could reach 15.5m by 2025, compared to just 3m in 2013.)
Minister Badal has also revealed that India’s production index for factory output was up 2.1% to 5.7% for the 10 months from April 2014 to February 2015.
Growth in rice, edible hydrogenated oil and skimmed and pasteurised milk provided the platform for output growth, Badal said.
Over the same 10 months, the food processing sector, which largely allows foreign countries to invest directly in India and is one of the priority sectors under Prime Minister Modhi’s high-profile “Make in India” initiative, saw US$421.5m in investment from overseas.