Reaching ‘full potential’: World Bank specialist urges India to further develop food processing sector

By Pearly Neo contact

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India’s food processing sector is only at 10% of its full potential, claims a World Bank expert. ©Pixabay
India’s food processing sector is only at 10% of its full potential, claims a World Bank expert. ©Pixabay

Related tags: India, World bank, Food processing

India’s food processing sector is only at 10% of its full potential, according to an expert at the World Bank who claims it is lagging behind other emerging markets.

At a World Bank session at this year’s Global Agriculture and Food Summit World Bank Lead Agribusiness Specialist Chakib Jenane told delegates that the milk processing industry in India was currently at 35% capacity of its full potential, but fruit and vegetable processing  at a mere 2%.

Overall, the Indian food processing industry is at 10% of its potential, which is far behind other developing nations like Morocco at 35%, not to mention developed countries like the United States at 60%.

“India is lagging due to poor business environment, lack of appropriate linkages, lack of processable varieties and assured input supply, presence of many small players and MSMEs (Micro, Small and Mini Enterprises) which face huge capital start up issues,” ​he said to United News of India.

Jenane added that US$450bn was needed to achieve food security in India, and that the private sector would need to help contribute some US$220bn of this.

The Indian government appears to be on the case though, with Indian commerce minister Suresh Prabhu announcing funding by the Abu Dhabi Investment Authority into the food processing industry not long after Jenane’s comments.

Speaking at an Assocham event on strengthening the MSME ecosystem in food processing, Prabhu added that with the new Agricultural Export Policy, restrictions on organic and processed food would be lifted.

"[The] government will remove all restrictions on organic foods as well as processed foods," ​he said to KNN India.

"As a part of entire policy, the creation of cold chain infrastructure would be aggressively worked on with the complete involvement of state governments.

“Each of the state governments has decided to appoint a nodal officer who will work to create the infrastructure.

“[The] idea is that we create clusters for different products for agriculture, horticulture, meat, dairy and others depending upon the natural products produced in each state."

More on the Indian food processing industry

According to data from the India Brand Equity Foundation (IBEF), the Indian food processing industry takes up some 32% of the country’s food and grocery market, which is the sixth largest in the world.

As the world’s second largest producer of fruits and vegetables, the Indian government has taken steps to reduce post-harvest losses by planning to implement 500 cold-chain projects as well as 42 mega food parks in the country.

The main export destinations for India’s processed foods are the Middle East and Southeast Asian markets.

The sector is currently valued at INR31tn (US$434bn), and estimated to reach INR65tn (US$911bn) by 2020, according to Telangana Today​.

An Assocham-Grant Thornton study released in 2017 added that the sector has the potential to attract some US$ 33 billion (about INR2.4tn) in investments by 2024.

"Given the trade in production of food commodities, the food processing industry in India is on an assured track of growth and profitability,"​ said the study authors to Economic Times India​.

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