New cash and regulations for Indian food processing sector

By Staff reporter

- Last updated on GMT

Related tags: Food processing, Food, Material, Venture capital

The dramatic push to develop India’s food processing sector continued this week after it was revealed the Government was in talks with banks to set up a venture capital fund for the sector.

The Food Safety and Standards Authority of India (FSSAI) also announced plans to introduce new regulations for the procurement of raw materials for food processors.

Venture capital

The Ministry of Food Processing Industries said a venture capital fund of between Rs10-20bn (€141-282m) would be set up by the start of the next financial year. But no details were available on how much the ministry would contribute to the fund and how much would come from financial institutions.

Processors dealing with perishable items such as fruit, vegetables, fish and meat would be given priority to apply to the fund for loans.

It is understood the separate fund for food processing outfits has been tabled in a bid to ensure funds reach the sector. Although food processors currently have priority status on borrowing, these funds are included in those for the agriculture industry, which means competition for the cash is intense.

The ministry hopes to channel funding into infrastructure investment for food processors as well as R&D for new product development.

Raw material procurement

In a separate development, the FSSAI released proposals to lay down rules for the procurement of raw materials for food processing. The regulation comes as the industry seeks to upgrade standards at the same time as boost food processing volume.

The new regulations will forbid companies to accept or use materials that contain parasites, pesticides, microorganisms or toxic chemicals whose concentrations would fall below acceptable levels post sorting or processing.

The rules would also boost traceability by requiring companies to log the source of all raw materials, food additive and ingredients. The measure also lays out standards for food storage, including segregation of rejected materials. Raw material must be stored separately from printed packaging materials and cleaning chemicals, said the rule. Raw meat, poultry and seafood must be kept separate from work in progress areas.

Processors will also be obliged to adopt First In First Out (FIFO) stock rotation systems for storage of raw materials, ingredients, and processed or cooked or packaged food products. Materials must be stored on racks and pallets above the floor and away from walls for hygiene purposes.

Related topics: Processing & Packaging

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