Foreign investment and infrastructure key to growing Indian food processing sector - report

By Rory Harrington

- Last updated on GMT

Related tags Food processing sector Food

Encouragement of foreign investment, implementation of unified food safety and processing policies, and a chronic lack of infrastructure are some of the bottlenecks stifling the development of the Indian food processing sector, said a new report.

The research from the Federation of Indian Chambers of Commerce and Industry (FICCI) highlighted what it described as 15 major challenges that are preventing the country’s food processing sector fulfil its potential to grow by 40 per cent to touch US$258bn by 2015.

The problems have “depressed its yield levels and constrained it from contributing its might towards the inclusive growth of the nation, said the industry survey entitled ‘Challenges before the Indian Food Industry’.

FICCI said it surveyed 250 “top decision makers” across the entire value chain of the food processing sector, receiving replies from half.


Some 18 per cent of respondents said there was a lack of strategy to attract foreign investment across the value chain.

Recommendations from the body to address this included the opening up of multi brand retail to bring in more global investment to the infrastructure and logistics domain. This in turn would boost the growth of the supply chain and logistics sector. It also urged the creation of a state specific plan to attract domestic and foreign private investment in the food processing sector.

But the major challenges facing the sector’s development were internal with almost half of respondents highlighting inadequate infrastructure in terms of a “long and fragmented supply chain” ​– including poor cold storage and warehousing facilities and a lack of technologies such as RFID.

The “absence”​ of a comprehensive national policy was also cited by 35 per cent of industry players - instead of the disjointed individual statutes that currently exist. The same complaint was raised over food safety.

“India urgently needs a national food processing policy which incorporates tax breaks for the sector,”​ said FICCI.

“The policy to be effective will have to be comprehensive and adopt a number of legislative, administrative and promotional measures. The comprehensive national level food processing policy would also ensure institutional strengthening, capacity building across the value chain and would also seek to promote innovation in general and technological innovation in particular," ​added the trade body.

Inconsistent and uncoordinated food safety laws across different states were also a major concern for almost 30 per cent. The government must enforce the Food Safety and Standards Act and introduce more inspectors and improve lab facilities, said FICCI.


The trade body also recommended the establishment of a national bank to boost credit access to food processing outfits:

“This will ensure speedy disbursals of the funds to food processing sector, always grappling, with the issue of lack of access to credit from banks,”​ it declared. “State governments should play a catalytic role in partnership with banks, financial institutions and technical and management institutions so that small and unorganised players become globally competitive.”

Related topics Processing & Packaging

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