Mains Daily Question
Dec. 21, 2020

  1. “The Food Processing Sector, often termed as a Sunrise Sector, has great potential to contribute to Indian economy, including in growth, employment generation and investment”. Explain.


  • Introduce the Food Processing Sector as a Sunrise sector

  • Highlight its potential to contribute in growth, employment generation and investment in Indian economy

  • Mention some government steps to promote the Food Processing Sector.

  • Conclude appropriately

Model Answer

Food processing industry (FPI) is one area which has the potential to add value to farm output, create alternate employment opportunities, improve exports and strengthen the domestic supply chain. Recognising the immense potential of FPI in promoting inclusive growth, it has been identified as one of the sunrise sector. This sector serves as a vital link between the agriculture and the industrial segments of the economy. The economic potential of the FPI are as follows:

  1. Growth

  • The Indian FPI accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

  • During the last six years ending 2017-18, Food Processing Industries sector has been growing at an average annual growth rate of around 5.06 per cent.

  • In 2017-18, the food processing industry accounted for 7.9 per cent of manufacturing GVA and 9.5 per cent in agricultural value added.

  • The value of processed food exports during 2018-19 was of the order of US $ 35.30 billion accounting for about 10.70 per cent of India’s total exports.

  1. Employment Generation

  • Over 16 % of the total workforce in the organised sector and 32 % in the unorganised manufacturing sector are employed in the food processing industries. The industry employs nearly 15 million people directly and 37 million indirectly.

  • According to the Annual Survey of Industries for 2016-17, the total number of persons engaged in registered food processing sector was 18.54 lakhs. Also, unregistered food processing sector supported employment to 51.11 lakh workers as per the National Sample Survey Office 73rd Round, 2015-16 and constitutes 14.18 per cent of employment in the unregistered manufacturing sector.

  • As per a report by ASSOCHAM, It can generate employment of 9 million person days by 2024.

  1. Investment

  • Indian food processing sector has the potential to attract US$ 33 billion of investment by 2024 according to an ASSOCHAM report.

  • Sops for private sector participation include 100 per cent FDI under automatic route.

  • Liberalisation and growth of organised retail have made the Indian market more attractive for global players. With a large agriculture sector, abundant livestock, and cost competitiveness, India is fast emerging as a sourcing hub of processed food.

Other than economic benefits, well-developed food processing sector reduces wastage, ensures value addition, promotes crop diversification as well as export earnings. Looking at the benefits and potential of FPI, the GoI has taken many initiatives to promote this sector such as launching an umbrella scheme named SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters), starting National Mission on Food Processing (NMFP) during 12th FYP, bringing food and agro–based processing units and cold chain infrastructure under Priority Sector Lending (PSL), permitting 100% FDI in food retail in India, and setting up a Special Fund of Rs. 2000 crore in NABARD to make available affordable credit at concessional rate of interest


Despite these efforts, the FPI suffers from many lacunas such as low level of govt outlay, unfinished reforms of APMC, tariff and non-tariif barrier, insufficient infrastructure etc. Thus, there is a need to give further thrust to the FPI. The way forward could be - better food safety and quality assurance mechanisms, technology upgradation, relaxation of export norms, greater access to credit, rationalize taxes and levies, ramp up infrastructure like quality power, modern logistics and reliable transport. The entire value chain needs proactive policy attention so as to step up oversight, shore up quality standards and boost innovation.

Subjects : Economy
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