| A holistic agri-solutions company, FIL is the largest producer of apple concentrate in India. At the recently held World Food India event in New Delhi the Hon’ble Prime Minister of India, Shri Narendra Modi stated, “In the 21st century, in a time of increasing agricultural production, India needs a post-harvest food processing revolution, with a focus on value addition. It would have been good for the country had this been done two to three decades back.”
Syed Junaid Altaf
Group Executive Director
FIL Industries
Still, India’s agri sector is doing remarkably well at 18.3 % of the country’s GDP with the world’s 2nd largest amount of agricultural land [157.35 million hectares], employing more than 50% of the population. Add to these statistics, India’s agri and allied exports in the fiscal year 2021-2022 which amounted to USD 49.6 billion.
However, to ensure the continuous growth of the nation, it is imperative to support our farmers with new technologies to help grow production and keep the agri-sector and system in sync with the rest of the world.
Whilst the government continues with its subsidies and development programmes, it is important and essential to also attract inflow of foreign capital. This will not only help the agri sector in India to access and leverage the latest scientific research and technological advancements but will also enhance capacities, increase production and a larger offering of farm products to new international geographies.
As we are a predominantly agrarian economy, FDI is the route to provide the necessary impetus. Fortunately, Indian government regulations allow for 100% FDI in the agri sector in India under the automatic route for horticulture, floriculture, apiculture and farming of vegetables and mushrooms; animal husbandry, fish farming, and aquaculture; development of seeds; services related to agriculture and allied sectors such as food processing. To quote the Prime Minister again, “India’s food processing sector has emerged as a “sunrise” industry and has attracted ₹50,000 crore in foreign direct investment (FDI) in the past nine years”.
Food processing plays an integral role in connecting the farmers of India to consumers within the country and worldwide. India’s food processing output is expected to reach $535 billion by 2025-26 making it among the largest in the world.
The government, through the Ministry of Food Processing Industries (MOFPI)is making massive efforts to encourage FDI in food processing and packaging. As per the Ministry, the export of processed food has increased 150% in the last nine years and the domestic processing capacity has increased significantly. What’s more, consumption in India too will drive more food production. It is projected that by 2030, India’s annual household consumption will quadruple, making it the fifth-largest consumer in the world.
This sector has also emerged as a significant source of employment, with the largest number of factories and number of people employed as compared to other industries. The total number of persons currently engaged in the registered food processing sector is approx 2.05 million in 40,579 odd factories and this is not counting the unregistered food processing sector that supports employment to 5.1 million workers. The sector is expected to add 9 million jobs by 2024.
Currently the sector size is estimated to be around US$322 billion, and it is expected to reach US$543 billion by 2025, growing at a CAGR of 14.6%. The key sub-segments of the Food Processing industry in India are Fruits & Vegetables, Poultry & Meat processing, Fisheries, Food retail, Dairy industry, among others. Under the aegis of the Pradhan Mantri Krishi Sinchai Yojana, 41 Mega Food Parks, 382 Cold Chain projects, 72 Agro-Processing Clusters, 469 Food Processing Units & Preservation Capacities, 61 Creation of Backward and Forward Linkages Projects, 46 Operation Green projects, 175 Food Testing Laboratories projects have been approved across the country.
The food processing industry in India is primarily concentrated in the states of Maharashtra, Uttar Pradesh, Andhra Pradesh, Tamil Nadu, and Gujarat who are the leading contributors to the sector. However, there is a huge untapped potential for the sector in the upper northern, eastern and north-eastern regions of the country. Both central and state governments in India continue to collaborate to boost automation in food processing. The central government provides subsidies for machinery installation, interest subvention on term loans, and a 100% GST refund.
The Government of Jammu and Kashmir [J&K] offers subsidies on turnover, land acquisition, diesel generator sets, and other facilities. These combined efforts aim to incentivise the establishment of automated food processing plants, fostering efficiency and growth in the sector. Since 2022, MoFPI in collaboration with the Government of J&K has allowed a 100% FDI under automatic route in manufacturing of food products and has adopted the policy for Promotion of Foreign Investments in J&K. The policy aims to attract and promote foreign investment in order to supplement domestic capital, technology, and skills for accelerated economic growth and development. Hopefully in the coming time, J&K will attract significant FDI in automation or technology in the food processing business.
Although the food processing sector has been identified as one of the critical growth drivers and acknowledged as a high priority industry by the government of India,it is still in its infancy when compared to more developed economies, such as the USA and the EU, which are more advanced and technologically sound. However, India has a unique advantage of having a vast supply of raw materials, which can be utilised for food processing. In addition, India’s population of over a billion people as well as an increasing disposable income indicate that the food processing industry is set for tremendous growth.
Automation in food processing and packaging will be the driver for the food industry to grow in India. Deployment of tech has already enabled new forms of e-commerce, automation of pick-and-pack operations, management of supply chains, forecasting production requirements,etc. This process of digital transformation has seen the industry upgrade and recalibrate and allow for efficient alignment of workforce alongside technology.
The technology-driven approach has been a catalyst for both adaptability and innovation within numerous food processing operations. The integration of advanced systems equips organisations with the agility to swiftly respond to dynamic market demands. The real-time monitoring and optimisation capabilities inherent in their automated processes enable them to flexibly adjust production volumes and offerings according to evolving consumer preferences and industry trends. Furthermore, the infusion of technology has ignited a culture of innovation within organisations. Beyond mere efficiency gains, it has opened avenues for pioneering product development and strategic partnerships. In essence, the technology-driven approach is not just about meeting the present market demands but anticipating and shaping future trends through an effective combination of adaptability and innovation.
Striking the right balance in a dynamic process while considering the unique requirements and objectives of each business is the key in an evolving technological and economic landscape. Food processing plants can leverage automation for certain processes while still relying on human labour for tasks that demand adaptability, critical thinking, or a personal touch.
The integration of automation in food processing has notably reduced the labour intensity of tasks, streamlining operations and enhancing overall efficiency. With machines taking on routine functions, the workforce is now strategically deployed to optimise and manage these automated systems, focusing on tasks that require human skills such as supervision, troubleshooting, and system improvement. This shift allows for extracting maximum productivity from automated processes while emphasising the value of human expertise in overseeing and fine-tuning these technologies for optimal performance.
Despite the government’s impetus, the sector is besieged with innumerable challenges that hamper its growth thereby increasing wastage of agri products. Emphasis is required to upscale infrastructure as well as provide for appropriate storage and cold-chain facilities and a robust supply chain. An increased focus on developing backward and forward linkages will also be beneficial. These should include development of a plan to increase the share of processed food in total food consumption; adoption of next-gen tech such as AI, LoT and blockchain to reduce food wastage, thereby boosting utilisation of by-products and waste generated during food processing as well as enhancing supply chain efficiencies.
I am optimistic about what technology and automation will make possible in the times to come. As the farming and food processing sectors invest in adopting new technologies they also need to be mindful about the criticality of human skills, experience, and supervision. A fine balance between technology and human skills is the key to the future.
