Food Processing Market Growing Due to Changing Lifestyle

At present, the market size of the food processing sector in India is increasing rapidly due to the increasing income of people, urbanization, and major changes in eating habits. A recent report on the food processing industry by Deloitte and FICCI states that 40 percent of the food budget of families in 2000-01 was spent on grains and pulses, which has now decreased to just 14 percent in 2023-24. The food habits of almost every income group in the country have changed. The urban affluent class is now spending about 50 percent of its monthly food budget on packaged food, eating out, and delivery. Similar changes are also visible in rural India, where consumption is shifting from grains to beverages and processed foods.

Due to the ever-increasing food production and significant changes in eating habits, the food processing industry is experiencing rapid growth in the country. According to the Reserve Bank's estimate, when agricultural produce is processed into prepared food, its value increases by about 30 percent. A research study report by the PHD Chamber of Commerce and Industry (PHDCCI) projects that India’s food processing sector is expected to reach a value of $700 billion by 2030, up from $307 billion in 2023. Furthermore, exports from agriculture and food processing sectors are anticipated to reach $125 billion by 2030.

India is setting global benchmarks in innovation, sustainability, and food safety within the food processing sector. Over the last decade, India has implemented numerous reforms aimed at transforming the food processing sector. This includes 100% foreign direct investment (FDI) in food processing, the Pradhan Mantri Kisan Sampada Yojana, and the formalization of micro food processing enterprises. India’s food processing capacity has grown more than 15 times, now exceeding two hundred million tonnes. The food processing sector is also providing more employment than many other capital-intensive industries.

The food processing sector in India comprises five main areas: dairy, fruit and vegetable processing, grain processing, meat, fish, and poultry processing, and packaged consumer goods and beverages. The Indian government has taken several measures to harness the potential of these sectors, including the Production Linked Incentive (PLI) scheme, which promotes the production of value-added food products. The government has also provided Rs 1 lakh crore financing for the Agriculture Infrastructure Fund, and introduced the infrastructure status for logistics. The Kisan trains introduced in 2020 have been playing a crucial role in facilitating food processing.

Under the Agricultural and Processed Food Products Export Development Authority (APEDA), the Export Promotion Forum (EPF) has been set up for the cultivation of various fruits, food grains, and flowers. APEDA is also focusing on strengthening existing agri-clusters and creating product-specific clusters. The "PM Formalization of Micro Food Processing Enterprises Scheme" is successfully providing financial, technological, and other support to small food processing industries.

Despite these developments, India still faces challenges in fully realizing the potential of the food processing sector. Currently, the food processing level in India is very low compared to other countries. According to Deloitte and FICCI, less than 10 percent of India’s total food production is processed. The processing level for vegetables is just 2.7 percent, for fruits 4.5 percent, for fisheries 15.4 percent, and for milk 21.1 percent. A significant factor contributing to this is the inadequate food grain storage capacity, which results in a wastage of 12 to 14 percent of food grains annually.

The government’s recently approved Dhan-Dhanya and Samridhi Yojana is expected to address some of these issues by enhancing agricultural productivity and addressing challenges in the food processing industry. The PLI scheme is anticipated to contribute to increased food processing in the country, leading to better food security, technological upgrades, improved logistics, and reduced post-harvest crop wastage. The government’s plan to create the world’s largest food grain storage capacity in the cooperative sector will also help in reducing food grain wastage.

With these developments, India is poised to strengthen its food security, increase the income of farmers, and become a major player in global food security through advancements in the food processing sector.