Day 24 – Q.2 India’s food processing industry has a lot of untapped potential to fill in the employment gap in the economy. Do you agree? Substantiate. 

  • IASbaba
  • December 21, 2022
  • 0
Agriculture, GS 3, TLP-UPSC Mains Answer Writing
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India’s food processing industry has a lot of untapped potential to fill in the employment gap in the economy. Do you agree? Substantiate. 

भारत के खाद्य प्रसंस्करण उद्योग में अर्थव्यवस्था में रोजगार के अंतर को भरने के लिए बहुत अधिक अप्रयुक्त क्षमता है। क्या आप सहमत हैं? प्रमाणित करें।

Approach –

In this question candidates need to write their opinion on how India’s food processing industry has lot of untapped  potential to bridge the employment gap in economy.substantiate their views in second part of answer.

Introduction –

Food Processing includes process under which any raw product of agriculture, dairy, animal husbandry, meat, poultry or fishing is transformed through a process in such a way that its original physical properties undergo a change and the transformed product has commercial value and is suitable for human and animal consumption.

Body –

  • The food processing industry in India is increasingly seen as a potential source for driving the rural economy as it brings about synergy between the consumer, industry and the farmer.
  • A well-developed food processing industry can increase farm gate prices, reduce wastage, ensure value addition, promote crop diversification and increase export earnings.
  • However, food processing activity is still at a nascent stage in India with low penetration. The challenges for the food processing sectors are diverse and demanding, and need to be addressed on several fronts to derive market benefits.
  • Some of these challenges are: Inadequate infrastructural facilities; GST implementation; access to credit; lack of applied research; constraints on quality of inputs; and food safety laws.
  • India’s food processing sector continues to grow in response to changing demographics,
  • Inadequate infrastructure-While the Indian national highways account for less than 3 per cent of the total network, they carry 40 per cent of all cargo, which puts a lot of pressure on the highways due to high traffic volumes, leading to delays in transit.
  • We need to:Develop dedicated freight corridors in rail, supplemented by concretion dual carriageways for the State and national highways, which will directly reduce the cost of goods supplied,
  • Implementation of GST-The government should ensure timely implementation of GST to provide incentives to the food processing sector, while removing subjectivity in treatment and classification of various food products.
  • Access to Credit-The Government should establish a national bank, on the lines of Nabard, or extend the scope of Nabard, to lend credit to food processing industries. This will ensure speedy disbursal of funds to the food processing sector, which is always grappling with the issue of lack of access to credit from banks.

To bridge employment gap in economy

  • By 2024, food processing sector is expected to employ 9 million people in India and expected to generate about 8,000 direct and 80,000 indirect jobs as per ASSOCHAM.
  • Farm related employment in agricultural sector (Allied activities like dairying), self-employment opportunities particularly to women, development and management of infrastructural facilities like storage and processing centers, transportation network, research and innovation to add value to the product and others.
  • Over 16 % of the total workforce in the organized sector and 32 % in the unorganized manufacturing sector are employed in the food processing industries. The industry employs nearly 15 million people directly and 37 million indirectly.
  • The food processing industries has an enormous potential to boost India’s Economy.
  • India with large raw material base in the agricultural sector can overcome the increasing problems poverty and unemployment rate in the rural areas through this sector.
  • Therefore it is of vital importance to take measures to boost the growth and development of these industries through increasing government interventions and policies.
  • India is one of the top rankers in the production of bananas, guavas, ginger, papaya etc although processing levels in the country remain limited, which indicates an extensive opportunity in the food processing sector.
  • Government of India has come out with SAMPADA scheme to give boost to Food Processing Industry in the country.
  • Thus the policymakers have identified food processing as a key sector in encouraging labour movement from agriculture to manufacturing.
  • Women can be given training in the area of processing and can go for value addition through mango pulp processing, guava products processing such as guava leather, guava nectar and various carbonated and fresh fruits beverages.
  • Foreign Direct Investment (FDI) policy: FDI up to 100%, under the automatic route is allowed in food processing industries.
  • Agricultural and Processed Food Products Export Development Authority (APEDA)– an apex organization under the Ministry of Commerce and Industry – focuses on ‘export’ of scheduled products.
  • Food Processing being a labour intensive industry will provide localized employment opportunities and thus will reduce the push factor in source regions of migration.

Way Forward-

  • Food processing seems to have promising future, provided adequate government support is there.
  • Food processing has numerous advantages which are specific to Indian context. It has capacity to lift millions out of under nutrition.
  • Government has challenge to develop industry in a way which takes care of small scale industry along with attracting big ticket domestic and foreign investments.


To fully leverage the growth potential of this vast untapped sector, the challenges being faced by the stakeholders in this sector need to be properly addressed, as there is a huge opportunity to increase prosperity from farm to fork.

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