Indian Economy, TLP-UPSC Mains Answer Writing
Q. 5. The food processing sector plays a critical role in enhancing farmer incomes and reducing post-harvest losses. Elaborate on its significance and examine the major upstream and downstream challenges in developing an efficient supply chain ecosystem. (250 words, 15 marks)
Introduction
India’s food processing industry, contributing over 12% of manufacturing GDP, is a sunrise sector with immense export potential. It links farm to fork, enhances value addition, and supports income diversification for millions of farmers.
Body
Role and Significance of Food Processing Sector
- Enhances farmer income: Increases value realization through grading, packaging, and branding of produce. The Ashok Dalwai Committee recommends value chain strengthening for doubling farmers’ income.
- Reduces post-harvest losses: As per MOFPI and NITI Aayog, India loses over ₹90,000 crore annually due to wastage; processing curtails this.
- Boosts employment: According to the Economic Survey, the sector generates 1.77 times more jobs per investment than general manufacturing.
- Promotes crop diversification: Ensures markets for perishables like fruits and vegetables, encouraging farmers to move away from cereal-dominated patterns, as noted in the Committee on Doubling Farmers’ Income.
- Enhances export competitiveness: Processed foods help tap global markets; India’s agri-exports stood at $53 billion in 2022–23, with processed foods forming a growing share (APEDA Report).
Supply Chain Challenges in Food Processing
Upstream Challenges
- Fragmented farm production: Small landholdings limit economies of scale and consistency in raw material supply, a concern raised by the Ramesh Chand Committee on Agricultural Marketing.
- Poor pre-harvest infrastructure: Lack of cold storage at farm-gates leads to spoilage, especially for perishables.
- Weak farmer-industry linkages: Limited contract farming and FPO involvement restrict market integration and backward linkages.
Downstream Challenges
- Inadequate logistics and cold chains: Only 15% of produce moves via cold chains; leading to nutrient and value losses (ICRIER Report, 2023).
- Regulatory bottlenecks: Multiple food safety norms (FSSAI) create compliance burdens for MSMEs.
- Low processing levels: India processes only 10% of its agro-produce vs. 40–60% in countries like China and Thailand (MOFPI data).
Solutions
- Cluster-based approach: Adopt Mega Food Parks and Agro-Processing Clusters to integrate infrastructure and reduce logistic costs, as recommended by Shanta Kumar Committee (2015).
- Strengthen farmer-FPO linkages: Implement Model Contract Farming Act to ensure price assurance and steady raw material.
- Technology adoption: Use AI and blockchain for supply chain monitoring, grading, and demand forecasting to cut waste and improve quality.
- Ease of business reforms: Streamline approvals through single-window clearance and reduce GST on processed food items.
Government Measures
- PM Formalisation of Micro Food Enterprises (PM-FME): ₹10,000 crore scheme to assist 2 lakh units through credit and capacity building.
- PLI Scheme (2021): ₹10,900 crore to incentivize branding, innovation, and global market access.
- Operation Greens: Extends price stabilization and value chain support for perishables beyond tomato, onion, and potato (TOP) crops.
- Budget 2024–25 push: Allocation for cold chain and food labs increased by 25%, emphasising quality exports and rural infrastructure.
Conclusion
Food processing is pivotal to making agriculture a profitable enterprise, as envisioned by M.S. Swaminathan. Building robust farm-to-fork systems can ensure that agriculture becomes a source of dignity, stability, and higher incomes for rural India.
