Food processing industries are major industries in developed countries. In developing countries, it is in the growing stage. The food processing industries include cereals, pulses, oilseeds, bakery, horticultural crops, livestock, and aquacultural produce, etc. Now food is a global commodity and hence its processing industries will play an important role in the economy of any country. The food processing in India is mainly done by unorganized sectors. The food industry is expected to be worth $ 10 trillion by 2028 and most of this growth will come from developing the world. The direct impact of the sub-sector on growth and indirect stimulus to another type of economic activity carries important implications for employment, exports, food security, and living standards On average, agro-industries accounts for about 2% of GDP in developing countries but 9% in developed countries. The value of agro-processing is about three to four times that of agriculture in the developed world, while it is typically a fraction of the value of agriculture in the developing the world. PARTS OF THE FOOD INDUSTRY The food industry is divided into four major segments:

  1. Production
  2. Manufacturing/processing
  • Distribution
  1. Marketing

Production: Production includes such activities as farming, ranching, orchard management, fishing, and aquaculture. Technologies involved in the production of the raw materials include the selection of plant and animal varieties, cultivation, growth, harvest, slaughter, and the storage and handling of the raw materials.

Manufacturing/processing: Manufacturing converts raw agricultural products to more refined or finished products. Manufacturing requires many unit operations and processes that are at the core of the food sector.

Distribution: Distribution deals with those aspects conducive to product sales, including product form, weight and bulk, transportation, storage requirements, and storage stability.

Marketing: Marketing is the selling of foods in raw and processed form and involves wholesale, retail, institutions and restaurants.

Many companies do not sell food directly but they are deeply involved in the food industry. These are called allied industries. Allied industries produce no- food items that are necessary for marketing food. The packaging industry is a good example.  

Allied industries Specific examples include cans, food color and flavor, paper products, and plastic products. Chemical manufacturers represent another group of allied industries. They supply the acidulants, preservatives, enzymes, stabilizers, and other chemicals used in foods. Monitoring and regulatory agencies such as the BIS, APEDA, FPO, Food & Drug Administration (FDA), lawyers, consumer action and information agencies, and other regulatory agencies are also part of allied industries.

STATUS OF FOOD PROCESSING IN INDIA India ranks first in the world in the production of Milk, Ghee, Pulses, Ginger, Bananas, Guavas, Papayas, and Mangoes. Further, India ranks second in the world in the production of Rice, Wheat and several other vegetables & fruits but hardly 2% of the produce is processed. India is the land of spices producing all varieties worth over Rs. 3500 Crores (the US $ 900 million) amounting to 25-30% of world production, which is processed for value-addition and export. It grows 22 million tonnes of oilseeds covering most of the varieties. Other important plantation products include tea, coffee, cocoa, and cashew. India's livestock population is the largest in the world with 50% of the world's buffaloes and 20% of cattle, but only about 1% of total meat production is converted to value-added products. India has become a surplus producer of food from being an importer of food grains. However, India does not figure significantly in the world trade of food and food products. Food processing industry in India has been stagnant for a long time, although consumers in India spend more than half their expendable income on food, beverages, and tobacco. During the last 5 years ending 2017-18, Food Processing sector has been growing at an Average Annual Growth Rate (AAGR) of around 8.41 percent as compared to around 3.45 percent in Agriculture at 2011-12 Prices. Food Processing Sector has also emerged as an important segment of the Indian economy in terms of its contribution to GDP, employment and investment. The sector constituted as much as 8.83 percent and 10.66 percent of GVA in the Manufacturing and Agriculture sector respectively in 2017-18 at 2011-12 prices. Food Processing Industry is one of the major employment intensive segments constituting 12.43% (at 3-digit of NIC classification) of employment 36 generated in all Registered Factory sector in 2016-17. The online food ordering business in India is in its nascent stage, but witnessing exponential growth. With online food delivery players like Food Panda, Zomato, TinyOwl, and Swiggybuilding scale through partnerships, the organized food business has a huge potential and a promising future.

MAJOR FOOD PROCESSING SECTORS THEIR STATUS, PROBLEMS &PROSPECTS Food processing industry in India can be segmented as follows:

  • Cereal/ pulse milling
  • Fruit & vegetable processing
  • Milk & milk products
  • Beverages like coffee, tea & cocoa
  • Fish, poultry, eggs & products
  • Meat & meat products
  • Aerated waters/soft drinks
  • Beer/alcoholic beverages
  • Bread, biscuits & other bakery products
  • Edible oil/fats.
  • Confectioneries
  • Breakfast cereals, malt protein, weaning, extruded food products

Problems in Food Processing Industries At present most of the industries are in unorganized sectors. So, the numbers of problems are arising from different sections of the industries. Some of the basic problems encountered by Indian food industries at different levels are given below. The reasons for the slow growth of processed foods in India in the past are

  • Majority of the population has low-income levels and cannot afford processed foods.
  • Indians traditionally prefer fresh foods that are cooked rather than use preserved foods.
  • There is also no national character for food habits and these keep changing from region to region.

However, the scenario is changing with some foods especially the fast foods acquiring the national character. Also, some foods such as idli, dosa, some Punjabi foods like chhole, alu mutter, etc., some Chinese foods and now the western foods like burgers and pizza are fast gaining national popularity.

There are some factors that impede growth in this industry.

  • Transport (both road and railways) and communication are poor. This causes special problems for perishable products.
  • There are no reliable cold chains, which are necessary for temperature-sensitive foods like fruits & vegetables, ice creams, etc.
  • Modernization is unaffordable for the small-scale manufacturer but the large companies do not find investment justifiable due to the small size of the market.
  • Packaging costs are high.
  • Even the retail business in small stores so large that an inventory needed to display various brands and that is lacking.
  • Supermarkets are not yet popular although a few are making an appearance.


  • Priority sector status for lending by banks will promote better growth of this industry.
  • Government is also trying to improve infrastructure support such as cold chain facilities, transport, storage warehouses, etc. Governments are setting up Food Parks, 10-year tax holiday, and replacement of PFA Act with a new more rational act.
  • To some extent cold chain is being provided, which will help in retaining quality, freshness and reduce post-harvest losses.
  • With the new hybrid, varieties being added the production season is also being extended. These developments shall result in the greater availability of quality raw materials to the industry thus resulting in better capacity utilization and producing a wider range of products and of international quality.
  • Multinationals now entering the food industry have an international marketing network and have their brand loyalties all over the world. This will enable the Indian products reaching all over the world in the form and packing required.
  • With the rise in the per capita income particularly of the middle classes, a drastic change in the food habits has been noticed. This will lead to increased domestic consumption

FOOD PROCESSING SECTOR –GROWTH POTENTIAL PULSE PROCESSING(This case study will help you to understand the need for food processing) PMKSY Scheme Government of India (GOI) has approved a new Central Sector Scheme – Pradhan Mantri Kisan SAMPADA Yojana (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) with an allocation of Rs. 6,000 Crores for the period 2016-20 coterminous with the 14th Finance Commission cycle. The scheme will be implemented by the Ministry of Food Processing Industries (MoFPI). PM Kisan SAMPADA Yojana is a comprehensive package which will result in

  • Creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet.
  • It will not only provide a big boost to the growth of the food processing sector in the country but also help in providing better returns to farmers and is a big step towards doubling of farmers income,
  • Creating huge employment opportunities especially in the rural areas,
  • Reducing wastage of agricultural produce,
  • Increasing the processing level and
  • Enhancing the export of processed foods.

The following schemes will be implemented under PM Kisan SAMPADA Yojana:

  • Mega Food Parks
  • Integrated Cold Chain and Value Addition Infrastructure
  • Creation/ Expansion of Food Processing/ Preservation Capacities (Unit Scheme)
  • Infrastructure for Agro-processing Clusters
  • Creation of Backward and Forward Linkages
  • Food Safety and Quality Assurance Infrastructure
  • Human Resources and Institutions
  • Operation Greens

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