Analyze the key challenges to India's food processing industry from production to consumption.
Food processing Industry is a sunrise industry which has an immense potential to address the rural economy distress. But the Food processing Industry is facing Key challenges which include
Constraints in Supply Side
- Large Informal Sector and mainly clustered in small scale industries
More than 50% of the industries in the food processing sector is concentrated in informal sector and are small scale industries. Therefore they cannot achieve economy of scale and avail the benefits from the formal financial sector.
- Upstream requirement bottlenecks
The fragmented supply chain due to APMCs provides challenges in the upstream supply chain.
- Subsistence nature of Indian Farming
The fragmentation of supply chain due to small and medium sized land holdings make it unviable to design an effective supply chain with research support to get desired characteristics in the raw materials.
- Lack of necessary infrastructure
Lack of sufficient number of warehouses, cold storages to ensure a strategic supply of raw materials hinders their production capacity.
- Lack of connectivity
With the supply base concentrated in rural areas and the lack of sound economical connectivity adds to the cost of production
Constraints in consumption side
- Underdeveloped processed food market
Indian processed food market is still evolving and still is at its infancy stage.
- Fragmented market
Indian retail sector is still dominated by small traders and Kirana shops. This poses a serious challenge in building of consumer base.
- Diversity of India
India’s diversity poses a challenge is building a large consumer base as the cuisines and tastes of consumers change from region to region
India’s food processing Industry has an immense potential and the government is encouraging the sector with plethora of schemes like food parks, Sampada to overcome the bottlenecks in realising their potential.
Topics: GS-III: Food Processing and Related Industries