NATIONAL FOOD PROCESSING POLICY

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NATIONAL FOOD PROCESSING POLICY 1. INTRODUCTORY Food Pr ocessi ng Industr i of enor mous si ance f Indi a s dev el opment because of the v tal l kag s and sy ner es that i pr omotes betw en the tw o pillars of the econom nam ely Industry and Ag riculture. India is w rld’s second est pr oducer of f ood and has the potenti to become number one i due cour se of ti me w th sustai ned ef s. T he g ow th potenti of thi sector i enorm ous and it is ex pected that the f ood production w ill double in the nex 10 ears and the consum ption of v lue added f ood products w ill g ow at a f

st pace. is g ow th of the Food Processing I ndustry w ill bring im ense benef its to the economy r ag cul ur al y el ds, meeti pr oducti ty , cr eati empl oy ment and r the standar d of v l e number of peopl e thr oug h out the countr , speci , i the r ar eas. Economi l ber al ati on and r si ng consumer pr osper i openi ng up new oppor tuni ti es f di ati n i Food Pr ocessi ng Sector. Liberaliz ation of w rld trade w ill open up new v stas f r g ow th. he Food Pr ocessi ng Industr has been i denti ed as a thr st ar ea f dev el opment. T i ndustr i i cl uded i the pr ty l endi ng sector . M

st of the Food pr ocessi ng Industr s hav e been ex empted f om the pr ov ons of i ndustr ensi under Industr s ( ev el opment and R ti on) Act, 1951 w th the ex cepti on of beer and al cohol dr ks and i ems r ser ed f Smal Scal e Sector , e v neg ar , br ead, baker . As f as f n i stment i concer ned automati appr ov al f ev en 100% eq ui ty i av ai abl e f maj ty of the pr ocessed f ood item s. e Food P ocessing S ector Food pr ocessi ng i es any ty pe of v ue addi ti on to the ag cul ur al pr oduce star ti ng at the post har st l It i cl udes ev en pr ar pr ocessi ng l e ading , sorting

cutting , seeding , shelling packag ng etc. he sector compr ses of the f ng maj ar eas: Fruit & Vegetable Maj r Products Bev s, Jui es, C oncentr tes, Pul s, Sl es, Fr oz en & D ehy dr ated pr oducts, ne Potato W /C hi ps etc. Fisheries-
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Maj r Products oz en & C anned pr oducts mai i f esh f . eat & Poult Maj r Products oz en and packed mai i f esh f , Eg Pow der ( onl a coupl e of uni ts) ilk & Dairy . Maj r Products hol e M Pow der , Ski mmed mi pow der , C ondensed mi , Ice cr eam, Butter Grain and C reals- Maj r Products Flour, Bakeries, Biscuits, St arch Glucose, Cornf

akes, Malted Foods, Verm icelli, and M ex tr acts, Gr ai n based Al cohol . Consumer Industry Maj r Products hocol ates, C onf ecti oner Sof t/Aer ated Bev s/D ks. Pl antati on Pr oducts ea, cof ee, cashew , cocoa, coconut etc.
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2. CHA LLENGES, CONSTRA NTS A ND Indi a i al eady a maj pr oducer of f ood ( st i cer eal s, l estock popul ati on, ilk and second in f uits and v tables ), producing ov er 600 m illion tons of ood pr oducts, and i case the i mmense untapped potenti of g ow th i achi ev ed the countr can emer as the est pr oducer of maj f ood i ems. Pr ocessi ng l pr

esentl bei ng ex tr emel l the w stag e l ar e v hi r sul i col ssal w stag e of nati onal w eal th r unni ng i thousands of cr or es. Val ue addi ti on to the r pr oduce i the countr i onl sev en per cent, compar ed to as much as 23% i chi na, 45% i the Phi ppi nes and 188 i the U.K he smal scal and unor ani ed sector s today account f 75% of the total ndustr hav onl l cal pr esence w thout much access to know edg e, technol og and mar eti netw . he di enti betw een the f er r eal ati on and the f nal consumer pr e i hi i our countr ev en i the f esh pr oduce. In pr ocessed f ood pr oducts

the hi pr e on account of cumul ti ef ct of l pr oducti ty , hi cost of mater al , spoi due to poor i astr uctur , i nef ci ent and costl tr anspor tati on, hi cost of f nance an hi i ci dence of tax s and duti s, ads to the v cious cy cle of low dem and  lo capacity utiliz ation  hig per unit cost  l demand. spi e the ex tence of a str ong and w de netw of R i sti uti ons ( SIR abs, IC AR i sti uti ons, IC Establ hments, U er si ti es and Pr ate sti uti ons) thei l kag w th the user s l e f er s and i ndustr i not w establ hed r sul i l ck of technol og f ow , pur e & academi r sear ch

ther than appl ed and commer l ck of i ement of i ndustr i r sear ch , and r sour ce cr unch. he unattr acti natur e and the hi r sk pr of of ood pr ocessi ng ndustr has peded r ed f ow of cr edi t f om f nanci i sti uti ns w ho ar e y t to acq e the pr oper under standi ng of thi sector to attai the r e l of appraising skills. Low mar s, seasonal and hi h ish ilit bei the di sti ct f eatur es of
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thi i ndustr the access to seed capi tal and w capi tal i not easy spi e hav been decl ed a pr ty endi ng sector , ther e i har dl any ow th i capi tal f ow to thi i ndustr spi e v st

domesti c mar et si , the pr esent l of pr ocessed f ood rketability is v ry low but by doi ng m ssiv aw arene ss and educational campai s thi mar et coul d g ow hi her enoug h to consume substanti par t of any q uantum of our pr ocessed f oods. Indian brands are y t to es tablish in the international m rkets calling f r a concer ted ef to captur e w d mar et shar e i tune w th our standi ng i the pr oducti on f ont. th the comi ng i of W O r me the countr has to pr epar e f meeti the e q ual standar ds i or der to compete w th i por ted g oods i the domesti c mar et i sel . T cal f adopti on

of hi tech machi ne and technol og s as al so dev el opment of enti e chai n of the i astr uctur . eak database and lack of m rket intellig ence are the prev ailing f eatures of this sector . Poor i astr uctur of not onl pr ocessi ng but ev en tr anspor tati on, por ts, ai por ts, stor ag e and handl etc. he backw ar d l kag betw een the f er and the pr ocessor i y t to take pr oper shape to ti de ov er the i pedi ments w h ex t on account of ag mented & smal l and hol di ng s, er ti c pr oducti on due to natur al f ctor s, non uni & i consi tent suppl of r mater al and l ong er chai n of ter

edi ar s. of l and r tor author s thr ttl e the i ndustr i i s f her ow th calling f r harm oniz tion of la , dev elopm ent and adm inistration of standar ds i consonance w th i ter nati onal standar ds l e C odex thr oug h a si ng author Prev ailing packag ng sy stem lacks req isite q uality and presentability par ameter s cr eati handi cap as compar ed to the i por ted pr oducts. ooper ati e i sti uti ons and other par astatal or ani ti ons ar e w ak and peopl es par ti ci pati on, ei ther thr oug h Panchay at R Insti uti ons or N GOs or er s or ani ti ons, i ndustr s associ ati on i f ood

sector r mai s f f om adeq uate. THE POLICY
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CRE ATI G E NABLI G E RONM T The Policy w ill seek t creat e an appropriat env ronment f r a. Fi scal i ti s/i ter enti ons l e r ti onal ati on of tax str ctur e on esh f oods as w as pr ocess ed f oods and machi ner used f the pr oducti on of pr ocessed f oods. b. oni ti on & Si mpl ati on of f ood l by an appr pr te enactment to cov al pr ov ons r ti ng to f ood pr oducts so that the ex ti ng sy stem of mul l i r epl aced and al so cov ng ssues concer ni ng standar ds N tr on, M t g oods, f tur s mar eti eq ual ati on f und etc.

c. A concer ted pr omoti on campai to cr eate mar et f pr ocessed oods by pr ov f nanci assi stance to Industr Associ ati ons, GOs/C ooper ati es, Pr ate Sector U s, State Gov ment Or ani ti on f under taki ng g ener mar et pr omoti on. d. Ef rts to ex pand the av ailability of the rig t kind and q uality of raw mater al r ound the y ear by i cr easi pr oducti on, i pr ov pr oducti ty . e. Streng thening of database and m rket intellig ence sy stem throug h studi es and sur ey s to be conducted i v ous States to enabl e pl anned i stment i the appr opr te sector matchi ng w th the av

ailability of raw m terial and m rk etability of processed products. Str eng theni ng ex tensi on ser es and to the f er s and co- oper ati es i the ar eas of post har st manag ement of ag produce to encourag e creation of pre- processing f cilities near the s l e w shi f mi ti on, packag ng etc. g. rts to e se ttin u o a ro -p ro ce ssin f cilitie s a clo to the ar ea of pr oducti on as possi bl e to av oi d w stag e and r educe tr anspor tati on cost. h. Pr omoti on of i stments, both f n and domesti c. Si mpl ati on of documentati on and pr ocedur es under tax ti on to av oi d unnecessar

har assment ar out of mer techni cal s.
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I. INFRA TRUCTURA L DEVELOPMENT w ill f acilit at : ta lish o co ld ch lo co st p co lin g f cilitie s n r rm s, cold stores and g ading , sort ing packing f cilities to reduce stag e, i pr ov e q ual and shel l e of pr oducts. b. Appl ati on of bi otechnol og r mote sensi technol og ener sav ng technol og s and technol og s f env onmental pr otecti on. c. Bui up a str ong i astr uctur base f pr oducti on of v ue added pr oducts w th speci emphasi on f ood saf ty and q ual matchi ng i ter nati onal standar ds. d. opment of Packag ng T

chnol og s f i ndi dual pr oducts, especi cut- ui ts & v tabl es, so as to i cr ease thei shel l e and i pr ov e consumer acceptance both i the domesti c and ter nati onal mar ets. e. opment of new technol og s i Food Pr ocessi ng & Packag ng and also to prov ide f r the m chanism to f cilitate q ick transf r of technol og s to f el d thr oug h a net w of R Insti uti ons hav a Central Institute at the national lev l w th satellite institutions cated str teg cal i v ous r ons to cov up the w hol e Country and to m ke av ailable the req ired testing f cilities. T is coul d be done by establ hi

ng a new i sti uti on or str eng theni ng an ex ti ng one. opment of ar ea- speci Ag Food Par ks dedi cated to pr ocessi ng of the pr edomi nant pr oduce of the ar ea e.g ., appl e i J&K, pi neappl e i N h East, Li chi i Bi har , M ng o i M ahar ashtr & Andhr a Pr adesh etc. etc. opment of Anchor Industr C entr and/or l kag w th Anchor Industr U s hav net w of smal pr ocessi ng uni ts. h. opment of Ag ndustr mul pr oducts uni ts capabl e of pr ocessi ng a cl uster of tr ans- easonal pr oduces.
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I. BACKWARD LINKAGE he Policy will promote: a. Establishment of a sustained and

lasting linkage between the farmers and the processors based on mutual trust and benefits by utilizing the existing infrastructure of c ooperative, village panchayats and such other institutions. b. Development of Futures Market in the best interest of both the farmers and the processors ensuring a minimum price stability to the farmer and a sustained supply of raw material to the processor. c. Mechanism to reduce the gap between the farm gate price of agro- produce and the final price paid by the consumer. d. Setting up of an Equalisation Fund to ensure sustained supply of raw material at a

particular price level and at the same time to plough back the savings occurring in the eventuality of lower price to make the Fund self-regenerative. I. FORWARD LINKAGE he policy will promote a. Establishment of a strong linkage between the processor and the market to effect cost economies by elimination of avoidable intermediaries. b. Establishment of marketing network with an apex body to ensure proper marketing of processed products. c. Development of marketing capabilities both with regard to infrastructure and quality in order to promote competitive capabilities to face not only the WTO

challenge but to undertake exports in a big way
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. SPECIAL PROVISION The following shall receive higher priority and special consideration in olicy and plans a. The North Eastern Region, t he Hilly Areas, Islands and the ITDP areas in the country to be given not onl y special attention but also special consideration. b. The fiscal incentives like excise duty/sales tax concession and the tax holidays to be provided not only to those units which are set up in these areas but also to those units which though set up outside these areas near the market center, are engaged in

processing the produce coming from these areas. c. Tax holiday for food processing units, with the exception of liquor, cigarettes and aerated drinks and similar luxury items, for a period of 10 years.