Context: India has the potential to become a global leader in the food processing sector.
Potential of food processing industry (FPIs) in India
FPIs can drive ambitious targets in agri-exports, that is worth $60bn by 2022.
From 2015-16 to 2019-20, value of agricultural and processed food increased from $17.8bn to $20.65bn.
Huge under-utilised potential: Ministry of Food Processing Industries shows that contribution of agricultural and processed food products in India’s total exports is just 11%.
In this also, primary processed agricultural commodities form majority share.
Domestic potential: FPIs promises scope for high economic growth and makes good profits.
Issues limiting India’s growth in agri-exports
India lacks comparative advantage in many items: That is, domestic prices of processed food products are much higher compared to world reference prices.
Non-tariff measures imposed by other countries: Some of these include
Mandatory pre-shipment examination by the Export Inspection Agency being lengthy and costly.
Compulsory spice board certification being needed even for ready-to-eat products which contain spices in small quantities.
Prohibition of import of meat- and dairy based-products in most of the developed countries.
Withdrawal of Generalised System of Preference by the U.S. for import of processed food from India.
Export shipments to the U.S. requiring an additional health certificate
Regressive policy paradigm: Such as lack of strategic planning of exports by State governments, lack of a predictable and consistent agricultural policy discouraging investments by the private sector etc.
Absence of an equivalency agreement with developed countries for organic produce.
Way forward: India’s competitive advantages in various agricultural commodities shall be passed onto processed foods, focusing on cost competitiveness, global food quality standards, technology etc.