India’s Food Processing Industry: Role of FDI in Its Development
India has one of the largest food processing sectors in the world, and the output is expected to reach $535 billion by 2025-26. It has an essential role in connecting the farmers of India to domestic and international consumers. Maximum efforts are being made by the Ministry of Food Processing Industries (MOFPI) to encourage investments across the value chain, such as through FDI in food processing.
The food processing industry has a share of 12.38% (at 3-digit of NIC classification) in the employment that is generated in all the Registered Factory sectors, engaging 1.93 million people approximately.
Components of and Developments in the Sector
According to the NSSO 73rd round report, the unregistered food processing sector supports providing employment to 5.1 million workers. Some of the major sectors which constitute the food processing industry in India are grains, edible sugar oils, beverages, and dairy products.
Under Pradhan Mantri Krishi Sinchayee Yojana, 41 Mega Food Parks, 356 Cold Chain Projects, 60 Agro-Processing Clusters, 317 proposals under the Creation/Expansion of Food Processing and Preservation Capacities, 61 Creation of Backward and Forward Linkages Projects, and 6 Operation Green projects have been approved across the country.
The main sub-segments of the Food and Processing in India are Fruits and Vegetables, Poultry and Meat processing, Fisheries, Food retail, and the Dairy industry, etc.
Key Facts About Food Processing Industries
- The estimation of Total Horticulture Production in 2021-2022 is to be at 341.63 MT.
- India is ranked 1st in milk production. Its overall contribution to global milk production is 23% growing at a Compound Annual Growth Rate of 6.2% to reach 209.96 MT in 2020-21.
- India is ranked 3rd in global egg production and produced at least 122.11 billion in numbers in 2020-21, with a per capita availability of eggs at 91 eggs per annum in 2020-21.
- The fisheries sector grew at an impressively rapid rate of growth of 14.3 % from 2019-20 to 2021-22.
- Online grocery retail in India has witnessed a Compound Annual Growth Rate of over 50% and is projected to grow from $10 billion to $12 billion by 2025.
Role of FDI
The role of FDI in the development of food processing industries is listed below:
- The equity inflow of FDI in the food processing sector for the period of April 2021 to March 2022 was $709.72 million. The total FDI received in this sector was $11.51 billion.
- 100% FDI is permitted under the automatic route in food processing industries in India.
- 100% FDI is allowed through the approval route for the trading of the government, which includes allowing FDI through e-commerce with respect to manufactured food products that are produced in India.
FDI has contributed to the Indian economy greatly by providing ample opportunities, which resulted in the employment of a large number of workers and helped in connecting Indian farmers with domestic as well as international consumers.
At FDI India, we simplify the complex structure of foreign investment and transactions through years of expertise in the field. We also open up funding options for Indian firms who are seeking financial assistance to boost their business, such as those looking for FDI in food processing businesses.
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