Bolstering Value-Added Agri Exports

India’s food processing sector currently operates at a suboptimal level, leading to a limited degree of value addition in this domain. As a consequence, the enhancement of value-added processes within the food processing industry remains relatively low. In India, the food processing sector faces challenges that hinder its ability to achieve optimal levels of value addition. These challenges include inadequate infrastructure, outdated technologies, inefficient supply chains, and a lack of modern processing facilities. These factors collectively contribute to a situation where the potential for adding value to food products is not fully realised. Resultantly, even in growing agricultural exports, trade of value-added agricultural exports remains low, indicated in the adjacent table. Given these challenges, India also has numerous opportunities which can help expand and diversify the export basket of value-added agricultural exports.

Food processing involves the conversion of raw agricultural materials into consumable products or the transformation of one type of food into various other forms. This encompasses a wide spectrum of techniques, ranging from grinding grains to produce raw flour, engaging in home cooking, to employing sophisticated industrial methodologies for crafting convenient foods.

Considering the fact that India is the world’s largest producer of spices, milk and pulses and the second largest producer of tea, sugarcane, food grains, fruits, and vegetables, there has been continuous attention of policymakers to process it for a variety of reasons, reducing food loss and waste, increasing shelf life, enhancing farmer’s income, and making food available to India’s growing population at affordable prices.

 According to the National Investment Promotion and Facilitation Agency, the share of GVA of agriculture and allied sector to the total economy is around 18.8 per cent and in India’s export of 10.4 per cent. Considering the high cropping intensity of 136 per cent and a significant contribution to total employment of 12.32, the value-added agricultural export offers significant opportunities. However, India also faces a series of challenges for the value-added export of agricultural products as depicted in the adjoining figure.

India’s food processing sector currently operates at a suboptimal level, leading to a limited degree of value addition in this domain. As a consequence, the enhancement of value-added processes within the food processing industry remains relatively low. In India, the food processing sector faces challenges that hinder its ability to achieve optimal levels of value addition. These challenges include inadequate infrastructure, outdated technologies, inefficient supply chains, and a lack of modern processing facilities. These factors collectively contribute to a situation where the potential for adding value to food products is not fully realised. Resultantly, even in growing agricultural exports, trade of value-added agricultural exports remains low, indicated in the adjacent table.

Given these challenges, India also has numerous opportunities which can help expand and diversify the export basket of value-added agricultural exports. India’s diverse climate and geographical conditions allow for the cultivation of a wide range of agricultural products, presenting numerous opportunities for value addition. With a growing middle-class population and changing consumer preferences, there is an increasing demand for processed and value-added agricultural products in India. Moreover, the Indian government has been encouraging foreign direct investment (FDI) in the food processing sector, creating more opportunities for collaboration and technology transfer which are well supported by a series of enabling policies and schemes. Furthermore, the growth of e-commerce and modern retail in India provides an avenue for reaching a broader consumer base for value-added agricultural products.

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India's food processing sector currently operates at