By Milind Pingle, CEO, Allana Consumer Products
News courtesy: Voices, India, TOI
The food processing sector is not only essential to how we conduct our daily lives, but it is also a significant economic pillar. The segment has immense potential to grow and contribute significantly to the country’s economy. The government of India has set a vision for the sector to achieve a target of doubling its contribution to the GDP by 2030.
The route our food takes from the farm to the plate has undergone a sea of change over a period of time. Food processing refers to the conversion of raw agricultural products into value-added products for human consumption. The products we consume have gone through several processes, such as harvesting, cleaning, packaging, grading, preserving, and transportation. The raw products from agriculture, dairy, plant-based or poultry meat, etc. undergo processing involving cutting-edge technology for post-harvest processing. Though the food processing sector continues to innovate on adopted methods of spray dying, colourants, artificial sweeteners, and preservatives, the addition of newer trends like plant-based meat, ready-to-eat, bakery ingredients, sugar-free ice creams, and healthy oils has reinvented and shaped the food processing industry in the country.
The food processing sector is one of the critical drivers of growth and has been acknowledged as a high-priority industry by the government of India, as it has shown enormous potential for creating employment opportunities and generating income in the country. Although the sector in India is at a nascent stage at present, it has shown promising growth in recent years. This industry is expected to add 9 million jobs by 2024. Foreign direct investments in India’s food industry totalled $4.18 billion between April 2014 and March 2020. By 2030, India’s annual household consumption is believed to quadruple, making it the fifth-largest consumer in the world. The sector’s size is estimated to be around US$322 billion, and it is expected to reach US$543 billion by 2025, growing at a CAGR of 14.6%.
The food processing industry in India is primarily concentrated in the northern and western regions of the country. The states of Maharashtra, Uttar Pradesh, Andhra Pradesh, Tamil Nadu, and Gujarat are the leading contributors to the sector. However, there is huge untapped potential for the sector in the eastern and north-eastern regions of the country. In comparison to more developed economies, such as the USA and EU, India’s food processing industry is still in its infancy. The sector in these countries is more advanced and technologically sound. However, India has the unique advantage of having a vast supply of raw materials that can be utilized for food processing. Additionally, India’s vast population and increasing disposable income present a significant opportunity for the growth of the food processing industry.
The food processing sector in India faces various challenges, such as inadequate infrastructure, a lack of proper storage and cold chain facilities, and a fragmented supply chain. These issues hamper the growth of the sector and increase the wastage of agricultural products. However, the government has taken various initiatives, such as the Pradhan Mantri Kisan Sampada Yojana, to promote the growth of the food processing industry in the country. The implementation of GST has also simplified the tax structure, making it easier for the food processing industry to operate in India.
The food processing industry’s vision for the next five to ten years should be to increase the sector’s contribution to the GDP from the current 8% to 20%. This can be achieved by focusing on the development of backward and forward linkages, increasing the share of processed foods in total food consumption, and expanding the sector’s reach in the eastern and north-eastern regions of the country. The industry should also aim to reduce food waste and increase the utilization of by-products and waste generated during food processing.
To achieve this vision, the industry should adopt modern technologies such as AI, IoT, and blockchain to improve the supply chain’s efficiency and reduce waste. The premier technical institutions, such as the IITs, can play a significant role in developing these technologies and providing training to industry professionals. The government should provide support in the form of incentives and subsidies to promote the adoption of these technologies.
The industry should also focus on developing new and innovative products, especially in the organic and health food categories, to cater to changing consumer preferences. The farm sector should also focus on increasing the production of raw materials suitable for food processing and adopting modern farming practices to improve the quality of the produce.
However, the adoption of technology has dramatically changed so many aspects of our lives, and it’s thrilling to see how the food services sector has witnessed change as a result. It incorporates automated quality control and effective work models to maximise consistency and profitability.
The sector’s integration of AI and automation will increase total efficiency while quickly servicing customers by establishing contemporary solutions like snack portals with heated and locker-style compartments. With the aid of mobile order-ahead tools, contactless service, and reduced person-to-person interaction, this new strategy will enable labels to serve customers at their leisure.
From in-store to official online portals to a variety of e-commerce platforms, these omnichannel customers are evaluating products and comparing their features across multiple platforms. Consumers now have multiple ways to interact with brands, and FMCG companies ensure that all their functions work together to provide a positive experience for their customers.
Brands are willing to collaborate with quick commerce, or e-commerce portals that guarantee quick delivery, for last-mile connectivity. There is fierce competition to see who can deliver to customers faster, even within those portals. Customers prefer branded and sealed as well as secure processed foods, resulting in a shift from the loose supply of these items to more labelled packaging.
To sum it up, the food processing industry in India has tremendous potential for growth, and the sector’s vision for the next decade should be to increase its contribution to the GDP and reduce food waste. The industry, farm sector, premier technical institutions, and government should work together to achieve this vision by adopting modern technologies, developing new products, and improving infrastructure and supply chain efficiency.