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Food Processing

The Ministry of Food Processing Industries (MFPI) was set up in July 1988 to give an impetus to development of food processing sector in the country. The Ministry is concerned with formulation and implementation of the policies & plans for the food processing industries within the overall national priorities and objectives. The Ministry acts as a catalyst for bringing in greater investment into this sector, guiding and helping the industry, and creating a conducive environment for healthy growth of the food processing industry. Within these overall objectives, the Ministry aims at better utilization and value addition of agricultural produce, minimizing wastage at all stages in the food processing chain by development of infrastructure for storage, transportation and processing of agro-food produce, induction of modern technology into the food processing industries, encouraging R&D in food processing for product & process development, providing policy support, promotional initiatives and facilities to promote value added exports, create the critical infrastructure to fill the gaps in the supply chain from farm to consumer.

Major Policy initiatives

  • Food processing has been identified as industry with employment potential.
  • Most of the processed food items have been exempted from the purview of licensing under the Industries (Development & Regulation) Act, 1951, except items reserved for small-scale sector and alcoholic beverages.
  • To ensure easy availability of credit, Government has included food processing industries in the list of priority sector for bank lending. NABARD has created a refinancing window with a corpus of Rs.1000 crore, especially for agro-processing infrastructure and market development.
  • Rs.150 crore earmarked for (National Horticulture Mission) NHM for terminal markets.
  • Food processing industries were included in the list of priority sector for bank lending in 1999.
  • Automatic approval for foreign equity upto 100% is available for most of the processed food items except alcohol and beer and those reserved for small scale sector subject to certain conditions.
  • Excise duty on processed fruit and vegetables was brought down from 16% to zero level in the Budget 2001-02.
  • In the budget of 2004-05 income tax holiday and other concessions announced for certain categories of food processing industries.
  • Under Income Tax Act, a deduction of 100% of profit for five years and 25% of profits for the next five years allowed in case of new agro processing industries set up to process, preserve and package fruits and vegetables.
  • In the Budget for 2007-08, the following fiscal incentives were announced:
    • Exemption limit of excise duty for small scale Industry (SSI) rose from Rs.1 crore to Rs.1.5 crores.
    • Excise duty on biscuits reduced from 8% to 0% whose retail price does not exceed Rs.100 per Kg.
    • Excise duty reduced from 8% to 0% on all kinds of food mixes including instant mixes.
    • Soya Bari (food supplements) and ready to eat packaged foods fully exempt from excise duty.
    • Excise duty on reefer vans (refrigerated motor vehicles) reduced from 16% to 8%. Customs duty also cut.
    • Custom duty on food processing machinery reduced from 7.5% to 5%.
    • Custom duty on sunflower oil (crude) reduced from 65% to 50% and of sunflower oil (refined) reduced from 75% to 60%.
    • Special additional duty of 4% waived in the case of refined edible oil.
    • Central sales tax reduced from 4% to 3% from April, 2007.
    • All services provided by Technology Business Incubators exempted from service tax.
    • Similarly their Incubatees whose annual business turnover does not exceed Rs.50 lakhs exempted from service tax for the first three years.

Growth Rate

The average rate of growth of food processing sector during the first four years of the 10th Plan period was @13.25% at current prices and @ 6.75% at 1999-2000 prices.

Plan Schemes

During the 10th Plan, the Ministry implemented Plan schemes for Technology Upgradation/Modernization/Establishment of Food Processing Industries, Infrastructure Development, Human Resource Development, Quality Assurance, R&D and other promotional activities.

In the 11th Plan, it has been proposed to continue assistance to the above schemes with higher levels of assistance. In the 11th Plan, the Ministry proposes to launch a revamped Infrastructure Scheme under which it will promote setting up of Mega Food Parks, cold chain infrastructure, value added centres and packaging centres. The Mega Food Park Scheme will provide backward and forward linkages as well as reliable and sustainable supply chain. The emphasis will be on building strong linkages with agriculture and horticulture, enhancing project implementation capabilities, increased involvement of private sector investments and support for creation of rural infrastructure to ensure a steady supply of good quality agri/horticulture produce. It will provide a mechanism to bring farmers, processors and retailers together and link agricultural production to the market so as to ensure maximization of value addition, minimize wastages and improve farmers' income. The Mega Food Park would be a well-defined agri/horticultural-processing zone containing state of the art processing facilities with support infrastructure and well established supply chain. The primary objective of the proposed scheme is to facilitate establishment of integrated value chain, with processing at the core and supported by requisite forward and backward linkages. It is envisaged that the implementation of the projects would be assisted by professional Project Management Agencies (PMA) from concept to commissioning. In 11th Plan it is planned to support establishment of thirty (30) Mega Food Parks in various parts of the country.

Vision 2015 on Food Processing Industries

A vision, strategy and action plan has also been finalized for giving boost to growth of food processing sector. The objective is to increase level of processing of perishable food from 6% to 20%, value addition from 20% to 35% and share in global food trade from 1.6% to 3%. The level of processing for fruits and vegetables is envisaged to increase from the present 2.2% to 10% and 15% in 2010 and 2015 respectively. The Cabinet has approved the integrated strategy for promotion of agri-business and vision, strategy and action plan for the Food Processing Sector, based on the recommendations made by the Group of Ministers (GOM).

Integrated Food Law

An Integrated Food Law, i.e. Food Safety and Standards Act, 2006 was notified on 24.8.2006. The Act enables in removing multiplicity of food laws and regulatory agencies and provide single window to food processing sector. Ministry of Health & Family Welfare has been designated as the nodal Ministry for administration and implementation of the Act.

National Institute of Food Technology Entrepreneurship & Management (NIFTEM)

The Ministry has set up a National Institute of Food technology Entrepreneurship & Management (NIFTEM) at Kundli (Haryana). The Institute will function as a knowledge centre in food processing. Certificate of Incorporation of NIFTEM as a section 25 Company under the Companies act 1956 has been obtained.

Source: National Portal Content Management Team, Reviewed on: 11-01-2011