Dr Prabodh Halde, chairman – West Zone, All India Food Processors’ Association (AIFPA) speaks to
Steena Joy about the growing FDI in the country’s food processing sector and why the industry needs priority status because of its potential to improve farmer welfare and employment generation
India has received foreign direct investment (FDI) of USD 463.44 million in the food processing sector in the first half of the current fiscal. Your comments.
Yes, India has already received US$ 463.44 million as FDI in the food processing sector in the first half of the current fiscal year and this amount is up 40 per cent compared to the same period last year. During last fiscal year India received a total of US$ 904.90 million and thus it is expected that this year the inflow will reach upto US$ 1200 by end of the year. This is very good news since when other sectors are not performing, food processing sector has received such a great investment and which will help overall growth of the sector and farmer’s welfare. This has happened due to positive step of the Indian government to allow 100 per cent FDI in this sector. It will help in capacity development, infrastructure development and employment generation in the sector.
The role of the government in driving investment to the sector?
The government has rolled out several initiatives to drive investment to this sector, like the flagship Scheme for Food Processing & Preservation Capacities (CEFPPC) under the Pradhan Mantri Kisan Sampada Yojana (PMKSY). The Pradhan Mantri Kisan Sampada Yojana (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) with an allocation of Rs 6,000 crore for the period 2016-20, is a comprehensive package which will result in creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet.
It will not only provide a big boost to the growth of food processing sector in the country but also help in providing better returns to farmers and is a big step towards doubling of farmers income, creating huge employment opportunities especially in the rural areas, reducing wastage of agricultural produce, increasing the processing level and enhancing the export of the processed foods.
The following are implemented under PM Kisan Sampada Yojana:
- Mega Food Parks
- Integrated Cold Chain and Value Addition Infrastructure
- Creation/ Expansion of Food Processing/ Preservation Capacities (Unit Scheme)
- Infrastructure for Agro-processing Clusters
- Creation of Backward and Forward Linkages
- Food Safety and Quality Assurance Infrastructure
- Human Resources and Institutions
- Operation Greens.
The need for upgrading India’s cold chain infrastructure.
As we know post-harvest fruits and vegetable losses in India are in tune of 20 to 30 per cent and cold chain infrastructure is a must for reducing the wastage and for value addition of products. The government has many schemes to promote cold storage development and it’s very important for product value addition.
New initiatives by All India Food Processors Association?
All India Food Processors Association is helping the Ministry of Food Processing (MOFPI) to make their various schemes popular and also helping our members in resolving various issues in area of food processing. We are also supporting FSSAI for various eat right initiatives for consumer safety. Organic, natural, traditional food are some key trends and areas which our association is focusing on. We are also focusing on innovation development and students participation. We believe that the Indian food processing sector should focus on more value addition and that this sector can solve many problems relating to farmer welfare.
Apart from promoting the food processing sector in the North East, which other regions have the potential to be developed as food processing hubs?
Apart from the North East, all hilly regions like Uttarakhand, Himachal, Jammu and Kashmir are potential areas due to raw material availability. Actually entire India needs to set up food processing hubs since processing should be close to market and many small and medium processing units should be encouraged for more employment generation. As said earlier, the more we process, the better it is for the farmer and for employment generation. This sector creates over 10 jobs per one crore invested. For other sectors, job generation per one crore investment is less than two. So for a populous country like India, both for farmer welfare and employment generation, the food processing sector should be given priority status and the government should bring more schemes all across the country.
Government initiatives
National Horticulture Board scheme for cold storage
Setting up of cold storage (of capacity above 5000 MT and up to 10000 MT) and their modernisation are eligible for assistance under the NHB Scheme of capital investment subsidy for construction/ expansion/ modernisation of cold storage for horticulture products (a sub scheme under MIDH). It is open ended credit linked scheme with scale of assistance @ 40 per cent of capital cost of project limited Rs 30.00 lakh per project in general area and 50 per cent limited to Rs 37.50 lakh per project in case of NE.
National Horticulture Mission (NHM)
Cold storage (long term storage and distribution hubs) up to 5000 MT capacity are eligible for assistance under the open ended scheme of NHM/ HMNEH (a sub scheme of MIDH). The assistance is extended as subsidies to credit linked projects @ 35 per cent of capital cost of project in general area and 50 per cent in case of hilly and scheduled areas.
Small Farmer Agri-Business Consortium (SFAC) assistance to cold storage
Setting up of cold storage as a part of a integrated value chain project are eligible for subsidy provided the cold storage component is not more than 75 per cent of total financial outlay. The scale of assistance as subsidy to projects is @ 25 per cent of capital cost and maximum ceiling to Rs 2.25 crore in general area and 33.33 per cent and maximum ceiling up to Rs 4 crore in case of NE, hilly and scheduled area.
Agricultural and Processed Food Products Export Development Authority (APEDA) assistance for cold chain
Setting up of cold chain are assisted by APEDA as a part of strategy to develop the industries relating to the scheduled products for export. The scale of assistance as 40 per cent subsidy subject to a limit of Rs 75 lakh for cold chain projects with mechanised handling system.
Food Processing Unit
Under Horticulture Mission For North Eastern Region and Himalayan States (HMNEH) a sub scheme of MIDH, food processing units for horticulture products are extended credit linked back ended capital investment assistance of 50 per cent of project cost (ceiling amount of project cost is Rs 8 crore) in J&K, Himachal Pradesh and Uttarakhand.
Venture Capital by Small Farmer Agri-Business Consortium (SFAC)
SFAC extents venture capital assistance in form of equity to agribusiness projects. The quantum of SFAC support is 26 per cent of promoter’s equity or amount of Rs 50 lakh whichever is lower in general area and 40 per cent of the promoter equity or amount of Rs 50 lakh whichever is lower in hilly and NE regions. This venture capital is repayable to SFAC after the repayment of term loan.
