MANTHAN

REPORT 2020
Food Processing
sector

National Institute of Agricultural Extension Management (MANAGE)

Rajendranagar, Hyderabad, 500030

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INDEX

S.No Topic Pg. No

1 Introduction 3

2 Indian Overview 3

3 Market Size 5

4 Segments of Food Processing Sector 7

5 India's Competitive advantage in Food Processing Sector 9

6 Government Initiatives 10

7 FDI In Food Processing 11

8 Opportunities in Food Processing Sector 12

9 Export Potential 17

10 Various Schemes and their achievements 18

11 Key Announcements in Union Budget 2020 21

12 Impact of COVID -19 22

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 Introduction
Food processing industry provides the vital linkage between industry and
agriculture and is of enormous significance for India's development. A well-
developed food processing sector with higher level of processing helps in the
reduction of wastage, improves value addition, promotes crop diversification,
ensures better return to the farmers, promotes employment as well as increases
export earnings. This sector is also capable of addressing critical issues of food
security, food inflation and providing wholesome, nutritious food to the
masses.
A well-developed food processing sector with higher level of processing helps
in the reduction of wastage, improves value addition, promotes crop
diversification, ensures better return to the farmers, promotes employment as
well as increases export earnings. This sector is also capable of addressing
critical issues of food security, food inflation and providing wholesome,
nutritious food to the masses.
Interventions across farm management, postharvest management,
modernization and capacity expansion, financial services, re-search and
development as well as skill development will help actualize the vast
opportunities in the sector. Several key initiatives by the Government, such as
according priority status to all agro- processing businesses, setting up of mega
food parks, allowing 100% FDI in food processing and cold chain
infrastructure, streamlining supply chains as well as facilitating exports, are
highly commendable and vital for realizing the sector’s truly immense
potential.

Indian Overview:
With India moving from a position of scarcity to surplus in food production the
prospects for increasing processing levels are enormous. The Indian food
industry is poised for huge growth, increasing its contribution to world food
trade every year. In India, the food sector has emerged as a high-growth and
high-profit sector due to its immense potential for value addition, particularly
within the food processing industry.

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According to the data provided by the Department of Industrial Policies and
Promotion (DIPP), the food processing sector in India has received around
USD 7.47 billion worth of foreign direct investments (FDIs) during the period
April 2000 - December 2016. The sector has the potential to attract even a
higher number of FDIs in the coming years. India is the second largest
producer of food in the world after China.
It has the potential to become food basket for world, considering the scope and
increasing demand for food processing.
The organized food processing sector employ more than 17.74 lakh people
(2013-14). As per NSSO 67th round, unorganized food processing sector
provides employment to 47.9 lakh people. Therefore, the sector as a whole
provides employment opportunities to more than 65 lakh people, which is
likely to reach 9 million by 2024.
The unorganized sector accounts for 42% of India’s Food Processing Industry.
The strength of the sector lies in the fact that India is the leading producer in a
number of commodities like cereals, banana, mango, chillies, ginger, milk,
meat, etc. However, the major cause of concern always lies in poor post-
harvest management infrastructure facilities. The post-harvest wastage has been
estimated to the tune of ` 92,651 crore per annum.
Accounting for about 32% of the country’s total food market, the Government
of India has been instrumental in the growth and development of the food
processing industry. Also, the allocation to food processing ministry has been
doubled to ` 1400 crore during 2018-19.

2014 2015 2016 2017 2018

World
food 1448248.6 1304998.95 1325685.67 1433362.50 1471089.2
export
World
food 1459120.6 1333359.41 1336423.20 1445981.58 1505427.5
import

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India’s Share in Global Food Trade (US$ Million)

India's food
34023.88
export to 37744.21 30417.56 29199.88 34434.32
world

India's food
import 19284.52 20783.16 21939.09 25064.67 19561.08
from world
% Share of
India's food
2.61% 2.33% 2.20% 2.40% 2.31%
export in
world
% Share of
India's food
1.32% 1.56% 1.64% 1.73% 1.30%
import in
world

Source: MOFPI Annual Reports

In spite of huge success that India has achieved in agricultural production, the
post-production wastage levels are unduly high, resulting in wastage of about of
` 440 billion worth of fruits, vegetables and grains every year. According to
ICAR-CIPHET study on post-harvest losses of major agricultural and
horticultural crops as well as livestock products, the losses in selected fruits were
found to be in the range of 6.70% -15.88%, the losses in vegetables varied from
4.58%-12.44%, losses in inland and marine fisheries were estimated to be 5.23%
and 10.52% respectively.
The assessed loss in milk sector was only 0.92%, whereas the losses in meat and
poultry sectors were 2.71% and 6.74% respectively. India has a strong raw
material base but it has been unable to tap the real potential for processing
(overall processing level of perishables is only 8%).

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Market Size:
The Indian food and grocery market is the world’s sixth largest, with retail
contributing 70% of the sales. It accounts for 32% of the country’s total food
market, one of the largest industries in India and is ranked fifth in terms of
production, consumption, export and expected growth. It contributes around
8.80 and 8.39% of Gross Value Added (GVA) in manufacturing and agriculture
respectively, 13% of India’s exports and 6% of total industrial investment.
The Indian gourmet food market is currently valued at US$ 1.3 billion and is
growing at a compounded annual growth rate (CAGR) of 20%. India’s organic
food market is expected to increase by three times by 2020.
The online food ordering business in India is in its nascent stage, but
witnessing exponential growth. With online food delivery players like
FoodPanda, Zomato, TinyOwl and Swiggy building scale through partnerships,
the organised food business has a huge potential and a promising future. The
online food delivery industry grew at 150 per cent year-on-year with an
estimated Gross Merchandise Value (GMV) of US$ 300 million in 2016.

Contribution of Food Processing Sector to Gross Value Added

(GVA):

Gross Value Added (GVA) By Food Processing Industries (FPI) at

Constant 2011-12 Prices

( Rs. in Lakh Crore)

Sr. Economi 2011- 2012- 2013- 2014- 2015- 2016- 2017-
No. c Activity 12 13 14 15 16 17 18
1 GVA -All 81.07 85.46 90.64 97.12 104.92 113.19 121.04
India
2 GVA 14.10 14.87 15.61 16.84 19.04 20.55 21.77
Manufact
uring
3 GVA- 15.02 15.24 16.09 16.06 16.16 17.17 18.03
Agricultur

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 e,
Forestry
And
Fishing
4 GVA-FPI 1.47 1.30 1.30 1.34 1.61 1.78 1.92
Source: National Accounts Division, Central Statistics Office

Segments of the Food Processing Sector

1.Fruits and Vegetables
India is the world’s 2nd largest producer of fruits and vegetables. The
government expects the processing in this sector to grow by 25 percent of the
total produce by 2025. In 2019-20, the total production in horticulture sector
(fruits and vegetables) is estimated at 320.48 million tonnes.

Top 5 Fruits and Vegetables Production (in

'000 MT)
51310
30808
21822 23262 19759
12546 5989 12801 9037
2327

2. Milk
India is the largest producer of milk in the world, with the production estimated
at 187.7 mn tonne in 2018-19.

Dairy Sector Distribution

5% 4% 1% 2% Liquid Milk
7% Ghee
Paneer
Curd
15% Butter
66% Cheese
Others

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3. Meat &Poultry
India is the largest producer of buffalo meat (1.5 mn tonnes in 2019) and the
second largest producer of goat meat (1 mn tonnes in 2019). India is also the
third largest egg producer (95 bn) and third largest producer of broiler meat (4
mn tonne in 2019)

Meat Sector Distribution

4%
Cattle

19% Buffalo
50%
Sheep
8%
14% Goat
Pig
5%

4. Marine Products
Total fish production in India is estimated at 13.0 MT during 2017-18. Andhra
Pradesh stood as the largest producer of fish with production of 4 mn tonnes
during 2017-18

Marine Sector Distribution

5%
Marine Fish

28% Inland Fish

Shrimps
67%

5. Grain Processing
India produces more than 250 mn tonne of different food grains every year.
Total food grains production reached 290.10 mn tonnes in 2019-20

Grain Sector Distribution

12% Rice

11% Wheat
41% Maize

36% Nutricereals

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6. Consumer food
Among the fastest growing segments in India; it includes
 Packaged food
 Aerated Soft drinks
 Packaged drinking water
 Alcoholic beverages

India’s Competitive Advantage in Food Processing Sector

India’s competitive advantage lies in its favourable climate, large agriculture
sector & livestock base, long coastline & inland water resources.
Particulars Units
Arable land (million hectares) 161
Area under irrigation (million 64.7
hectares)
Coast line (‘000 Km) 7.5
Bovines (million) 302

Commodities Production(million Global Share Global Rank

Tonnes)
Milk 187.7 22% 1
Pulses 23 25% 1
Buffalo meat 1.5 6% 5
Bananas 30 28% 1
Mangos 21 40.1% 1
Tea 1.3 28% 2
Rice 117.5 23% 2
Sugar 33 19% 1
Wheat 106 13% 2

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Government Initiatives
The Ministry of Food Processing Industries (MoFPI) is implementing PMKSY
(Pradhan Mantri Kisan SAMPADA Yojana)

 The objective of PMKSY is to supplement agriculture, modernize

processing and decrease agri-waste.
 It is an umbrella scheme incorporating ongoing schemes
 Under PMKSY the following schemes are to be implemented.
 Mega Food Parks.
 Integrated Cold Chain, Value Addition and Preservation Infrastructure.
 Creation/Expansion of Food Processing/Preservation Capacities.
 Infrastructure for Agro Processing Clusters.
 Scheme for Creation of Backward and Forward Linkages.
 Food Safety & Quality Assurance Infrastructure.
 Human Resources and Institutions.
Foreign Direct Investment (FDI) policy: FDI up to 100%, under the automatic
route is allowed in food processing industries.
 Agricultural and Processed Food Products Export Development
Authority (APEDA)– an apex organization under the Ministry of
Commerce and Industry – focusses on ‘export’ of scheduled products.
 Food processing has numerous advantages which are specific to Indian
context. It has capacity to lift millions out of poverty and malnutrition.
Government should develop industry in a way keeping in mind the
interests of small scale industry along with attracting big ticket domestic
and foreign investments.
 The entire food value chain in India is controlled by multiple ministries,
departments and laws. A comprehensive policy will ensure that various
initiatives across the departments are aligned to the overall goal of
ensuring availability, awareness, affordability, access, quality and safety
of food.

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  The target of ensuring food security for more than a billion people
requires a concerted effort by all stakeholders including government and
the food processing industry. In addition to private players and
government, industry bodies and academia will also have a crucial role in
the success of these initiatives.

FDI in Food Processing Industry:

As per extant Policy, FDI up to 100%, under the automatic route, is allowed in
food processing industries. Further, 100% FDI under Government route for
retail trading, including through e- commerce, is permitted in respect of food
products manufactured and/or produced in India
Data on foreign investment in India is maintained remittance wise, which is very
voluminous and is available in public domain at the website of Department of
Industrial Policy & Promotion at www.dipp.nic.in under the heading
`Publication’ at ‘SIA Newsletter’. However, the statement on financial year wise
FDI equity inflows from October 2014 to March 2019in food processing
industries, as maintained is as under

Government reviews FDI policy on an ongoing basis with a view to liberalise

and simplify the FDI, policy so as to provide ease of doing business in the
country leading to larger FDI flows

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Opportunities in Food Processing Sector

The Processed food market is expected to grow to $ 543 bn by 2020 from $

322 bn in 2016, at a CAGR of 14.6%.

 Milk sector
Introduce value-added dairy products viz. Cheese, smoothies, flavored milk,
custard, yoghurt and other ethnic Indian products

 Fisheries sector
Most marine exports are currently in the frozen form and there is immense
potential for exporting value-added products. Value addition and product
development for items such as ready-to-cook, ready-to-eat, canned and frozen
goods, etc. The need for proteins and the domestic consumer demand for fish
delicacies is at already always rising stage. Cleaned, portioned, deveined,
marinated ready to cook chilled fish varieties are a domestic consumers
favourite. With increased focus on health centered convenience foods this is
certainly an opportunity for the food processing industry to present an
innovative platter in this sector. The health-conscious consumer looks out for
preferences in fish products over other meats.

 Meat and poultry sector

New technology in meat and poultry processing, Egg powder plants, Hatcheries
include a few opportunities whereas New products - value-added products such
as frozen, chilled goods, RTC or RTE ethnic products or snacks in convenience
package are domestic consumers all time favourite and therefore opportunities
for the processing industry as well.

 Fruits and vegetables sector

India is the world’s largest producer of bananas, papaya, mangoes and guavas,
and the second-largest producer of potatoes, green peas, cabbages and
cauliflowers.

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 New technology to reduce wastage levels
Adequate infrastructure (cold chain, processing infrastructure, R&D for
processed food, packaging and innovative farm preservation systems) -
Packaging technology for convenience foods - Processed fruit-based ingredients
for ice cream, yoghurt, beverages. Other than processed fruits and vegetables,
even frozen and chilled products are an urban consumer’s most sought choice.
Organic products are also in demand amongst the health-conscious consumers

Due to evolving economic demographics and economic growth, India is likely to

drive the global food service industry. Some key aspects that drive the demand
in this segment are:

 Improving demand metrics of ready-to-eat products with more healthy

varieties of choices

 Impact of technology on the entire food service industry, from sourcing of

raw materials to reservations and on-demand delivery - Online
aggregators and third-party logistics service providers can take up the vast
opportunity. Key formats behind the markets growth are Quick Service
Restaurants (QSRs), Casual Dining Restaurants (CDR), Cafes, Frozen
Dessert Parlors, Lounges, Fine-Dining Restaurants.

The growth of the food grocery market is mainly driven by the dry food
grocery segment since the products involved are not only consumed in a
raw form, but also serve as raw material for food processing.

 Other growing segments are spices, perishables, fresh produce, other

processed food and beverages. As it deals with items of everyday
consumption, the market can never face a shortage of demand, thus
resulting in constant growth.

 The annual value of harvest and post-harvest losses of major agricultural

produce at the national level is estimated to be Rs 92,651 crore (US$14
Bn). Hence, the need for feasible cold chain solutions is critical.
Currently, about

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  60% of India’s cold chain storage capacity is held by the states of Uttar
Pradesh and West Bengal, where the majority of cold storages are used
for a single commodity: potato! There lies the opportunity for the food
processing industry across the states to focus on other nutritionally rich
and valuable products that are produced. With the budget allocation on
the positive side, the food processing industry certainly has opportunity to
try its innovative potential to have a hand on and deliver to the domestic
consumers demand for nutritionally rich processed food.

 Spice pastes: Supply chain infrastructure – this niche has investment

potential in food processing infrastructure, the government’s main focus
is on supply chain related infrastructure like cold storage, abattoirs and
food parks.

 The establishment of food parks – a unique opportunity for entrepreneurs,

including foreign investors to enter in the Indian food processing sector

Financial Support

 The Cabinet Committee on Economic Affairs, chaired by Prime Minister

Shri Narendra Modi has approved a Dairy Processing & Infrastructure
Development Fund” (DIDF) with an outlay of Rs 10,881 crore during the
period from 2017-18 to 2028-29.

 State of the Art Testing facility would be set up at 42 Mega Food Park to
promote Agri export from current US $ 30 billion to US $ 100 billion.

 Tomato, Onion and Potato processing- Operation Green has been

launched to promote FPOs, agro logistics, processing facilities and
professional management with a sum of Rs. 500 crore.

 Under the scheme of Mega Food Parks, MoFPI provides an assistance of

50 % of the project cost (excluding land), and 75% of the project in hilly
regions subject to a maximum of Rs 50 crore, for setting up the project. In

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  Addition to develop small clusters, a subsidy of 35% of the eligible cost,
or USD 1.5 million (whichever is less), is also being provided to agro-
processing clusters

 Financial assistance (grant-in-aid) under the scheme is limited to a

maximum of Rs 10 crore per project in relation to technical civil works
and eligible plant & machinery subject to the following.

 For storage infrastructure including Pack House and Pre cooling unit,
ripening chamber and transport infrastructure, grant-in-aid at 35% for
General Areas and at 50% for North East States, Himalayan States, ITDP
Areas & Islands, of the total cost of plant & machinery and technical civil
works will be provided. For value addition and processing infrastructure
including frozen storage/ deep freezers associated and integral to the
processing, grant-in-aid at 50% for General Areas and at 75% for North
East States, Himalayan States, ITDP Areas & Islands, will be provided.
For irradiation facilities grant-in-aid will be provided at 50% for General
Areas and at 75% for North East States, Himalayan States, ITDP Areas &
Islands.

Income Tax
Businesses involved in Processing, preservation and packaging of fruits and
vegetables, or integrated business of handling, storage and transportation of food
grains( starting operations from 1 April 2001) and in processing, preservation
and packaging of meat, meat products, poultry, marine or dairy products (staring
operations from 1 April 2009), are eligible for Profit Linked Tax Holiday under
Section 80-IB of the Income Tax Act 1961, as per follows:

 For the first five years, 100% of profits and gains derived will not be
taxable.

 For the next five years, there would be a tax deduction of 25% (and, 30%
in the case of a company)

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 Quantum of deduction under Section Section 80-IB (11A):
Assessee Period of % of Profit
Deduction(commencin eligible for
g from initial Deduction
assessment year)
Owned by a First 5 Years 100%
Company
Next 5 Years 30%
Owned by any First 5 Years 100%
other Assessee
Next 5 Years 25%

 Under Section 35-AD of the Income-tax Act, 1961, specified business are
eligible for investment linked deductions, receiving 150% weighted
deduction. And, these specified businesses are:
 Setting-up and operating a cold chain facility
 Setting-up and operating warehousing facility for storage of agricultural
produce
 Setting-up and operating a warehousing facility for storage of sugarBee-
keeping and production of honey and beeswax

Production of fertilizers in India

 Additionally, units that have been set up in an SEZ prior to 1 April 2021,
engaged in the manufacture or production of any article or thing are
eligible for the following deductions for profits and gains derived:
 For the first five years, 100% deduction of profits derived from exports
 For the next five years, 50% of profits and gains derived from exports
 And, for another five years, 50% of profits derived are subject to
deduction amount being debited to a “Special Economic Zone Re-
investment Account” and used for certain specified purposes (such as
purchase of plant and machinery).

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GST:
Ministry of Food Processing Industries, has streamlined the rates for products
under GST regime, at specified rates of 0% (Nil), 5%, 12%, 18% and 28%.
Project import scheme:
Under the Project Imports Scheme, industrial plants, irrigation projects and
power projects are eligible for concessional customs duty
Detailed mention of the concessional duty are:

 The basic customs duty rate for goods imported under the Project Imports
Scheme is 5%.and,for certain specified projects such as a specified drinking
water supply project, the basic
 Customs duty rate is 0%.
 After the introduction of GST, goods that were initially subject to
countervailing duty, are liable to an IGST at 18 %.
Export potential

 As per 2018-19 data, the Indian fruits and vegetables industry exported fruits
and vegetables worth INR 10,236.93 crores ($ 1,469.33 Mn). Of this, fruits
comprised of exports worth INR 4,817.35 crores ($ 692.01 Mn) and
vegetables comprised of exports worth INR 5,419.48 crores ($ 777.25 Mn).
Additionally, India exported 3,39,606.58 MT of other processed fruits and
vegetables globally worth of INR 2,804.99 crores ($ 402.47 Mn) during the
year 2018- 19.
 The country’s total export of processed food was valued at INR 31,111.90
crores ($ 4.121 Bn) in 2018-19 which included dried and preserved
vegetables and mango pulp.
 India exported 12,36,638.39 MT of buffalo meat products globally, which
was worth INR 25,168.31 crores ($ 3608.72 Mn), while the export of poultry
products stood at INR 687.31 crores ($ 98.42 Mn) during the year of 2018-
19.

 Exports of fish and fish products emerged as the largest group under
agricultural exports and export of marine products for the year 2018-19, at
13, 92, 559 metric tons and was valued at INR 46,589 crores ($ 6.73 Bn).
This rapid increase in the growth of seafood exports can be been mainly

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attributed to the boom in brackish water aquaculture. India was also one of the
key suppliers of frozen shrimp and fish internationally in the year 2019.

 India's export of dairy products was 1,13,721.70 MT to the world, worth INR
2,422.85 crores ($ 345.71 Mn) during the year 2018-19.

 Overall, India's exports of Processed Food was Rs. 31111.90 Crores in 2018-
19, which including the share of products like Mango Pulp (Rs. 657.67
Crores/ 93.97 USD Millions), Processed Vegetables (Rs. 2473.99 Crores/
354.75 USD Millions), Cucumber and Gherkins( Prepd. & Presvd) (Rs.
1436.08 Crores/ 205.84 USD Millions), Processed Fruits, Juices & Nuts
(Rs.2804.97 Crores/ 402.52 USD Millions) Pulses (Rs. 1680.18 Crores/
242.66 USD Millions), Groundnuts (Rs. 3298.33 Crores/ 473.81USD
Millions), Guargum (Rs. 4707.05 Crores/ 676.47 USD Millions), Jaggery &
Confectionary (Rs. 1606.32 Crores/ 230.14 USD Millions), Cocoa Products
(Rs. 1350.86 Crores/ 193.26 USD Millions), Cereal Preparations (Rs. 3859.37
Crores/ 553.17 USD Millions), Alcoholic Beverages (Rs. 2103.97 Crores/
301.71 USD Millions), Miscellaneous Preparations (Rs. 4072.98 Crores/
583.33 USD Millions), and Milled Products (Rs. 1060.13 Crores/ 151.85
USD Millions).

(Source:APEDA)

Achievements

 9 Mega Food Parks operationalized during 2014-18

 83 Cold Chain Projects operationalized, 3.9 lakh tonnes food processing
capacity created
 4 Abattoirs projects completed

Creation of quality testing food labs:

 36 labs accredited by National Accreditation Board for Testing and
Calibration Laboratories (NABL)
 MoUs for investment worth of Rs. 90,191 crore (US$13.56 billion)
signed during 'World Food India 2017' in November, 2017

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  A dedicated Investors' Portal and Mobile APP called 'Nivesh Sandhu'
launched by the Prime Minister during the inaugural function of the
World Food India 2017.

Achievements of MoFPI in 2019-20

1. Completion of 55 Projects under PMKSY

Of the targeted 58 projects under Pradhan Mantri Kisan Sampada Yojana
(PMKSY), 54 projects have been completed accounting for about 94% of the
target the details of which are as follows:

 Mega Food Parks-1

 Cold chain -41
 Unit Scheme-8
 Backward and Forward
Linkage-2
 Food Testing Laboratories:3
Smart Agro Mega Food Park in Nizamabad District, Telengana inaugurated on
06.09.2019.
The above projects are expected to leverage private investment of Rs.1140
crore against subsidy outgoing of Rs.381 crore.

1. Sanction of New Projects under PMKSY

106 new following projects have been sanctioned with grants-in-aid of

Rs.572.02 crore which are expected to leverage private investment of
Rs.1462.58 crore:

Cold Chain: 30
Agro-processing Clusters:10 Unit scheme-66
Transparency Measures
Dashboard for monitoring expenditure progress under PMKSY and feedback
receipt system from the promoters/beneficiaries of PMKSY Schemes have been
developed.

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Achievements of Technical Institutes under MoFPI

Achievements of IIFPT
Five new products developed (3 from traditional rice varieties and two
from millet based)
 One patent filed
 New sensor device developed for measuring moisture and temperature in
grain storage to monitor grain quality by using mobile App.
 India’s first indigenous food 3D printer
 Millet ice cream technology was transferred to M/s AP Fresh, Trichy on
28.08.2019.
Achievements of NIFTEM
 Pilot plants are commissioned, put in use by licensed users and for other
corporate trials. About a dozens of products are standardized for
commercial production.
 NIFTEM Kiosk (An outlet of various products) is made ready.
 A new lab on Agriculture and Environmental Science is made ready for
commissioning

Export Processing Zones

 Santa Cruz Electronic Export Processing Zone (Andheri East Mumbai)

 Falta Export Processing Zone ( JC Bose Road Calcutta)
 Cochin Export Processing Zone (Kakkanand, Cochin)
 Noida Export Processing Zone(Khel Gaon Marg, New Delhi)
 Madras Export Processing Zone(GST Road, Tambaram, Chennai)
 Visakhapatnam Export Processing Zone( Shripuram Junction,
Visakhapatnam)

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Special Economic Zones

A special economic zone (SEZ) is an area in which the business and trade laws
are different from the rest of the country. SEZs are located within a country's
national borders, and their aims include increased trade balance, employment,
increased investment, job creation and effective administration

Type of Special Economic Zones:

1. Free trade Zones(FTZ)
2. Export Processing Zones(EPZ)
3. Free Zones/Free economic zones (FZ/FEZ)
4. Industrial Parks/Industrial Estimates(IE)
5. Free ports
6. Bonded logistics Parks (BLP)
7. Urban Enterprise Zones

Key Points in the Union Budget

For the food processing ministry, the government has increased allocation to Rs
1,232.94 crore for the next fiscal from the revised estimate of Rs 1,042.79 crore.
In a major initiative to improve the health and nutrition profile of children and
adults in the country, the government announced Rs 35,600 crore provision for
nutrition-related programmes for the fiscal year 2020-21 the jump of over 22 per
cent in allocation for nutrition-related programmes.

Key Announcements in the Union Budget 2020

 Promoting Fisheries
By 22-23 Fish production to reach 200 lakh tonne 3,477 sagar mitras and
500 fish farmer producer organisation to involve youth

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  Doubled Milk Production
Proposed to double the milk production capacity from 53.5 MMT to 108
MMT by 2025

 Warehousing capacity
India has an estimated capacity of 162 MMT of agri warehousing, cold
storage and reefer van facilities. NABARD to map and geo tag such
facilities

 Kisan Rail
To build a national cold supply chain for perishables like meat milk and
fish

 Jaivik Kheti Portal

Online organic product markets to be strengthened

Announcements made under Aatmanirbhar Bharat economic

package for food processing and related sectors:

Following reforms have been announced by the Finance minister along with the
measures taken by Reserve Bank of India to give a boost to agriculture and
allied activities, animal husbandry and allied activities, food processing sector
and allied activities, fisheries and MSMEs in the mentioned sectors

INR 10,000 crores ($ 1.32 Bn) scheme for formalization of Micro

Food Enterprises (FME)

 With a vision to promote Prime Minister's vision 'vocal for local' with
global outreach, the Government of India launched the FME scheme.
 Scheme will help 2 lakh (200 thousand) micro food enterprises attain
above goals
 Existing micro food enterprises, farmer producer organizations, self-help
groups and cooperatives would be supported under this scheme.


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  Scheme will be based on a cluster-based approach (e.g. Mango in UP,
Kesar in J&K). Expected outcomes- improved health and safety
standards, integration with retail markets, improved incomes.
 Will also help in reaching untapped export market

INR 20,000 crores ($ 2.65 Bn) for fisherman through Pradhan

Mantri Matsya Sampada Yojana (PMMSY)

To address the critical gaps in fisheries value chain, PMMSY will focus on
integrated, sustainable, inclusive development of marine and inland fisheries.
Cage culture, seaweed farming, ornamental fisheries as well as new fishing
vessels, traceability, laboratory network will be key activities.

Animal Husbandry Infrastructure Development Fund – INR

15,000 crores ($ 1.99 Bn)
Aim to support private investment in dairy processing, value addition and cattle
feed infrastructure. Incentives to be given for establishing plants for export of
niche products

Beekeeping initiatives - INR 500 crores ($ 66 Mn)

The government will implement a scheme for infrastructure development related
to Integrated beekeeping development centres, collection, marketing and storage
centres, post-harvest and value addition facilities etc. Implementation of
standards and developing traceability system, capacity building with thrust on
women, development of quality nucleus stock and bee breeders.
This will lead to increase in income for 2 lakh (200 thousand) beekeepers and
quality honey to consumers.

From ‘TOP’ to TOTAL - INR 500 crores ($ 66 Mn)

Due to disruption in supply chains and farmers not being able to sell their
produce in the market, there was a need to prevent distress sale and reduction of
price of perishable produce at the farm level. Government of India will be

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extending Operation Greens from Tomatoes, Onion and Potatoes (TOP) to all
fruits and vegetables (TOTAL)

Scheme features will be as follows:

 50 % subsidy on transportation from surplus to deficient markets.
 50 % subsidy on storage, including cold storages.

Possible impact of agriculture reforms amendments to the

Essential Commodities Act

Reform: Agriculture food stuff including oilseeds, pulses, onions,

potato, cereals and edible oils to be regulated.
Impact

 Attract private sector investments in warehousing and storage

infrastructure and capacity expansion of food processing industries, retail
food-chains
 Improve effectiveness of flow of commodities from surplus areas to
markets with higher demand
 Minimizing price volatility- smoothen consumption of agri-horticulture
produce throughout the year
 Potentially will encourage commodity derivatives market
 Reduction in the subsidy cost -will reduce the excessive stocks currently
held by the government

Possible impact of agriculture marketing reforms

Reform: New central law to be introduced that will remove all

barriers to inter-state trade and introduce a framework for e-
trading of agriculture produce
Impact

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  Help farmers earn a larger portion of the ultimate sale price of their
produce
 Enable better markets and price discovery with no geographical
limitations on the available markets
 Help match demand and supply better in the long run
 Another step towards attaining free market operations in the sector

Possible impact of agriculture reforms: Farm-gate infrastructure

Reform: Financing facility of INR 1,00,000 crores ($ 13.24 Bn) will be

provided for funding agriculture infrastructure projects at farm-gate and
aggregation point to develop affordable and financially viable post-harvest
management infrastructure

Support for aggregators

 With relaxation of the APMC laws, aggregators will play a major role in
securing alternate buyers for farmers
 Currently, India has only 249 pack-house (near-farm aggregation points
where fresh harvest is brought for processing) against a requirement of
over 70,000 (National Centre for Cold Chain Development)

Employment generation

Such infrastructure development will also have a positive impact on creation of

village level employment. For e.g.: creation of above mentioned 70,000 pack-
houses has a potential to create 2.8 Mn village level jobs

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Possible impact of agriculture reforms

Reform: Pradhan Mantri Matsya Sampada Yojna: INR 20,000

crores ($ 2.65 Bn) have been associated with the scheme in the
recent reforms

 As per Department of Fisheries, Government of India –there will be an

additional fish production of 70 lakh tonnes (7 Mn tonnes) over 5 years:
employment to over 55 lakh (5.5 Mn) people and double exports to INR
1,00,000 crores ($ 13.24 Bn)
 Private investments in the field of cold storage and processing
infrastructure can be attracted
 Access of affordable credit to farmers for self-development of
infrastructure
 Marketing infrastructure will also enable farmers to earn better prices

Reform: Extending operation greens scheme to all fruits and

vegetables

 Efforts under the scheme will reduce price volatility for horticulture
products
 Subsidy on transportation between markets will help avoid hoarding
situations and match demand supply better within the country

Possible impact of beekeeping initiatives reform:

 Increases yield and quality of crops through pollination

 This will lead to increase in income for two lakh (200 thousand)
beekeepers and quality honey to consumers
 Provides honey and other beehive products like wax

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 Academic Committee
2019-2021
National Institute of Agricultural Extension Management

(MANAGE)

Rajendranagar, Hyderabad: 500030

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