30 Minute Interview

'The food processing sector is driving many other sectors'

Subodh Kant Sahai, minister of state for food processing industries (independent charge), Govt of India, feels that the sector will drive the Indian economy in the coming years, having reached a growth rate of 13.7 per cent. By Praveen K Singh

Subodh Kant Sahai Union Minister for Food Processing Industries

How has the Indian food processing industry developed over the years?

At present, I can say that the Indian food sector is in a state of turmoil. We were producing surplus during the first Green Revolution but there has not been enough investment in the sector in recent years. Other sectors like IT and real estate have become the focal point for investments. The long-established sector of agriculture where investments had already been made became the least priority area. As a result, we have reached a state of shortage and there is shortfall of eight million metric tons of wheat.

Secondly, there was a restricted market in the past and the government was the sole purchaser. But today, we have an open market and the government's role is restricted to keeping reserve and address issues that worry farmers.

How important is retail for this sector?

Retailing has induced the demand for food products. If we talk about the Indian market, it is prepared for ready-to-cook products. Retail is not limited to just domestic market; there are several international chains operating in the retail segment. Though we have not allowed FDI in the retail segment yet, companies are coming through the franchisee mode. The link for international market has been established and our field-fresh products are reaching international markets.

Reports suggest that Indian companies have been evading food safety norms.

The upcoming law on food safety and standards - Integrated Food Law - will be the ultimate check in terms of meeting the standards of European Union and other Western countries. We have written this law after consulting over 270 organisations under the government.

There were over 16 laws involved in food safety but they have now been streamlined and made into a single law - Integrated Food Law. The issue has gone to the health ministry and the authority to handle the issue is yet to come into existence. We are trying our best that it should come into operation as soon as possible. Secondly, the growth was linked with cluster farming for which Agriculture Produce Marketing Act (APMC Act) has to be amended. The states should amend the act and make way for contract farming to curb cluster farming, which is demand-driven. Most of the states have not formed any concrete policy for food processing industries. There's a need to formulate a Perishable Industrial Policy. We are also trying to have joint labs with European countries and have already signed with UK to develop 20 labs. We have signed up deals with Italy as well and are talking with Germany and France for joint ventures on food safety.

How do you see the sector grow?

Food processing industries is going to be on the driving seat of the Indian economy in the coming years. In terms of target, in the next five-year plan, there will be over 20 per cent usage of agri-products in processing and over 35 per cent towards value addition. Today, the percentage of usage of agri-products in food processing is just seven per cent. This will be an overall target for all sectors including meat, milk, marine products, fruits and vegetables, grain, beverage, wine and non-molasses beer.

What are the incentives the ministry is offering to new entrepreneurs?

We have increased the grant for setting up of a plant. We are offering Rs 10 crore for cold chains/supply chains, Rs 50 crore for food parks and mega food facilities, and Rs 10 crore for setting up of dairy and meat sectors.

Wide-ranging fiscal policy changes have been introduced. Excise and import duty rates have been reduced substantially. Many processed food items are totally exempted from excise duty. Custom duty rates have been substantially reduced on plant and equipment, as well as on raw materials and intermediates, especially for export production.