Journal of Rural Development, Vol. 32, No. (4) pp.

451-478 451
NIRD, Hyderabad.

FOOD PROCESSING INDUSTRY IN

INDIA : S&T CAPABILITY, SKILLS AND
EMPLOYMENT OPPORTUNITIES
Mohammad Rais,
Shatroopa Acharya* and
Neeraj Sharma**

ABSTRACT

This paper provides a detailed analysis of food processing industry in India, its
S&T capability, skills and employment opportunities. Food processing industry is slowly
and steadily becoming one of the major industries of our economy. Its share in GDP is on
continuous rise, with a CAGR of 8.40 per cent, from 2005-06 to 2009-10. Ther0e has
been a continuous increase in the total plan outlay amount from INR 650 crore in 10th
Plan; to INR 15077 crore in proposed outlay for 12th Plan. The sector is growing, but it
is yet to compete in the world market. India’s share in world export is meagre with
1.17 per cent. There is a wide gap between productivity and processing of items. The
factors which have been used to study food processing industry are S&T capability of
sector, its employment generation capacity and skills needed in the sector. The S&T
capability segment venture into the changing trend of technology, difference between
conventional and modern technology, the areas in which India is lagging behind. The
employment generation capacity highlights growth and size of the industry and skills
about the kind of human resources involved in the industry, the level of technology
used in the sector. The employment generation capacity of the sector is huge, but the
industry is not working at its potential. The labour force is highly unskilled, with 80 per
cent of them having educational level below 10th standard. The impact of a variety of
policies and programmes undertaken by government to develop food processing
sector has not been very encouraging. The state needs to strengthen its efforts in S&T
capability, infrastructure support and skill set in order to develop food processing
industry.

Introduction The processed food industry is divided

into the following broad segments:
Food processing is the transformation of
 Primary processed food – which includes
raw ingredients into food, or of food into other
products such as fruits and vegetables,
forms. Food processing typically takes clean,
packed milk, unbranded edible oil, milled rice,
harvested crops or butchered animal products
flour, tea, coffee, pulses, spices, and salt, sold
and uses these to produce attractive, marketable
in packed or non-packed forms.
and often long shelf-life food products.

* Senior Principal Scientist and Project Fellow, Respectively, CSIR-National Institute of Science, Technology &
Development Studies (NISTADS), Pusa Gate, K.S. Krishnan Marg, New Delhi-110 012.
* * Agriculture
Journal economist, Dwarka,
of Rural Development, New
Vol. 32, No. Delhi-110
4, Oct 077.
- Dec. : 2013
452 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

 Value-added processed food – which the burden on agricultural sector for creation of
includes products such as processed fruits their livelihood. This is due to their familiarity
and vegetables, juices, jams, pickles, with the agricultural sector which would make
squashes, processed dairy products (ghee, it easier to train and place them in food
paneer, cheese, and butter), processed processing enterprises. The multiplier effect of
poultry, and processed marine products, investment in food processing industry on
confectionary, chocolates, and alcoholic employment generation is also higher than any
beverages. other sector. Therefore, for the overall progress
of economy it is important that the farmers and
Across the world, food-processing is backward communities working in rural food-
considered to be a sunrise sector because of its processing units are treated at the top of the
large potential for growth and socio-economic growth process. Rapid and sustained poverty
impact. It not only leads to income generation reduction requires economic growth which is
but also helps in reduction of wastage, value inclusive and the one that allows people to
addition, and foreign exchange earnings and contribute to and benefit from it.
enhancing manufacturing competitiveness. In
today’s global market, quality and food safety In India, the food processing industry is
have become competitive edge for the highly fragmented and is dominated by the
enterprises producing foods and providing unorganised sector. A number of players in this
services. “With proper investment in food industry are small. About 42 per cent of the
processing, technical innovation and output comes from the unorganised sector, 25
infrastructure for agriculture sector, India could per cent from the organised sector and the rest
well become the food basket of the world” from small players. Though the unorganised
(Punjabi Meeta, 2007). The existing level of segment varies across categories, approximately
processing and the extent of value addition are 75 per cent of the market is still in this segment.
very low as compared to other developing The organised sector is relatively bigger in the
countries. In India, the food processing industry secondary processing segment than the primary
is ranked fifth in terms of production, processing segment. Increasing urbanisation,
consumption, export and expected growth consciousness on health and nutrition and
(MOFPI, 2007). A strong and dynamic food changing lifestyle are changing the consumption
processing sector plays a significant role in habits of India. The number of working women,
diversification of agricultural activities, single students/professionals and nuclear
improving value addition opportunities and families are creating demand for processed
creating surplus for export of agro-food products ready-to-eat foods. Growth of organised retail,
(Merchant, 2008). Food processing accounts for which makes the processed food readily
about 14 per cent of manufacturing GDP, i.e. available, is also driving growth of food
` 2,80,000 crore, and employs about 13 million processing.
people directly and 35 million people indirectly.
Its employment intensity can be seen by the The paper endeavours to analyse the
fact that for every ` 1 million invested, 18 direct food processing industry in its current form in
jobs and 64 indirect jobs are created in organised India. It will primarily focus on S&T issues related
food processing industry only (MOFPI, 2010). to food processing [Link] paper looks into
the various challenges faced by the industry, and
It is widely accepted that the food the future prospects of sector, the employment
processing sector is the most appropriate sector generation capability of industry, and the skills
for creating jobs for rural poor, and thus reduce possessed by the workforce; it also deals with

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 453

various public sector initiatives implemented are available up to 2010-11, but there is no
through various policies, programmes and distinction between food products industry and
schemes of government. food processing industry. There are no data
available after 2010 on food processing industry
Methodology from NSSO and ASI.
We reviewed the relevant literature and Overview of Indian Food Processing
analysed secondary data available on food Industry
processing sector. The data sources are from
National Sample Survey Organisation (NSSO), In the post-Independence period, India
National Skill Development Corporation (NSDC) witnessed rapid growth in food- processing
report on Human Resource and Skill sector specifically during 1980s. It followed the
Requirements in the Food Processing first phase of the Green Revolution that had
Sector, Study on mapping of human resource skill resulted in increased agricultural production and
gaps in India till 2022, National Bank for the need for its post-harvest management. The
Agricultural and Rural Development (NABARD) importance of the sector was realised by the
occasional paper on Status and Potentials of business community leading to diversification
Village Agro-Processing Units/Industries, 2005, from grain trading to processing (Kachru, 2006).
Annual Survey of Industries (ASI) reports of the Initially it was rice processing which was
year 2010-11, Ministry of Food Processing followed closely by wheat milling, paper and
Industry (MoFPI) strategic plan and others. The pulp industry, milk processing sector, jute
NSSO data belong to 56th and 62nd rounds. The industry, sugarcane processing and oils
other reports which were consulted are Planning extraction through solvent plants. In some areas
Commission Working Group report on 12th Five like the solvent extraction industry, the growth
Year Plan. Food Processing and Agribusiness in installed processing capacity has been far
(ASSOCHAM, 2009), Processed Food and higher than the supply of the raw materials.
Agribusiness: Opportunities for investment in However, in other areas like fruits and vegetable
India (FICCI, 2007), FICCI survey on challenges processing, the growth has not been
in Food Processing Sector, 2010. encouraging due to poor demand for processed
products by the consumers. In such cases, the
Limitations: Access and availability of same set industry has also not been able to develop the
of data on food processing industry across demand adequately. The low levels of
different years was a big constraint. There was processing are driven primarily by the food habits
no separate code for food processing industries of the population. Fresh fruits and vegetables
till 2008 in Annual Survey of Industries and are preferred compared to processed fruits and
National Sample Survey Organisation [Link] vegetables (Deloitte, 2009).
Food and Processing industries are included in
Food and Beverages industry according to Even after a strong agricultural production
National Industrial Classification (NIC), 2004 and base, India’s food processing industry is still
in Food Industry according to NIC, 2008. The last under-developed. The highest share of the
survey done on industries by NSSO was in processed food is in the dairy sector, where 35
62nd round (July 2005-June 2006). Before that per cent of total produce is processed, of which
manufacturing industries were surveyed in only 15 per cent is processed by the organised
rounds 3rd, 10th, 14th, 23rd, 29th and after the sector. The processing level is around 2.2 per
launching of Economic Census (EC) in 1977, the cent in fruits and vegetables, 21 per cent in meat
industries were again surveyed in rounds 33rd, and poultry products. Of the 2.2 per cent
40th, 45th, 51st, 56th and 62nd of NSSO. In ASI data processing in fruits and vegetables only 48 per
Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013
454 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

cent is in organised sector remaining in share of food processing industry in GDP has
unorganised sector (Merchant, 2008). Food and gone up to ` Rs.44,93,743 crore in 2009-10
food products are the biggest consumption from ` 32,54,216 crore in 2005-06, with
category in India, with spending on food Compound Annual Growth Rate (CAGR) of 8.40
accounting for nearly 21 per cent of India’s GDP per cent. CAGR for total manufacturing sector
and with a market size of ` 9,050 billion. The during the same period has been 9.35 per cent
( Table 1).
Table 1: Contribution in GDP from 2004-2010
Contribution to GDP (` in crore) at 2004-2005 prices CAGR
2004- 2005- 2006- 2007- 2008- 2009- 2005-06
2005 2006 2007 2008 2009 2010 To
2009-2010
Manufacturing 453225 499011 570436 629052 655775 713428 9.35
Food
processing
industry 44355 47690 52164 57320 67122 66078 8.49
Registered
food
processing
industry 22148 26780 30710 34752 43893 43910 13.16
Non-registered
food
processing
industry 22207 20910 21454 22568 23229 22168 1.47
Total GDP 2971464 3254216 3566011 3898958 4162509 4493473 8.40

Data Source: NAS, 2011.

A study by McKinsey reiterates the below 5 acres of land sizes. Presence of food
importance of the food sector in India. It indicates processing industry also increases the hired
that food in India has an economic multiplier of workforce in farms. It is over 75 per cent for
farms associated with industry in comparison to
[Link] is to say that for every rupee of revenue
average of 72 per cent of total hired workforce
from food, the economy at large gets ` 2-2.50.
in agriculture (Mehta, 2012). Even after all these
This phenomena was highlighted in a study done benefits, farmers and the private sector are yet
in Uttar Pradesh for knowing the contribution of to exploit the full potential of food industries in
agro-industries in generation of income and [Link] is a big market for products like sugar,
employment generation for farmers, it was found coffee, tea and processed foods such as sauce,
out that the farmers involved in food processing jelly and honey. The market for processed meat,
industry as suppliers are able to increase their spices and fruits is equally large. Tripling of the
income to the extent of 69 per cent for large size of industry by 2015 is expected to generate
farmers, followed by 13 per cent for farmers who direct employment of 28 lakh persondays and
own 10 to 20 acres of land while it increased an indirect employment of 74 lakh persondays
lowest at 0.69 per cent for farmers owning land (MOFPI, 2007).

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 455

India is the largest producer of milk, fruits, economy, generating huge employment
pulses, cashewnuts, coconuts and tea in world opportunities and increase in income.
and accounts for 10 per cent of the world fruit
production. Confederation of Indian Industry Still, there are significant constraints
estimated that the food processing sector has which, if not addressed sooner, can impede the
potential of attracting US$ 33 billion (` 1, 50,000 growth prospects of food processing industry in
crore) of investment in next ten [Link] Indian India. At present, our share in exports of
domestic food market is expected to grow by processed food in world trade remained at about
nearly 40 per cent of the current market size to 1.5 per cent or ` 16 billion (Bhuyan, 2010).
` 12,900 billion by 2015 and ` 17,200 billion by Competitiveness of Indian export items are
2025 (World of Food India, 2011; Merchant, coming down, eg. India slipped from first to third
2008). The state wants to fully utilise the rank in tea export. It is no longer competitive
untapped potential of the sector, and generate even with Vietnam in marine products and
more revenue from the sector. If the policies of spices. Indian exporters are largely small scale,
government towards food processing industry often undercut each other, export low value-
are analysed, there also it comes out that added products to small traders/agents overseas
according to the vision 2015, the food or bulk packaged commodities for re-processing
processing industry is moving towards higher and re-packaging overseas where real value
avenues, for example, increase in the level of addition takes place. According to Annual Report
processing of perishables from 6 to 20 per cent, of MOFPI, 2008-09, India produces 105 million
value addition from 20 to 35 per cent, increase tonnes of milk, 150 million tonnes of fruits and
in share of global food trade from 1.5 to 3 per vegetables, 485 million livestock, 230 million
cent. These targets can be achieved if policies tonnes of foodgrain, 7 million tonnes of fish, 489
are implemented properly and international million poultry and 45, 200 million eggs, and still
standards match, then food processing industry our presence at world stage is even less than
can become the leading industry of India’s 1.5 per cent.

Figure 1: Export Share of Various Countries in World Processed Food Market

Export Share in the World

Source: NMCC, 2009.

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

456 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

Having analysed the general scenario of Suguna poultry etc., in meat processing and
food processing industry, its contribution in packaging has accelerated growth of this
national income, and in international trade, we industry segment. Meat production is estimated
will be analysing the major segments within food at 6.5 MT during 2007-08, which is around 2 per
processing industry, the growth of food cent of world meat [Link] contribution
processing across various states, and its role in by bovine, ovine, pig and poultry is 43, 12, 8 and
generating employment and skill development 37 per cent, respectively (Source: NPC, 2009).
in the sector.
Fish & Marine Products : The dietary habits
The major segments in the Food of the people all over the globe are changing
Processing sector comprise fruits and vegetables, fast and India is gearing up to produce and supply
dairy, edible oils, meat and poultry, non-alcoholic value added products in tinned packs by
beverages, grain-based products, marine adopting the latest technologies and by tapping
products, sugar and sugar-based products, the unexploited and under-exploited fishery
alcoholic beverages, pulses, aerated beverages, resources. Value addition has been considered
malted beverages, spices, and salt. Out of these as the thrust area. Indian seafood processing units
segments, dairy (16 per cent), grain-based are being encouraged to go in for value addition
products (34 per cent), bakery-based products and export through setting up new units,
(20 per cent), and fish and meat products (14 expanding their capacity and diversifying their
per cent) contribute to a major portion of current activities etc., for value addition. The
industry revenues, apart from the manufacture export of marine products has steadily grown
of beverages.
over the years-from a mere ` 3.92 crore in 1961-
Fruits and Vegetables : F&V processing is 62 to ` 8607.94 crore in 2008-09. Marine
dominated by unorganised players, who occupy products account for approximately 1.1 per cent
a share of 70 per cent in the total market size. of the total exports from India (Source: NPC,
Over the last few years, the industry has witnessed 2009).
rapid growth of Ready to Eat foods, frozen
vegetables, processed mushroom [Link] major Snacks : The Indian snacks market is estimated
challenge with this sector is non-availability of to be worth ` 150 billion with the organised
infrastructure facility to store produce. The segment accounting for half of the market share
cultural preference for fresh fruits and and is growing at a rate of 15-20 per cent. The
vegetables dominates over processed items. unorganised share is roughly ` 75 billion and is
currently growing at a rate of 7-8 per cent. Potato
Dairy: According to Dairy India 2007 estimates, chips and potato based products occupy almost
the current size of the Indian dairy sector is 85 per cent share of the Indian snack market
` 3133.50 billion and has been growing at a rate (Source: PC, 2009).
of 5 per cent a year. The dairy sector is mainly
unorganised due to which the products do not Beverages : The market for carbonated drinks
match international standards. In 2011, the value in India is worth US$ 1.5 billion while the juice
of milk output from livestock is around ` 240000 and juice-based drinks market accounts for US$
crore and the value of dairy products market is 0.25 billion. Growing at a rate of 25 per cent, the
around ` 400000 crore (Source : NDRI, 2011). fruit-drinks category is one of the fastest growing
segments in the beverages market (Source: NPC,
Meat & Poultry: Entry of many organised
2009).
players like Godrej, Venkateshwara Hatcheries,

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 457

Figure 2: Share of Major Segments of Food Processing Industry in Revenue Generation

in 2010

Source: ASI, MOFPI, 2010.

Major food processing States in India are per cent, and a centre for edible oils and dairy),
Andhra Pradesh (13.4 per cent of India’s food Maharashtra (14 per cent, and a centre for fruits,
processing industry, and a centre for fruits, vegetables, grains and beverages), and Uttar
vegetables, grains and livestock products viz. Pradesh (12 per cent, across almost all product
poultry, dairy, fisheries, meat, etc.), Gujarat (12.7 categories).

Figure 3: Major Food Processing States in India

Source: ASI, 2010.

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

458 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

Figure 3 demonstrates that there is and urban areas. The OAME consist of
uneven development of food processing fragmented primary processing units which are
industries in India, most of the States have not mostly home-based (Graph 1). The higher share
fully capitalised their resources, and most of the of OAME leads to non-adherence to quality
produce is getting waste. This figure also standards, low income generation, and less skill
demonstrates the fact that there is huge gap development. In OAME, it’s the same work which
between numbers of food processing industries continues for generation, thus leading to
present in different States. stagnation of creativity and development of
technology.
The food processing industry has strong
backward linkages with rural economy, as all the The study by Sarkar (1995) indicated that
raw material is produced by rural people. Hence, the Own Account Enterprises (OAE), the smallest
any growth in food processing industry, positive size group in the unorganised sector, is
or negative, will have a direct impact on economy disadvantageously positioned in terms of
of rural India. According to NABARD (2005-06), backward linkage, raw material concentration
the share of agro-industry in village level rural index and size of market factors. Their ever
industry in terms of number of enterprises, total diminishing advantages lie in dispersed raw
employment and gross value added were 83, 78 material availability and sectors where processes
and 72 per cent, respectively. Out of the agro- are difficult to standardise. Further, raw material
processing sector in rural areas, the food concentration index and direct backward linkage
processing industry is the second most important are positively and significantly correlated. It
industry, in terms of revenue generation. But signifies that food-industries using larger
there is a huge productivity gap because of the proportion of material inputs also have added
use of traditional technology in production. advantage in geographically concentrated
In rural areas, the food processing industry availability of raw materials used in production.
is mainly unorganised. According to NSSO Whereas the advantages of factory sector lie in
classification, there are two types of setup in terms of larger market, higher linkages and
unorganised sector, one is own-account concentrated availability in raw material.
enterprise and another is establishment. An own- Specialisation of agricultural production in
account enterprise is an enterprise which is run different regions, higher income level by
without any hired worker employed on a fairly expanding size of market and better
regular basis, and an establishment is the one transportation facilities are likely to eat into the
which employs at least one hired worker on a location advantages that the OAME still possess.
fairly regular basis.
In the unorganised sector, the OAME have With the increase in preference for
the highest number of enterprises in both rural processed food in India, there is a significant

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 459

Graph 1: Total Number of Unorganised Food Processing Industries in India in 2006-07

Number of enterprises in thousands

Division of enterprises in rural and urban sector

Source: NSSO 62nd round, February 2008.

increase in the number of industries in organised a very encouraging view of food processing
sector. The sector has grown at 31 per cent in the industry.
last three years (Table 2). This development gives

Table 2: Total No. of Factories in Organised Food Processing Sector from 2008 to 2011
Year No. of factories
2008-09 25854
2009-10 26164
2010-11 34023
Source: ASI, December 2011.

India’s strong agricultural base, variety of presence of food processing Multi National
climatic zones and accelerating economic Corporations (MNC’s) in different States in India.
growth hold significant potential for food The highest number of MNC’s are present in
processing industry, and provide a strong Andhra Pradesh (6127), followed by Tamil Nadu
attraction to foreign investment. The foreign (3589) and Maharashtra (2316). These numbers
players are able to sense enormous unexploited show that those States which have provided
potential, and are continuously increasing their some incentives through policy initiatives in the
investment in food processing [Link] sector food processing industry are able to attract
has been able to attract around INR 45.19 billion foreign investment. They provide significant
Foreign Direct Investment (FDI) during 1991- investment subsidy, sales tax exemption on a
2005 which is 3.3 per cent of total FDI inflow in fixed capital and rebate on power bill, thus making
India, and has been ranked as 7th sector attracting themselves a perfect choice for investment.
largest FDI in India. There is quite a significant

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

460 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

Graph 2: State-wise Number of MNC Food Processing Factories in Operation

Factories in Operation

Source: ASI, MOFPI, 2010.

The presence of FDI is beneficial to the farmer families across six States. They provide
retail segment also. The presence of FDI cutout farmers with superior seeds, timely agricultural
the middlemen, thus giving a platform to the inputs and supply of agricultural implements free
farmers to sell their produce to industry at a of [Link] company has an assured buy-back
profitable price. There has been some hesitation mechanism at a prefixed rate with farmers. This
regarding government decision to allow FDI in insulates them from market price fluctuations.
food retail sector, but some of the farmers' Through their tie-up with State Bank of India,
associations like All India Vegetable Growers they help farmers get credit at a lower rate of
Association (AIVGA), Bharat Krishak Samaj, interest. The company arranges weather
Consortium of Indian Farmers Associations (CIFA), insurance for farmers through tie-up with ICICI
People for Environment Horticulture & Livelihood Lombard. They have a retention ratio of over 90
of Himachal Pradesh have come out in the per cent, which reveals the depth and success
support of FDI, as they expect that FDI will roll of their partnership with farmers. In 2010,
out produce storage centres, increase market contract farmers in West Bengal registered a
access, reduce the number of middlemen and phenomenal 100 per cent growth in crop output,
enhance returns to farmers. Then there are creating a huge increase in farm income. The
various examples where presence of Multi- remarkable growth has resulted in farmers
national Corporation has changed the fortune receiving a profit between ` 20, 000– 40,000
of farmers of that area. Here, study of two cases per acre, as compared to ` 10000–20,000 per
is given which strengthen the fact that FDI will acre in 2009.
bring a good change for the farmers. Case study 2: Bharti Walmart Initiative
Case study1: PepsiCo India Corporate Social Responsibility (CSR)
PepsiCo India‘s potato farming initiatives in Bharti Walmart are aimed at
programme reaches out to more than 12,000 empowerment of the community thereby

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 461

fostering inclusive growth. Through their the laws should be properly implemented such
philanthropic programmes and partnerships, they that small retailers are safeguarded, the traditional
support initiatives focused on enhancing retailers should be upgraded and wholesale
opportunities in the areas of education, skills markets should be upgraded to serve retailers
training and generating local employment, and farmers better. The policy should work on
women empowerment and community the line of “Competitiveness with inclusiveness”.
development. In conjunction with the farmers‘
One of the sectors which is attracting a
development programme in Punjab,
huge attention from global market players as
community-building activities have been
well as from domestic players is fruit and
implemented in village, Haider Nagar. Due to
vegetable processing sector. There is a sudden
lack of sanitation facilities, households tend to
surge in demand for these products and market
use the farm fields, thereby affecting yields and
is trying to cope up with the demand. India is
impacting the produce that is being supplied to
the second major producer of fruits and
stores. In order to improve the yields and the
vegetables after China, but our fruit and
community‘s way of life, the company is working
vegetable processing industry is making a very
on the issues of Sanitation and Biogas, Education,
slow progress. In last 16 years, only 2068 new
Awareness Building and Health and Hygiene.
licenses have been issued for the fruit and
The presence of FDI will definitely act as vegetable processing industries, marking only
a boon for the investors, farmers and everyone 50 per cent rise in the number of industries.
associated with food processing sector, but there These facts again prove that there is higher
is a strong need to regulate the modern retail, preference for fresh fruits and vegetables.

Graph 3: Fruit and Vegetable Processing Licensed Industries (1994, 2004 and 2010)

No. of Units

Years

Source: [Link], 2010.

Till now we have studied that the food growing in some States at a very fast pace
processing industry is growing at a significant (Andhra Pradesh, Maharashtra, Tamil Nadu), but
rate. There is a continuous increase in the some places are yet to mark their place
number of [Link] is a decent presence especially north-east. But, overall the industry is
of foreign capital in the sector. The industry is growing, which is a positive sign.

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

462 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

With the kind of growth the industry is various usable products using conventional and
registering, it is important to know about its modern post-harvest and food processing
technology, its income and employment technology. It involves operations like cleaning,
generation capability and skills needed in the grading, drying, storage, milling, packaging,
sector. transport, marketing and utilisation. At the end
of each operation, value is added to the product.
Technological Capability of Food The lowest and the highest monetary values of
Processing Industry a food commodity are, respectively, when it is in
raw and fresh form and when it is in processed
The incoming of FDI and increase in the
and ready to consume/eat form. Post-harvest
number of food processing industries, highlights
and food processing technology are commodity
the importance of science and technology
and location-specific. It enhances and augments
capability of our food processing industries. A
per capita food availability from a unit arable
well developed technology infrastructure will
land and other resources by preventing avoidable
add on to other incentives which India enjoys in
post-harvest losses and adding value to the fresh
food processing industry. In India, food processing
agro-produces. It also creates opportunities for
dates back to the pre-historic age when crude
employment and income generation. Integration
processing including various types of cooking,
of production agriculture with on-farm primary
such as over fire, smoking, steaming, fermenting,
processing is needed to have higher and
sun drying and preserving with salt were in
sustainable production, productivity and better
practice. Foods preserved this way were a
quality end products for domestic and export
common part of warriors’ and sailors’ diets. These
markets. It, therefore, demands establishment
crude processing techniques remained
of Agro-Processing Centres in the production
essentially the same until the advent of the
catchments itself to facilitate backward linkage
Industrial Revolution. Modern food processing
with farmers, have fresh and best quality raw
technologies, in the 19th century were also
food materials for processing and value addition,
largely developed to serve military needs. In the
minimise material movements, check migration
early 20th century, the space race, change in food
of rural people to urban areas for jobs and thereby
habits and the quality consciousness of the
reducing pressure on public utilities in urban
consumers in the developed world furthered the
areas. Such centre would be a very strong tool
development of food processing with
for rural reconstruction and its upliftment. It
advancements such as spray drying, juice would help in reducing rural- urban disparity and
concentrates, freeze drying and the introduction ensuring household food and nutritional security
of artificial sweeteners, colourants, and for all at an affordable cost. The technology is
preservatives. In the late 20th century, products available but political will and commitment is
including dried instant soups, reconstituted fruit required to implement the programme to shape
juices, and self-cooking meals such as ready-to- a new India in the new millennium where
eat food rations etc., were developed. But, in everyone would be healthy and happy. It is in
technological advancement and use, India is far the interest of the nation and its people.
behind other countries. Most of the work is done
In India, the post-harvest losses are to the
manually, and international standards are
tune of ` 76,000 crore per annum, giving out a
compromised.
gruesome picture of industry. A substantial
India produces about 450 million tonnes amount of these losses could be prevented if
of raw food materials of plant and animal origin appropriate agro-processing centres having
which are refined, stored and transformed into backward linkage with farmers to ensure

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 463

additions to the raw food materials through

constant supply of quality raw food materials are
primary and secondary/tertiary processing in India
established and operated. The two major goals
are 75 and 25 per cent, respectively.
of post-harvest technology are loss prevention
and value addition to the raw food commodities Now, we will explore some of the
through preservation and processing. Raw food
conventional and improved agro-processing
materials are cleaned, graded and then they are
technologies which are used in food processing
either stored or processed. Processing is done to
industry. Indian food processing industry is
make raw commodities edible through primary
growing at a healthy rate, and two sectors which
and secondary processing and ready to eat are driving the growth are dairy sector and
through tertiary processing. Estimated value
horticulture sector.
Table 3: Conventional and Improved Agro-processing Operations Used in Food
Processing Industry
Operation/activity Conventional technology Post-harvest technology

Threshing Manual beating and Mechanical threshing

animal/tractor treading with improved design
of threshers
Winnowing Manually with ordinary Mechanical winnowing with
baskets manual mechanical power.
Cleaning Manually operated SUPA, a Manual/power operated
simple device but of low cleaner cum-graders.
capacity
Drying Open yard sun drying Solar dryers or heated air
dryers using
mechanical power.
Storage Earthen pitchers, mud bins Metal bins, brick structures
or bag storage and concrete silos of
improved designs.
Milling Hand and foot pounding, rice Modern rice, dal and
hullers, stone grinders, oil flourmills of different
ghanis, etc. capacities, oil expellers,
solvent extraction plants.
By-product utilisation Direct feed and fuel uses Solvent extraction of rice
bran and oil cakes, pelleted
animal feed, etc.
Marketing Selling raw materials to Selling of cleaned and
middlemen of trade at low graded produces, value
prices added products directly
to super/cooperative
markets for better
profitability.
Preparation and utilisation Open vessel cooking and Pressure and microwave
traditional food preparations cooking. Nutritionally
balanced diet/recipes. Use
of refrigerators, grinders/
mixtures.
Source: Ali, 1999.
Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013
464 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

Dairy Sector 15 plants in India have initiated industrial

India is currently the largest producer of production of khoa with daily output of 1 to 4
milk in the world, a status it has maintained since tonnes using continuous khoa making machine.
the late nineties. Further, India is also self- The entire traditional technology can be
sufficient in milk. This has been largely achieved improved and modernised by employing
through a combination of favourable policies mechanical systems such as casein parocess for
and an institutional network that has helped chhana and paneer making. Shelf-life of
support millions of rural households in pursuing pasteurised milk could be extended by adoption
their livelihoods through small-scale dairy of higher pasteurisation conditions,
farming. About one-fifth of the milk produced is Lactoperoxidase (LP) - system, bactofugation
collected and processed by the organised dairy technique, micro-filtration technique, electrical
sector. Cooperatives now link more than twelve process, thermisation process or use of bio-
million small-scale dairy producers to urban [Link] sweets are also gaining wide
markets and provide them a stable source of acceptance in South Asian and African countries,
income. India is witnessing winds of change UK, Canada and the USA.
because of improved milk availability, a change- New Whey Products : In India, whey is
over to market economy, globalisation, and the obtained during the manufacture of paneer,
entry of the private sector in the dairy industry. chhana, casein and shrikhand. It has been
The value addition and variety in the availability estimated that about one million tonnes of whey
of milk products are on everybody’s agenda. is annually derived as a by-product which
There is an increasing demand for new products possesses about 70,000 tonnes of nutritious
and processes. The main reasons are - an solids. Whey obtained in our country as by-
increase in disposable incomes; changes in product is mostly thrown away as waste. No
consumer concerns and perceptions on proper attempts have so far been made
nutritional quality and safety; arrival of foreign particularly on a small scale to exploit this by-
brands; increasing popularity of satellite/cable product. Considerable economic benefit can also
media; and availability of new technologies and be secured from prompt utilisation of the whey.
functional ingredients. Whey can be converted into a range of products
viz. whey powder, lactose, high protein whey
In India, milk and milk products are powders, whey protein concentrate, granulated
inseparable part of socio-cultural life. The high protein whey powders, These products can
traditional milk product marks an auspicious and be used in infant foods, weaning foods, bakery
happy occasion in India. Traditional products products, confectionery products, dairy products
account for more than half of the total revenue etc. Beverages and soups are generally consumed
generated from dairy industry. But, then also by a large number of people for the reasons of
these products have not been able to create an their being refreshing, tasty and nutritious.
international demand for them, due to their
limited shelf-life period. With advent of new Ultra High Temperature (UHT) Processing
processing technology in dairy sector, the sector and Aseptic Packaging: Considered as the
is gearing up to take on the world with its single most important innovation for dairy
traditional products. products in the last half-century, it involves
producing shelf-stable products by sterilising the
Traditional Sweets : With the successful product and the packaging material or container
innovation of Scraped Surface Heat Exchangers, separately and filling in a sterile environment. It
traditional sweet products can be easily was popularised in India with the success of fruit
manufactured by the Indian dairy industry. About juices, drinks and milk such as Amul Taaza.
Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013
Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 465

Super Heated Water Spray Steriliser : Early pickles, murabba and other homemade
methods for sterilising milk involved filling milk chutneys. Mostly the produce was heated,
into heat resistant glass bottles, then sealing boiled or sun dried. There was no big business in
them with air tight, pressure resistant caps and the form of fruit and vegetable processing.
heating in a commercial pressure cooker (or
retort) to temperatures between 1150 C and But in the last two decades things have
122.70 C for between 12 and 20 minutes. The changed, with the coming of multi-national
retort process can include an agitation step which corporations and new technologies, fruit and
helps reduce heat transfer time and combats vegetable processing is also seen as a business
settling and separation. A new method of opportunity. Some of the new technologies
sterilisation has been developed called “Super which are used in horticulture sector are:
Heated Water Spray Steriliser” for heat sensate
Thermal Processing Methods: In this method
products. This is suitable for delicate containers
the severity of the heat treatment and the
like plastic [Link] system is suitable for rapid
resulting extension of the shelf life are
heating and rapid cooling for heat liable products.
determined mostly by the pH of the food. In low
Membrane Processing : Recently, membrane acid foods its mainly high temperature
processing has gained importance over processing, and in acidic and highly acidic food
conventional processes in dairy industry for its its boiling water processing. Some of the thermal
advantages that are well known and established. processing methods are, Blanching,
Membrane processing has presented new Pasteurisation, Sterilisation and Commercial
possibilities for the production of newer Sterilisation.
intermediate dairy products that can be used in
Drying/ Dehydration: Preservation of foods by
different foods based on their functional
drying is perhaps the oldest method known.
properties.
Drying of foods and biological products is a
Horticulture widely applied process for different purposes
such as increasing shelf life, reducing packaging
Another very important component of costs, lower shipping wastes, encapsulating
food processing industry is Horticulture. flavours, making food available during off-
Horticulture sector includes fruits, vegetables, season, adding value by changing the phase
root and tuber crops, spices, mushrooms, honey, structure of the native material and maintaining
floriculture, medicinal and aromatic plants and nutritional value. In earlier times drying was only
nuts. These crops though account for only 6-7 done by solar, i.e. sun drying. With the invention
per cent of the total area under cultivation, of new technologies many more have come,
provide more than 25 per cent of total agricultural they are Mechanical (Cabinet) dehydration,
GDP and the total agricultural expertise. It is Osmotic dehydration, Freeze drying, Ionising
estimated that post-harvest losses of horticultural radiations.
produce range between 8-37 per cent. Even if
10 per cent of these losses could be saved by Chemical Preservation: In this technique,
converting the surplus into processed products, chemical additives such as sugars, salt, acids,
there will be considerable saving to the spices etc., are used to preserve food. Some of
horticultural wealth in the country. the common ways are high sugar preservation,
use of salt/acid/spices, and use of chemical
The horticulture sector of India has got additives.
its share of limelight in last decade only, with the
advent of globalisation. Before that, most of the The use of chemical additives is highly
fruits and vegetables were stored in the form of sensitive issue; there are basic rules which

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

466 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

govern chemical preservation. Chemical food For example, our meat and poultry industry,
preservatives have to be used only at dosage which has a huge market outside India, has only
level that is needed for a normal preservation 9 modern abattoirs out of the 3,600 slaughter
and not more than that prescribed by Fruit houses. Therefore, it’s the time when Indian
Product Order, 1955. Reconditioning of chemical government should come out with various
preserved food is not recommended. The use of policies to promote technological development
chemical preservatives must be strictly limited of food processing industry.
to those substances which are recognised as Now, we will analyse the employment
being without harmful effects on human beings' generation capacity and skill requirements of
health and are accepted by national and the sector. The food processing industry is
international standards. employment intensive. The sector employs
Another very common method of people of different backgrounds and of different
preservation is Hurdle technology; it’s a education [Link] sector actually needs highly
combined method of [Link] trend of skilled people, who can contribute to the growth
using a wide range of mild preservation of [Link] need of skills is different in different
techniques has emerged to be known as segments of the sector. For example: a person,
combined preservation or barrier (Hurdle) who is working in dairy segment, might be highly
technology. It advocates the deliberate skilled for that segment, but he will not be
combination of existing and novel preservation suitable in fish processing segment. In this part
techniques in order to establish a series of we will first analyse the employment generation
preservative factors (hurdles) that any capacity of food processing sector.
microorganisms present should not be able to
overcome. Employment Generation Capacity

These were some of the technologies As stated earlier, food processing industry
used in horticulture for the preservation of employs 13 million people directly and 35
products. The Indian entrepreneurs are making million people indirectly (MOFPI, 2011), and the
use of new technologies to increase their kind of growth industry has it is expected that it
production, match the quality standards of will create job opportunities for large part of
international trade, and to generate maximum workforce. The food processing sector is highly
profit for themselves. But Indian food processing unorganised, 82 per cent of the workforce
industry is highly unorganised, and most of the employed in food processing industry is in
employers in this sector ignore the new unorganised sector, and i.e. out of every 10
technologies and prefer manual labour, persons around 8 are employed by unorganised
compromising on Good Manufacturing Practices. sector (Table 4).

Table 4: Employment Scenario in Food Processing Industry in India in 2010-11

Sector No. of Persons (million) Share (%)

Organised 1.53 18%
Unorganised 7.00 82%
Total 8.53 100
Source: ASI, NSSO, 2010-11.
As for unorganised sector, the maximum Establishment).The higher proportion in DME can
working population is in DME (Directory be attributed to the fact that they are large

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 467

industries and hire more people. Another striking establishment) sector in employment
feature which comes out of Graph 6 is that in generation, i.e. more people go for their own
rural areas OAME (Own account manufacturing enterprises in rural areas, and in urban areas the
enterprises) sector is much bigger than the OAME sector is almost negligible.
NDME (Non-directory manufacturing

Graph 4: Number of Workers Engaged in Unorganised Food Processing Industry by

Enterprise Type, 2005-06

Source : NSSO, December 2007.

Persons employed under the registered probably because the growth had been very
food processing industries have been increasing high in the preceding years and also because
from 2004-05 to 2007-08. There has been a fall 2007-08 was a year when there was a global
in the growth rate of employment in registered slowdown in economic activity.
food processing industry units in 2007-08,

Graph 5: Persons Employed Under Registered Food Processing Industries

Year-wise persons employed (In lakhs)

Source : ASI, 2007-08.

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

468 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

In division of employment state-wise it industry, as Andhra Pradesh is the biggest centre

came out that Andhra Pradesh has the biggest of food processing sector in India (Table 5).
share of persons employed in food processing

Table 5: Share of Various States in Employment in Food Processing Industry in 2010

S. No. Name of the State Share of employment in %
1 Andhra Pradesh 14.1%
2 Assam 4.7%
3 Gujarat 5.9%
4 Haryana 3.3%
5 Karnataka 6.0%
6 Kerala 11.9%
7 Madhya Pradesh 2.3%
8 Maharashtra 7.8%
9 Punjab 7.7%
10 Tamil Nadu 11.2%
11 Uttar Pradesh 12.0%
12 West Bengal 4.8%
13 Others 8.3%
Source: NSDC, 2010.
While analysing the employment entrepreneurs in a survey conducted by FICCI
generation of food processing industry, it is (FICCI, 2010). The trade and distribution facilities
important to understand the skill set which is also include transportation for export, and shifting
required in food processing Industry. To of produce from one place to another and trading
understand the skill set required it is important of sourced agro-produce. Then comes the
to know value chain in food processing industry. processing part which involves grading, sorting
and waxing in case of fruit and vegetable
Value Chain in Food Processing Industry segment, milling, grading in case of grains (for
The value chain in food processing example, paddy-rice, wheat-flour). Then value
industry starts from farm inputs and ends at food addition of wheat into noodles, wheat into bakery
retail and food service. The first stage of value items, processed fruit and vegetables, extruded
chain includes delivery of agro-inputs, i.e. seeds, snacks etc. In the next stage there is wholesale
agro-chemicals, fertilisers etc. This also includes trading of value-added produce, export of
production of crop, and insurance of crop against produce and branding of products. The entry of
any sort of natural or man-made calamity. The big brands in food industry has created a tiff
stage also involves procurement of agro-produce competition for small players. The presence of
for value [Link] second stage of trade and MNC’s in the market, do not allow local players
distribution, which involves storage and trading to grow, as they lack that extensive branding and
of produce and here, comes the importance of publicity. The final stage of food retail and food
cold chain facilities. The absence of proper cold services, implies retailing of value-added foods
storage facilities leads to wastage of produce, by means of hotels, restaurants, eat-outs and
which amounts as high as 35 per cent. This retail stores (for packed items, grains, Ready to
problem has been marked as number 1 Eat foods etc.).There is increase in value addition
challenge in food processing industry, by the in every segment of food processing industry

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Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 469

with increase in demand for processed food. target for Tenth Plan in every segment with
Graph 6 clearly shows that there is increase in respect to Ninth Plan.
Graph 6: Value Addition in Different Segments in Ninth Plan and Target for Tenth Plan
Value ( ` Crore)

Source: [Link].2005.

The value addition in different stages in the human resource in food processing industry
food processing industry requires different skill is involved in production work, or in processing
sets; the basic functional distribution of human stage. Table 6 gives out a basic distribution of
resource across segments in food processing human resources across different segments in
industry is given in Table 5. Around 55 per cent of food processing industry.

Table 6 : Basic Functional Distribution of Human Resources Across Segments in Food

Processing Industry in 2010

Function % of employees

Procurement 10%
Testing and Quality 20%
Production 55%
R&D 1-2%
Storage 2-3%
Other(Sales and other support functions) 10%

Source: NSDC, 2010.

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

470 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

Having provided the functional industry have low level of education, and
distribution of human resources across therefore, their skill level is also low. Low level
segments in food processing industry, now we of skills highlights a very dark picture of Indian
will reflect upon the educational profile of the food processing industry; here workers can not
employees involved in food processing industry. contribute from their side in the development
of the industry, thus leading to stagnation of the
Analysis of Table 7 shows that maximum industry.
percentage of workers in food processing

Table 7: Distribution of Human Resources by Education Level in Food Processing Industry

Education level % of employees
Employees with management education 1-2%
Proportion of food technologists 20%
Post-Graduates 0.5-1%
Graduates 10%
Diploma holders 2-5%
Certificate holders 2-5%
10th Standard or below 80%
Source: NSDC, 2010.

While the overall requirement for skilled 8 presents the demand for skilled human
human resource in the food processing sector is resource across different educational
much larger, we have considered the organised qualification for the organised sector alone.
sector to illustrate the demand-supply [Link]
Table 8 : Annual Demand for Skilled Human Resource in Organised Sector in Food
Processing Industry
Category Required annual demand
Food technologists (Post Graduate) 2,384
Food technologists 5,363
Diploma 4,768
ITI/ITC 4,768
Short term-course trained personnel with
education below 10th /12th std. 95,351
Total 112,633
Source: NSDC, 2010.
While there are gaps in terms of excess 10,000 persons. This requirement will increase
of demand over supply in the organised sector to over 5.3 lakh if the unorganised sector is also
at all levels, the gap is maximum when taken into account.
considering the demand for ‘those trained by
short-term courses’ with low educational Skill Gaps in Food Processing Industry
qualification (below 10th/12th standard) where Analysis of Table 9 shows that there is a
there is a required demand for about 1 lakh wide gap between skills needed and skill
trained persons annually against a supply of over available. If India is to make its presence in the
Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013
Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 471

world market, then there is a need to bridge this workers at all the stages in food processing
gap as soon as possible. There is a huge gap in industry, especially for persons with short-term
demand and supply market. According to a survey course training, having education level below
done by NSDC, there is a huge demand for skilled 10th/ 12th standard.

Table 9 : Skill Gaps Present in Various Segments of Food Processing Industry

S. Type of Dairy Foodgrain Fruit & Meat & Fish and
No. Gaps milling Vegetable Poultry marine products

1 Production Inadequate Inadequate knowledge Inadequate / Inadequate Inadequate

knowledge of ways of latest / best farming restrictive consistency knowledge of fish
of maintaining the practices because of motivational in Operations breeding and
quality of produce. lack of training /access skills Inadequate due to rearing processes.
Inadequate to other information documentation inadequate Inadequate
knowledge of sources. Inadequate skills / not understanding sensitivity to
breeds, feeding, knowledge of percentage conversant of immediate environmental
disease control, increase in value with with e-reporting / or long issues, thus
and poor knowledge minimal value addition working term impacts. leading to poor
of hygiene main- to Produce. Lack of on computers. Tendency hygienic
tenance and knowledge of grading Inadequate to change conditions
management and standardisation of knowledge of jobs
practices. foodgrains. operations frequently,
Inadequate resulting leading to a
understanding of in wastage high attrition
ways to minimise rate and
breakage of grains. consequently
lower quality
of work and
lower
productivity.

2 Testing Inadequate ability Inadequate practical Inadequate Inadequate Inadequate

to practically expertise in conduct- ability to apply ability to technical
conduct tests and ing tests. The field technical conduct knowledge
record results, no needs Visual examina- expertise tests and about the
knowledge of tion skills for faster and procedural record results. new machines
correct sampling segregation and knowledge in Inadequate and the
methods. checking of input/ actual work technical associated
output and ability situations, knowledge aspects of
to record the results especially for primary maintenance.
as they are observed at the entry medication in
and reporting non- level. case of disease/
adherence to medication.
standards.

3 Procurement Inadequate ability Inadequate Inadequate Inadequate

to forecast demand. ability to knowledge and awareness of
Inadequate forecast the ability to educate prevention care
communication skills, demand accurately. farmers on techniques.
especially in local Inadequate demand, advice
language because training skills on farming and
of diverse dialects. for encouraging wastage reduction.
Poor knowledge the producers Inadequate
of making milk for better communication
by-products, productivity skills to be able
and inability to and quality. to motivate
increase their Inadequate farmers for
shelf life. ability to follow better quality
rules of marking and higher
gunny bags. productivity.

Data Source: NSDC, 2010.

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472 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

The demand for skilled human resource organised sector (Table 10). This is because of
is continuously increasing, but there is greater the fact that organised sector is very small in
demand in unorganised sector rather than respect to unorganised sector.
Table 10: Incremental Human Resource Requirement for Persons Trained
Through Short-term/Modular Training Initiatives in Food Processing Industry-
Annual Requirements (in’000s)

Sector Total demand of trained Demand of trained human

human resources resources in organised sector
Fruit and Vegetable Processing 12 2
Foodgrain Milling 42 8
Dairy Products 68 12
Meat and Poultry Processing 104 19
Fish Processing 1 0
Bread and bakery 258 46
Alcoholic beverages 42 8
Aerated water/soft drinks 2 0
Total 530 95
Source: NSDC, 2010.
We have studied the various skill gaps initiatives of Government of India in
present in food processing industry. Now, we development of food processing industry.
will look at various science and technology policy

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Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 473

Table 11: Various Institutions Providing Vocational Education and Training Programmes in Food
Processing Sector

[Link]. Ministry/ Schemes/Programmes/ Target Group Duration of training

Department Institutions having (short-term/long-term)
provision for vocational
education and training
programme

1 Ministry of Food Grants were provided to Persons living in rural

NGO for setting up 326 areas with preference
food processing and training being given to women,
centres (FPTCs) during SC, ST and other
1992-93 to 2000-01. weaker sections of society.

Institutions like Central Food Mainly persons in food Short-term

Technology Research Processing Industries
Institute, Paddy Processing
Research Centre, PHTC,
Council of Entrepreneurial
Development Programme
(EDP) are also training
courses.

Person power development Open Short-term

in rural areas (FPTC
Scheme)

Entrepreneurship Open Short- term

Development Programme

Programmes for Candidates aspiring to AICTE approved

development of human managers, technicians/ diploma/degree
resources in food processing, technologists, and courses durations
testing, training, quality entrepreneurs. as usual
management etc. (Long-term)

2 Ministry of Micro, Entrepreneurship  Workers Both short-term

Small and Medium Development programme, and long-term
Enterprises Skill Development

[Small Industries Programme (SDP),  Educated

Development Management Development unemployed youth
Organisation (SIDO)] Programme.  Entrepreneurs

Source: MOFPI, MMSME, 2012.

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474 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

Table 12: Programmes and Policies of GoI for Food Processing and Gaps Present

Policy/ Programme Year Feature Gap/ Constraints

Scheme for Implementation 2005 Match the quality standards The numbers of food
of HACCP/ISO 22000, ISO of the world. processing centres are
14000/GHP/GMP, Quality/ highly uneven in respect
Safety Management to number of industries.

(Source: Food Safety and

Standards Bill, 2005)

Scheme of Technology up- 2007 Financial intervention No knowledge on how

gradation, Establishment for enhancing unorganised sector
and Modernisation of Food processing will come in its purview.
Processing Industries levels of industries, There has been a
(Source : MOFPI , 2006-07) and assistance in persistent demand for
setting up new industry increasing the limit
of capital grant, but this
does not seem to be feasible
in view of the limited resources
for and galloping demand on
the scheme.

Entrepreneurship 2007 Financial assistance to No incubation policy

Development Programme various organisations in case of failure
(Source: Eleventh planning to promote establishment of the business.
commission report, 2007) of food processing industries.

Scheme for creating 2011 Development of rural The entrepreneurs do

Primary Processing entrepreneurship and not pay adequate attention
Centres/Collection Centres transfer of technology for to all these facilities,
in rural areas. food processing by therefore all the
(Source: Draft report for WG utilising locally grown responsibility falls on
12TH FYP,2011) raw materials. farmer groups.

Training at recognised 2011 Financial assistance The training centre location,

national/state level to farmers or upcoming and till time even after
institutes sponsored by entrepreneurs for training grant of budget no training
MOFPI/other training institute has come up.
programmes

(Source: HRD Ministry,

annual report 2011-12)

Creation of Infrastructure 2011 Financial assistance The problem lies whether

Facilities for running to educational institutions the courses introduced are
Degree/Diploma Course for starting course in line with the market
in Food Processing in food technology. demand. Various short
Technology duration certificate
(Source: HRD Ministry, courses have been
annual report 2011-12) introduced, but there are
no statistics on whether
they suffice the
market demand.

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Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 475

Most of the policies developed by Central cold chain, packaging and grading centres, lack
government are generic in nature. In order to of adequate quality control and testing
benefit from these policies, respective States infrastructure, inefficient supply chain, shortage
have to evolve their own policies, which are in of processable varieties of farm produce,
tune with their socio-economic and agri- seasonability of raw material, high inventory
livestock resource base. The policy from the carrying cost, high taxation, high packaging cost,
Centre and State should incentivise and affordability and cultural preference for fresh
encourage Public Private Partnership (PPP) in food. Table 13 lists various challenges faced by
overcoming various constraints namely, non- food processing industry, and their weightage.
availability of adequate infrastructure facilities,

Table 13: Top Five Challenges of Food Processing Industry and Their Weighted Response

Top Five Challenges Identified Weightage of Challenges

Inadequate Infrastructural Facilities 44.25
Comprehensive national policy on food processing sector 34.46
Food safety laws 28.51
Inconsistency in Central and State policies 28.08
Availability of trained manpower 25.53

Source: FICCI survey, 2010.

facilities need to be upgraded substantially for
The food processing sector is governed economic viability of these enterprises through
by multiple acts rather than a single widespread development of rural infrastructure
comprehensive policy on food processing. The (NABARD, 2005).
food laws governing food processing industry
span nine ministries, comprising 13 central If infrastructural facilities present at village
orders alone; in addition, States have their own level or all over India are considered, then the
control [Link] policy to be effective will have most important part of infrastructure facility in
to be comprehensive and adopt a number of food processing industry is cold storage facilities,
legislative, administrative and promotional which are crucial for the value addition. In India,
measures. According to NABARD, village level there are 5,381 cold stores with a storage
agro-industry does not come within the purview capacity of 24.45 MT. Uttar Pradesh and West
of any single Ministry. Because of this problem, Bengal account for more than 60 per cent of the
only a fraction of the village level agro-industries cold storage capacity followed by Punjab, Bihar,
are registered. It says further that an Gujarat, Andhra Pradesh and Madhya Pradesh.
overwhelming proportion of the registered Over ninety five per cent of the cold storages
enterprises are registered with the village are in the private sector. According to the Report
panchayats. To infuse technology and credit in of the Task Force on Development of Cold Chain
agro-industry, it is required to bring them under in India constituted by Ministry of Agriculture in
single registration authority and start a massive May, 2007, more than 80 per cent of the
campaign to register village level agro-industries. capacities are utilised only for potatoes and about
It goes on to state that in spite of the government 17 per cent fall under multi-commodity category.
programmes, lack of infrastructural facilities Most of the multi-purpose cold stores are also
hinders the growth of agro-industries. These used for potato storage besides providing
include electricity connection, power cut, storages for chillies, dry fruits, spices, vegetables
transportation facilities, etc. Infrastructural etc. Cold storages for meat, fish, milk and milk
Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013
476 Mohammad Rais, Shatroopa Acharya and Neeraj Sharma

products and for other commodities such as products is mainly attributed to the high and
chillies and other spices account for about one annual intake of potatoes, and its longer shelf
per cent of the total cold storage capacity. These life. The various existing challenges present in
cold storages are usually smaller in capacity. This cold storages in India are discussed in Box 1.
difference in storage of potatoes and other

Box 1 : Technological challenges in cold storage facility in India

 Designed to store single commodity, not suitable for multipurpose.

 Not suitable for providing storage conditions of uniform temperature, humidity, air
circulation and fresh air requirements.

 Pre-cooling technologies such as forced air evaporative cooling, package icing, and
vacuum cooling are non-existent in India.

 Controlled atmosphere cold storages still in nascent stage.

 Over 90 per cent of cold stores use old ammonia refrigeration compressor without
any capacity control, which is inefficient and expensive.

 Managed by unskilled and untrained manpower, not aware of latest technology and
techniques in handling and storing fresh perishable produce to international standards.

In context with food regulation laws, skills and available supply. In fact, of late, shortage
the Indian food regulations comprise various of skilled, semi-skilled and unskilled workers has
food policies that have been enacted at different emerged as a critical factor impacting the
points of time, and are under the ambit of competitiveness of Indian food industry. Around
various ministries of Government of India (GoI). 58 per cent of the employers are dissatisfied
Historically, they were introduced to with technical skills and knowledge needed for
complement and supplement each other in the job. Also 72 per cent showed discontent
achieving total food sufficiency, safety and with employees’ ability to use appropriate and
quality. This incremental approach has led to modern tools, equipment, and technologies
incoherence and inconsistency in the food specific to their jobs (FICCI, 2010).
sector regulatory scenario. In addition, the
multiplicity of ministries and administering The food processing industry has many
authorities at both the Central and State levels challenges in front of it, ranging from
has resulted in a complex regulatory system that infrastructure to human resources and to
is not well integrated adding an additional technological backwardness. Now, with the
burden on the food industry. growing demand of processed food there is a
need to address these problems and concerned
Lack of skilled and trained manpower in issues on priority basis. Else, India will miss a
food processing industry is also a big issue. Many golden opportunity of using its vast agri-livestock
positive developments in the food processing resources to strengthen its economy, revive its
sector have also resulted in the apprehension rural industries and create employment for
about the emerging skill shortages due to thousands of people.
mismatch between the demand for specific

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013

Food Processing Industry in India : S&T Capability, Skills and Employment Opportunities 477

Opportunities opportunity to develop S&T capability and R&D

in the sector. There is a need to train the unskilled
Indian food processing industry has seen
labour force, need for development across
significant growth and changes over the past
various human resource profiles. India can
few years, driven by changing trends in markets,
harness all the opportunities present in food
consumer segments and regulations. These
processing sector only when its labour force is
trends, such as changing demographics, growing
educated and skilled. The government needs to
population and rapid urbanisation are expected
strengthen its skill development programme;
to continue in the future and, therefore, will shape
new training institutes should open up, which
the demand for value added products and thus
are in tune with market demand. The
for food processing industry in India. The
development of infrastructure facilities like cold
Government of India’s focus towards food
chain, road facilities, and power will strengthen
processing industry as a priority sector is
the food processing industry. It will have a very
expected to ensure policies to support
positive sign on perishable food products
investment in this sector and attract more FDI.
industry, such as fruit and vegetable, dairy
India, having access to vast pool of natural
industry, meat and poultry segment. The food
resources and growing technical knowledge
processing industry is all set to drive Indian
base, has strong comparative advantages over
economy to higher growth, only need is to pay
other nations in this industry. The food processing
due attention on technological development of
sector in India is clearly an attractive sector for
field, and generation of skilled manpower.
investment and offers significant growth
potential to investors. There is a huge
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Journal of Rural Development, Vol. 32, No. (4) pp. 479-480 479
NIRD, Hyderabad.

ANNEXURE

Definition BY NSSO : not. In other words, all proprietary and partnership

enterprises are household enterprises.
Enterprise:
An enterprise is an undertaking engaged in the Non-household Enterprise:
production and / or distribution of some goods Non-household enterprises are those which are
and / or services meant mainly for the purpose institutional i.e. owned and run by the public
of sale, whether fully or partly. An enterprise may sector (Central or State Government, local self-
be owned and operated by a single household
governments, local bodies, government
or by several households jointly on a partnership
undertakings, etc.), corporate sector, cooperative
basis, or by an institutional body.
societies, other type of societies, institutions,
Manufacturing Enterprise: associations, trusts, etc. Nonhousehold
A manufacturing enterprise is a unit engaged in enterprises covered under public sector were
the physical or chemical transformation of not included in the current survey.
materials, substances or components into new
Own-account Enterprise:
products. It covers units working for other
concerns on materials supplied by them. Also An enterprise, which is run without any hired
included are units primarily engaged in worker employed on a fairly regular basis 5, is
maintenance and repair of industrial, commercial termed as an own account enterprise. If such an
and similar machinery & equipment, which are, enterprise is engaged in manufacturing and/or
in general, classified in the same class of repairing activities, it is termed as Own Account
manufacturing as those specialising in
Manufacturing Enterprise (OAME).
manufacturing the goods.
Establishment:
Unorganised Manufacturing Enterprise:
The unorganised manufacturing sector for the An enterprise which is employing at least one
present survey consists of following types of hired worker on a fairly regular basis is termed
enterprises: (i) All manufacturing enterprises as establishment. Paid or unpaid apprentices, paid
except those registered under section 2m(i) and household member/servant/resident worker in
2m(ii) of Factories Act, 1948 and Bidi and Cigar an enterprise are considered hired workers.
Workers (conditions of employment) Act, 1966.
Establishments have further been categorised
(ii) All manufacturing enterprises except those into two types: non-directory and directory.
run by Government (Central Government, State
Governments, Local Bodies) / Public Sector Non-directory Establishment:
Enterprises.
An establishment employing less than six
Household Enterprise: workers (household and hired workers taken
together) is termed non-directory
A household enterprise is one which is run by
establishment. If such an establishment is
one or more members of a household or run
jointly by two or more households on partnership engaged in manufacturing activities, it is termed
basis irrespective of whether the enterprise is Non-Directory Manufacturing Establishment
located in the premises of the household(s) or (NDME).
Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013
480

Directory Establishment: sections 2m (i) and 2m (ii) refer to any premises

including the precincts thereof (a) whereon ten
A directory establishment is one which has
or more workers are working, or were working
employed six or more workers (household and
on any day of the preceding twelve months,
hired workers taken together). If such an
and in any part of which a manufacturing process
establishment is engaged in manufacturing
is being carried on with the aid of power, or is
activities, it is termed Directory Manufacturing
ordinarily so carried on; or (b) whereon twenty
Establishment (DME).
or more workers are working or were working
Definition by ASI on any day of the preceding twelve months,
and in any part of which a manufacturing
Factories: process is being carried on without the aid of
power, or is ordinarily so carried on.
Factory is one that is registered under sections
2m (i) and 2m (ii) of the Factories Act, 1948. The

Journal of Rural Development, Vol. 32, No. 4, Oct - Dec. : 2013