Lok Sabha Question No. 3507 (UNSTARRED), answered on 2019-12-10
Subject: More Investment in FPI
Ministry: FOOD PROCESSING INDUSTRIES
Asked by: Geetha Viswanath Vanga

## GOVERNMENTOF INDIA MINISTRY OF FOOD PROCESSING INDUSTRIES

## LOK SABHA UNSTARRED QUESTION NO. 3507

ANSWERED ON 10 TH  DECEMBER, 2019

## MORE INVESTMENT IN FPI

## 3507.  SHRIMATI VANGA GEETHA VISWANATH:

Will the Minister of FOOD PROCESSING INDUSTRIES be pleased to state:

- (a) whether the food processing industries in India for agricultural products is just less than 10 per cent which is not satisfactory;
- (b) if so, the details thereof and the steps being taken to correct the situation in future;
- (c) whether  Philippines  and  other  countries  are processing  about  80  per  cent  of  their agricultural/horticultural crops and in China it is 40 to 50 per cent processing;
- (d) if so, the details thereof and the comments of the Government thereupon;
- (e) whether food processing work is very important in a country like India which is agriculture based, if so, the details thereof and the steps being taken in this regard; and
- (f) the  steps  being  taken  by  the  Government  to  pump  more  investments  in  food  processing based  industries  to  help  farmers  in  future  in  coordination  with  States  including  Andhra Pradesh which has large scope for agriculture based development in paddy, tobacco, mirchi, lemon, mangoes, cotton and other products particularly in Godavari areas, Krishna district and Guntur district in future?

## ANSWER

## THE MINISTER OF STATE FOR FOOD PROCESSING INDUSTRIES (SHRI RAMESWAR TELI)

(a) to  (f): Yes, Sir. Government is already seized of the low level of food processing in  India as compared to the countries like Philippines and China. To promote food processing industries and attract investment  into the sector the  Government  has  taken  various  steps/measures/policy initiatives which includes permission to 100% Foreign Direct Investment (FDI) through automatic route in manufacturing of food products and 100% FDI under Government approval route for retail trading, including through e- commerce, in respect of food products produced and/or manufactured in India, creation of a special fund  of Rs.2000 crore in National Bank for Agriculture  and Rural Development (NABARD) to provide affordable credit to food processing projects/units, bringing food  &  agro-based  processing  units,  cold  storage  units/cold  storage  chains  under  the  ambit  of Priority Sector Lending (PSL), allowing 100 percent income tax exemption from profit derived from activities such as post-harvest value addition to agriculture by FPOs' having annual turnover up to Rs.100 crore, 100% income tax exemption for new food processing units for a period of five years and lower income tax rate for subsequent five years, 100% deduction for capital expenditure incurred on setting up and operating of cold chain facility, concessional import duty for plant and machinery under project imports benefit scheme, import duty exemption on import of raw material under advance authorization scheme.

The Ministry of Food Processing Industries is implementing the Central Sector Umbrella Scheme-PRADHAN  MANTRI  KISAN  SAMPADA  YOJANA  (PMKSY)  with  the  scheme components viz; (i) Mega Food Parks, (ii) Integrated Cold Chain and Value Addition Infrastructure, (iii) Infrastructure  for  Agro-processing  Clusters,  (iv)  Creation  of  Backward  and  Forward Linkages,  (v)  Creation  /  Expansion  of  Food  Processing  &  Preservation Capacities,  (vi)  Food Safety and Quality Assurance  Infrastructure, and  (vii)  Human Resources  and  Institutions with  the objectives, inter alia, to create modern infrastructure and efficient value/supply chain with a view to encourage and facilitate food processing industries for preservation and processing of all agro and marine produce including paddy, mirchi, lemon, mangoes like food crops (tobacco & cotton not  included)  in  the  country  including  in  the  states  of  Andhra  Pradesh.        The  Ministry  is  also implementing the scheme "Operation Greens" as a vertical of PMKSY since November 2018 for integrated development of value/supply chain of tomato, onion and potato (TOP) crops in selected States on pilot basis that includes the State of Andhra Pradesh. Under the above schemes, financial assistance  as  capital  subsidy  in the  form  of  grants-in-aid  to  individuals,  farmers,  entrepreneurs, organizations  such  as  Central  and  State  PSUs/Joint  Ventures/Farmer  Producer  Organizations (FPOs)/NGOs/Cooperatives/SHGs/ Public and Private Companies etc. is provided for setting up of food processing industries/units/projects.

The food processing sector is important for an agrarian country like India from  view of its contribution to gross domestic product by way of value addition and processing and preservation of  agricultural  output  reducing  thereby  post-harvest  losses  of  the  agricultural  produce,  off-farm employment and export of value added food products. The Gross Value Added (GVA) by food processing sector is 1.59% of all sectors. It accounts for 8.83% of manufacturing GVA. The food processing  sector  has  the  largest  share  of  employment  among  the  registered  manufacturing industries  which  is  12.43%.  Food  processing  sector  also  contributes  significantly  to  country's export accounting for 11% of the country's total  export.

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