Lok Sabha Question No. 137 (STARRED), answered on 2016-07-26
Subject: Promotion of FPI
Ministry: FOOD PROCESSING INDUSTRIES
Asked by: ANOOP MISHRA

## GOVERNMENT OF INDIA MINISTRY OF FOOD PROCESSING INDUSTRIES

## LOK SABHA

## STARRED QUESTION No. *137

ANSWERED ON 26 TH  JULY 2016

## PROMOTION OF FPI

## *137. SHRI ANOOP MISHRA:

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

- (a) the  existing  capacity  of  food  processing  sector  in  the  country  in  comparison  to that of other advanced countries along with the foreign exchange earned by this sector during the current five year plan;
- (b) whether the country is lagging behind the other advanced countries in the matter of food processing and if so, the details thereof and the reasons therefor;
- (c) whether the Government has entered into any agreements/signed MOUs with the foreign countries for bilateral cooperation in the food processing sector and if so, the details of such agreements/MOUs signed during the current five year plan, country-wise;
- (d) the benefits accrued/likely to be accrued due to such agreements/MOUs; and
- (e) the steps taken by the Government for the promotion and development of food processing sector in the country?

## ANSWER

THE MINISTER OF FOOD PROCESSING INDUSTRIES (SMT. HARSIMRAT KAUR BADAL)

- (a) to (e): A Statement  is laid on the Table of the House.

## STATEMENT  REFERRED  TO  IN  REPLY  TO  PART  (a)  TO  (e)  OF  LOK  SABHA STARRED QUESTION NO. *137 FOR ANSWER ON 26 TH  JULY, 2016 REGARDING PROMOTION OF FPI

- (a) & (b) As  per  the  study  (2014)  of  Institute  of  Economic  Growth,  New  Delhi  on  'An assessment of the extent of food processing in various food sub-sectors' commissioned by  Ministry  of  Agriculture  and  Farmers  Welfare,  Government  of  India,  the  food processing level in India was estimated at 6.76% in 2010-11 as against 80% in USA, 70% in France, 25% in Australia and 40% in China.

The foreign exchange earned by the food processing sector during the current five year plan, in terms of the value of export of agricultural and processed food products, is given asunder:

| Exports of agricultural& processed food products (in US $ Billion)              | Exports of agricultural& processed food products (in US $ Billion)              | Exports of agricultural& processed food products (in US $ Billion)              | Exports of agricultural& processed food products (in US $ Billion)              | Exports of agricultural& processed food products (in US $ Billion)              |
|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------|
| Year                                                                            | 2012-13                                                                         | 2013-14                                                                         | 2014-15                                                                         | 2015-16                                                                         |
| Exports                                                                         | 36                                                                              | 38                                                                              | 36                                                                              | 29                                                                              |
| Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S). | Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S). | Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S). | Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S). | Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S). |

Inadequate infrastructure along the value chain, requirement of multiple approvals from various Government agencies, APMC (Agricultural Produce Marketing Committee) restrictions  in  most  States  on  procurement  of  agricultural  produce  by  processors  and inadequate investment in organized retail marketing, are some of the important causes for lower levels of food processing in the country.

However, as per National Accounts Statistics 2015, the food processing industries in  2014-15  has  grown  at  5.78%  at  constant  prices,  which  is  higher  than  1.91%  growth recorded in 2013-14.

- (c) & (d): Ministry of Food Processing Industries has entered into agreements/signed Memorandum of Understanding (MoU) with France and Italy for bilateral co-operation in the field of food processing sector.

These  agreements/MoUs  are  mainly  intended  for  -  (i)  attracting  foreign  direct investment into the country for developing food processing infrastructure and technologies  and  facilitating  establishment  of  business  joint  ventures,  (ii)  exchange  of know-how & technologies and encouraging business to business engagement in the field of  food  processing  and  food  trade, (iii)cooperation  on  scientific,  technical  and  training matters  for  exchange  of  scientific  information  in  the  area  of  food  processing,  (iv) institutional  level  cooperation  on  food  processing  education  and  capacity  building activities.

(e) For  promotion  and  development  of  food  processing  sector  in  the  country, Government is  implementing Central Sector Scheme  for Development of Infrastructure for  Food  Processing  having  components  of  (a)  Mega  Food  Parks  (b)  Integrated  Cold Chain, Value Addition and Preservation Infrastructure and (c) Setting-up / Modernization of Abattoirs; (d) Scheme of Technology Up-gradation / Establishment / Modernization of Food  Processing  Industries;  (e)  Scheme  for  Quality  Assurance,  Codex  Standards, Research  &  Development  and  Other  Promotional  Activities;  (f)  Scheme  for  Human Resource Development and  Scheme of Strengthening of Institutions.

Further, to provide impetus to the development of food processing Industry in the country, Government is also providing a number of tax incentives such as reduced excise duty on food processing and packaging machinery from 10% to 6%, 100% Income Tax exemption to food processing units on profits for the first five years of operation and 25% thereafter for next 5 years etc. In addition, foreign direct investment (FDI) is allowed up to  100%  through  automatic  route  for  food  processing  and  100%  FDI  through  Foreign Investment  Promotion  Board  (FIPB)  route  in  trading  of  food  products  produced  and manufactured in India.

Government has also created a Special Fund of Rs. 2000 crore in National Bank for  Agriculture  and  Rural  Development (NABARD) to provide affordable credit to the food  processing  industries  in  the  designated  food  parks.    Loan  to  food  &  agro-based processing units and Cold Chain are now classified under Agriculture activities subject to aggregate  sanctioned  limit  of ₹100  crore  per  borrower  under  Priority  Sector  Lending (PSL)  by  Reserve  Bank  of  India    to  ensure  greater  flow  of  credit  to  entrepreneurs  for setting up of food processing units.

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