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National Institutes of Food Technology, Entrepreneurship and Management Bill 2021

National Institutes of Food Technology, Entrepreneurship and Management Bill 2021

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  • GS 3 || Economy || Industries || Major Industries

Why in the news?

Parliament passed the National Institutes of Food Technology, Entrepreneurship and Management Bill, 2021.

Present context:

  • Bill has been passed from both the houses and will become an act once passed by the president.
  • The two educational institutes within the Ministry of Food Processing Industries were designated as Institutions of National Importance as a result of the bill.
  • Indian Institute of Food Processing Technology (IIFPT), Thanjavur National Institute of Food Technology Entrepreneurship and Management (NIFTEM), Kundali (Haryana) (Tamil Nadu).
  • The law will provide these institutes more autonomy, allowing them to launch new and creative courses while also assisting them in attracting top professors and students. Academic and scientific activity can also use global standards.

Understanding food processing industry:

What is food processing?

  • Food processing refers to any of a number of procedures that are used to prepare raw foods for eating, cooking, or storage.
  • New goods such as concentrated fruit juices, freeze-dried coffee, and quick meals have all emerged from food processing advances.

Importance of Food Processing Industries in Indian economy:

  • Increase agriculture’s portion of GDP: In India’s economy, the tertiary sector, while employing a smaller population, accounts for the majority of GDP. On the other hand, the agricultural sector employs the majority of Indians, although it contributes a smaller percentage of GDP. In this sense, the food processing sector has the potential to be a game changer by boosting the value of the produce.
  • Rural development: By developing rural regions, the migration of rural people to metropolitan areas in pursuit of a living can be minimized.
  • Cost of transportation: The loss experienced by manufacturers when delivering their products to market might be decreased.
  • Employment: The agricultural industry employs more than 50 percent of the Indian population. However, India continues to struggle with poverty and unemployment. Several agricultural industries are experiencing hidden unemployment. The growing food processing sector has the potential to alleviate these issues
  • Agricultural Exports: It can help India preserve its position as the world’s leading exporter of a variety of foods such as ginger and mango.

Food processing Industry- Scenario in India:

  • Growth and expansion of the food processing sector: On a global scale, India is the largest country in terms of food production, processing, supply, and consumption. The Government of India supports the growth and expansion of the food processing sector through the Ministry of Food Processing Industries.
  • Food market in India: India’s food market is rated sixth in the world, accounting for 70% of sales and ranking fifth in production, consumption, and export.
  • Increases trade and generates foreign exchange: It is a significant source of foreign currency. For instance, if you’re looking for a unique way to express yourself, try Basmati rice from India, which is in high demand in the Middle East.
  • Crop diversification: Because food processing will require a variety of inputs, farmers will be encouraged to cultivate and diversify their crops.
  • Industrial investment: India exports 13% of its total manufacturing output and 6% of its overall industrial investment.
  • India’s Gross Value: Manufacturing and agriculture account for 8.80 percent and 8.39 percent of India’s Gross Value Added, respectively. India’s food market is predicted to reach USD 544 billion by 2020-21, with food sector production reaching USD 535 billion by 2025-26.
  • Growing food prices: In addition, the fact that more than two-thirds of our 1.3 billion-strong population is young and has growing incomes generates a huge market for food items. All of these factors contribute to growing food prices, which are expected to reach $ 1.2 trillion by 2025-26.

Problem with food processing Industry:

  • Inadequate expansion of processing and storage capacity commensurate with agriculture production: The main reasons for higher wastages, higher production costs, and lower value addition in the food processing sector have been identified as a lack of efficient supply chain infrastructure and inadequate expansion of processing and storage capacity commensurate with agriculture production.
  • Lower Value Addition: Despite being one of the world’s largest producers of agricultural commodities, India’s level of food processing and value addition remains low, lowering our competitiveness, export performance, and farmer income.
  • Raw material availability: The industry confronts manufacturing delays due to seasonal availability of particular vegetation, resulting in insufficient supply.
  • Storage constraints: The lack of or insufficiency of infrastructure to store raw materials reduces the quality and availability of the finished product.
  • Transit issues: Perishable food items should be delivered in suitable packaging to avoid breakage and damage throughout the transportation process.
  • Technological equipment: The traditional production techniques that include human assessors inspecting the quality of agriculture and food products. This manual check is time-consuming, requires a lot of effort, and is prone to human error.
  • Intense competition: This business is fiercely competitive, with numerous participants in both the organized and unorganized sectors.
  • GHP & GMP: Inadequate focus on food safety across the food value chain, resulting in the promotion of Good Hygiene Practice (GHP) and Good Manufacturing Practice (GMP) to maintain food quality standards. Furthermore, food testing, quality certification, and safety concerns are all weak areas that require immediate attention.

Scope of food processing industry in India:

  • Significant local and global investment: India’s existing food processing sector is projected to be worth USD 130 billion, and it is likely to attract significant local and global investment. Some of the major variables that are anticipated to boost demand for processed foods, and hence the food processing sector, in the future years are as follows: –
    • Consumption or investment: India has a population of about 1.25 billion people. The domestic market provides 1.25 billion prospects for the industry, with the expanding middle class having significant discretionary money.
    • Reduce food waste: The United Nations estimates that 40% of food output is wasted. In a similar vein, the NITI Aayog projected yearly post-harvest losses of almost Rs 90,000 crore. This wastage might be decreased by putting more emphasis on appropriate sorting and grading close to the farm gate, as well as redirecting surplus output to FPI, resulting in improved price realization for farmers.
    • Globally expanded market inside and outside the country: India produces the most milk, ghee, ginger, bananas, guavas, papayas, and mangoes in the world. In addition, India is the world’s second-largest producer of rice, wheat, and a variety of other vegetables and fruits. If excess grain, fruit, vegetable, milk, fish, meat, and poultry output is processed and sold both inside and beyond the country, there will be greater opportunities for the growth of the sector.
    • Rapid urbanization: As a result of rising urbanization, people’s eating patterns are shifting toward more value-added goods. The fact that more than 65 percent of India’s population is under the age of 35, with a penchant for processed foods, has exacerbated the change.
    • The fastest growing economies: India, along with China, has one of the fastest growing economies in the world. The country’s excellent business climate, as evidenced by the World Bank’s recent quantum leap in the ease of doing business ranking (from 130 to 100), is expected to attract international investment in this sector.
    • Enormous potential of the sector: According to estimates, about 40% of global food production is lost owing to insufficient transportation, storage, processing, and marketing capabilities. If these flaws are rectified, the sector’s potential for expansion is enormous.

Government initiative:

  • Mega Food Parks Scheme: Its goal is to create a framework that connects agricultural output to the market by bringing together farmers, processors, and retailers to maximize value addition, reduce wastage, increase farmers’ income, and create jobs, particularly in rural areas. A Mega Food Park is defined as an area of at least 50 acres that uses a clustered strategy based on a hub and spoke model.
  • Scheme of Cold Chain, Value Addition and Preservation Infrastructure: The scheme’s goal is to offer seamless cold chain and preservation infrastructure from the farm to the customer. It includes pre-cooling facilities at manufacturing plants, reefer vans, transportable cooling units, and value-added centers.
  • Pradhan Mantri Kisan Sampada Yojana (PMKSY): Mega Food Parks, Integrated Cold Chain, Value Addition Infrastructure, Food Safety and Quality Assurance Infrastructure, Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages, and Creation and Expansion of Food Processing and Preservation Capacities are all part of this umbrella scheme.
  • Food Processing Fund: In the fiscal year 2014-15, NABARD established a unique fund, the Food Processing Fund, worth Rs. 2,000 crore, to provide affordable financing to food processing units in Mega and Designated Food Parks.
  • Make in India: The food processing sector was chosen as one of the 25 target sectors for the Make in India initiative. As a result, the policy environment has been overhauled in order to attract financial, technological, and people resources to the industry. Allowing 100 percent FDI into this industry via an automated method is also a big step in the right direction.
  • Modernisation of Abattoirs scheme: The Scheme’s major goal is to increase processing and preservation capacity, as well as modernize and expand current food processing plants, with the goal of improving processing and value addition, and reducing waste.

Suggestions:

  • Developing demand for healthy processed food: Corporations will have to spend in developing demand for their highly processed yet nutrient-dense food items. They must also keep the prices of the goods low.
  • Higher-quality produce: Farmers may increase the value of their output by diversifying into non-food grain crops and producing higher-quality produce.
  • Reaching local masses: Farmers may find purchasers (enterprises/cooperatives/FPOs) who can prepare their product and offer it to the general public in a way that allows it to be stored longer while maintaining its nutritional value.
  • New products that appeal to a wide range: The Food Safety and Standards Authority of India’s (FSSAI) regulatory framework must allow the food processing sector to develop new products that appeal to a wide range of people’s tastes. Frozen peas, noodles, spaghetti, chips, dosa and idli powders are instances of processed food sector innovation.
  • Some other steps that need to be taken:
    • Whenever feasible, reducing travel time and distance
    • Organizing and cleaning materials, papers, and equipment on a regular basis;
    • optimizing layouts for the task(s) at hand, and if required, surveying personnel for advice;
    • Orienting supplies or inventories so that they are close to the desired location
    • Using automation or artificial intelligence software to remove manual redundancy.

Mains oriented question:

Is the Food Processing Industry Promising for Indian Agriculture? Explain the policies adopted by the Indian government to address the difficulties faced by the food processing industry. (250 words)