The Indian food processing industry is on verge of change to reach $530 billion by FY27.
According to a survey, the Indian food processing industry is on the verge of a change, with a solid agricultural base and various favorable factors supporting its advancement. The business may potentially grow at a CAGR of 10-11 percent to reach $500-530 billion by FY27.
According to the paper, by solving immediate difficulties and focusing on reducing food waste, boosting food processing penetration, and growing exports, the sector could possibly double in size to $600-650 billion in the same period.
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According to McKinsey & Company, the report’s Knowledge Partners, India has emerged as a global agricultural powerhouse, and it is now the world’s second-largest agricultural producer, leading in the production of grains, pulses, fruits, vegetables, sugar, and milk.
The agricultural industry not only accounts for 19% of India’s GDP but also employs nearly half of the population. Between 2000-01 and 2020-21, the per capita agricultural GDP increased at a CAGR of 6% to ₹15,056 per year.
Between FY 15-20, the country’s food processing industry grew at an 11 percent CAGR to USD 300-320 billion. In terms of growth, it outperformed Brazil, the United States, and China in 2021, particularly in cereals.
Despite these accomplishments, the potential remains unrealized. It stated that a stronger emphasis on food processing may greatly enhance farmer income while also creating thousands of employment and thriving enterprises on its coasts.
Creating demand and establishing standards
Because different crops are cultivated in each state, processing in India will continue to be an issue.
In Maharashtra, for example, 77% of the product passes through primary processing, whereas it is close to 50% in Gujarat and Andhra Pradesh. It is 60% in Tamil Nadu and Madhya Pradesh. In nearly all states, less than 40% of the product goes through secondary or tertiary processing.
Furthermore, the unorganized sector complicates matters. In fact, it dominates the country’s environments/soils, creating items of varying grades. As a result, the amount of processing necessary for each category varies by state.
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The paper makes several recommendations for actions that industry actors, in partnership with the government and other stakeholders, should take. These include encouraging demand-backed production, raising consumer awareness to generate demand, enhancing processing efficiency, constructing a strong logistical infrastructure, and assuring export quality and traceability standards.