RECENT INITIATIVES

Food Processing Sector Under Priority Lending

The Processed Food Sector had been facing serious problems in financing the projects as the food processing industries are high risk prone with long gestation period and the returns are small. As a result, the projects in this sector were not finding favourable consideration by the financial institutions. Considering the demand of the industry and in view of the vast potential of the growth of the agro-processing sector, the Government has now decided to include agro processing sector within the definition of "Priority Sector" for bank lending.

Meeting of State Nodal Agencies

Expansion of the Role of Regional Offices of Directorate of Fruits & Vegetable Preservation

In view of the liberalized economic scenario, the role of regional offices of the Directorate of Fruit and Vegetable Preservation under the Ministry has been expanded. These offices will henceforth act as a link between the Ministry and the State Nodal Agencies, disseminate information on the plan schemes and programmes of the Ministry, monitor the projects assisted by the Ministry, provide technical guidance to the entrepreneurs and provide technical help to the Food Processing and Training Centres funded by the Ministry.

Workshop on institutional finance for food processing industries

Interaction with State Nodal Agencies

Most of the States & Union Territories, except for West Bengal, do not have a separate department for the processed food sector. Ministry in consultation with the state Governments has nominated a State Nodal Agency in each State/Union Territory for coordinating all efforts towards development of food processing sector. A conference of the State Nodal Agencies was held on 11.1.99 at New Delhi. The conference provided useful feedback on problems faced by State Nodal Agencies and identifying areas for development of this sector.

INVESTMENTS

In the era of economic liberalisation where the private, public and cooperative sectors are to play their rightful role in development of food processing industries. Ministry acts as a catalyst for bringing in greater investments into this sector.

Since August 1991 till December 1998, 4676 Industrial Entrepreneur Memorandas (lEMs) envisaging an investment of Rs.53490 crores and direct employment of approximately 7.40 lakh persons have been received for various sectors of food processing. Out of the lEMs filed during this period, 3999 lEMs envisaging an investment of Rs.46924 crores and direct employment of approximately 6.73 lakh persons are for non-urban areas. About 39% of these investments are for backward areas. Of these, 646 lEMs envisaging an investment of approximately Rs.7375 crores and direct employment of 81686 persons have already been implemented.

During the same period. Government has also approved 1089 proposals of industrial licences and 100% export oriented units, envisaging an investment of over Rs. 18685 crores and direct employment of approximately 2.70 lakh persons. Out of these, 206 proposals envisaging an investment of Rs.3,836 crores and direct employment of approximately 0.86 lakh persons have already been implemented. Out of the total proposed investment of Rs. 72175 crores, foreign investment envisaged is Rs. 8809 crores. Out of the total proposed foreign investment of Rs. 8809 crores in the food processing sector, the actual inflow till December 1998 is over Rs.1850 crores. Sectorwise details of the proposed investments is at Annexure-II.

GROWTH OF INDUSTRY

(i)    Grain Processing

Due to the constant efforts made by the Ministry from time to time, the number of modern/modernised rice mills has gone up from practically nil in 1970 to 34688 as on 01.01.1999. Statewise number of all the rice mills is given at Annexure-IIl. As a result of improved availability of bran from these modern and modernised mills, the processing of bran is estimated to be around 33 lakh tonnes in 1998-99.

A modern mini rice mill for rural areas

Thirteen Regional Extension Service Centres have been set up in various states with Agricultural Universities/Research institutions for propagating the benefits of modernisation of rice milling industry and by-product utilisation through organising seminars, group discussions/ setting up demonstration units and preparation of technical literature etc. Four Rice Mills & Allied Equipment Testing Centres set up at Tamil Nadu Agricultural University, Coimbatore; Indian Institute of Technology, Kharagpur; Harcourt Butler Technological Institute, Kanpur; and Mahatma Phule Agriculture University, Pune are continuing their activities by providing necessary assistance to machinery manufacturers and millers for testing of equipments, as well as for selection, operation and maintenance of machinery. Post-Harvest Technology Centre at Indian Institute of Technology (IIT), Kharagpur, offers training courses of long term duration leading to M.Tech, Ph.D. & Post Doctoral Degree and also short term courses for managers/ mill operators etc. The centre also undertakes research & development project as per need of the industry.

No licence is required for manufacture of wheat products. There are no controls on price and distribution of wheat products. The mills have been given a free hand to obtain their requirements of wheat from any source, thereby avoiding their dependence on government for supply of raw materials. Nearly 10.5 million tonnes of wheat is converted into various wheat products by about 820 roller flour mills in the country every year against an installed capacity of 19.5 million tonnes. Statewise number of roller flour mills is at Annexure-IV.

(ii)    Consumer Food Industries

The consumer food industry mainly consists of ready-to-eat or ready-to-cook products such as pasta products, cocoa based products, bakery products, biscuits, soft drinks, etc.

a)    Bakery

Bakery industry in India is probably the largest among the processed food industries, production of which has been increasing steadily in the country. The two major bakery industries, viz., bread and biscuit account for about 82% of the total bakery products. The annual production of bakery products which includes bread, biscuits, pasteries, cakes, buns, rusk, etc., most of which are in the unorganised sector, is estimated to be in excess of 30 lakh tonnes. The production of bread and biscuits in the country, both in the organised and unorganized sectors, is estimated to be around 15 lakh tonnes and 11 lakh tonnes respectively. Of the total production of bread and biscuits, about 35% is produced in the organised sector and the remaining is manufactured in the unorganized sector.

Another wheat based product known by its generic name, pasta products, comprising of noodles, vermicelli, macaroni and spaghetti is gaining popularity.

b)    Cocoa Products

There are 20 units engaged in the manufacture of cocoa products like chocolates, drinking chocolates, cocoa butter, cocoa butter substitutes, cocoa based malted milk foods with a production of approximately 34 thousand tonnes.

c)    Soft Drinks

The production of soft drinks during the period under review has increased from 4920 million bottles in 1997-98 to 5670 million bottles during the period under review.

d)    Beer & Alcoholic Drinks

At present, there are 36 units manufacturing beer under licence from Government of India having an estimated output of 4.33 lakh KL per annum. On the other hand, the production of alcoholic drinks from non-molasses sources is very small in the country compared to the total production of alcoholic drinks. However, with various foreign companies producing non-molasses alcoholic drinks such drinks are gaining popularity in the domestic market.

(iii)    Fruit & Vegetable Processing Industries

The estimated installed capacity of fruit and vegetable processing industries has increased from 20.4 lakh tonnes in 1997 to 20.8 lakh tonnes in 1998. The production of processed fruits and vegetables in the country has increased from 9.1 lakh tonnes in 1997 to 9.4 lakh tonnes in 1998. During the same period the number of licences issued under Fruit Product Order (FPO), 1955 has increased to 5112 from 4932.

Bread slicing and wrapping machine

iv)    Milk & Milk Products

During the year 1998-99, dairying in India would achieve another milestone. With its milk production projected to be 74 million tonnes as against 71 million tonnes during 1997-98, India would become the largest milk producing country in the world.

There has been increase in the estimated production of milk powder including infant milk food from 2.15 lakh tonnes in the year 1997 to 2.22 lakh tonnes in the year 1998 and the estimated production of malted food product has increased from 55,000 tonnes in the year 1997 to 65,000 tonnes in the year 1998. The production of cheese in the organised sector in the year 1998 has been estimated as 5,000 tonnes. The estimated production of condensed milk has increased from 7,800 tonnes in the year 1997 to 9,000 tonnes in the year 1998.

A milk processing plant

v)    Meat and Poultry Processing

The production of meat and meat products has shown an impressive growth. The details of production of meat and meat products from 1993 to 1997 is as under:

(Thousand Tonnes)

The total meat production in the country is of the tune of 4.2 million tonnes per annum. The slaughtered rate in relation to the population of animals is about 6% in the case of cattle, 10% in the case of buffalo, 99% in case of pigs, 31% in case of sheep and 39% in case of goat.

vi)    Fish Processing

60% of the production of fish in India is from marine sources with coastal fishing constituting the bulk and only 2% comes from deep sea resources. Production of fish from both marine and inland sources has increased from 5.34 million tonnes in 1996-97 to 5.38 million tonnes in 1997-98.

Processing of marine products into canned and frozen forms is carried out almost entirely for the export market. In all, there are 407 freezing units, 13 canning units, 154 ice-making units, 11 fish meal units and also about 489 cold storage units in this sector.

Development Councils

The first meeting of the Development Council for Processed Fruits and Vegetables, Cereal Products and Beverages was held on 14th December, 1998 under the chairmanship of Secretary, Ministry of Food Processing Industries. Following action points have been identified.

Short Term:

1.    A study to be undertaken to find out the implications of post-WTO regime, opportunities and challenges emerging out of it in the processed food sector and the action needed on the part of the Ministry and the Industry;

2.    CFTRI to make available item specific standards of Good Manufacturing Practices (GMP) to the industry; and

3.    Role of Regional offices of F&VP Directorate to be expanded to cover extension of developmental activities also. The Ministry has already taken action on this.

Long Term:

A Task Force has been set up to identify the problems faced by processed food industry and to suggest short term and long term action points. Apart from other issues, the Task Force would suggest changes in export and import policy, identify items which require dereservation and suggest measures for harmonisation of food laws.

Exports

Exports of processed fruits and vegetables in 1998-99 is estimated to be around Rs.640 crores as against Rs.745 crores in 1997-98. Export of animal products is estimated to be around Rs.955 crores in 1998-99 as against Rs.910 crores in 1997-98. Export of processed foods (including cereal based products) is estimated to increase to Rs.6900 crores in 1998-99 from Rs.6371 crores in 1997-98 and export of marine products is expected to increase from Rs.4643 crores to Rs.6300 crores during the same period. Yearwise details of export of processed food products is at Annexure-V.