Why in News?
To promote "Brand India" globally, the PLI Scheme for Food Processing Industry supports companies with branding and marketing abroad, boosting emergence of strong Indian brands.
  
Context:
India is the world’s second-largest producer of food after China. Yet, it has one of the lowest levels of food processing in the world. At about 10 per cent, the Gross Value Added (GVA) of the food processing industry in India is among the lowest in the world compared to 30 per cent in China and ranging from 60-80 per cent in Western economies.
However, the country’s still developing food processing industry holds tremendous potential and impact on its economy. Food processing is one of the largest employment-generating industries in India, and it contributes significantly to the country’s GDP.

What is Food Processing Sector?  
·         Food processing is a type of manufacturing in which raw materials are processed into intermediate foods or edible items using scientific knowledge and technology. 
·         Bulky, perishable, and occasionally inedible food resources are converted into more usable, concentrated, shelf-stable, and pleasant meals or beverages using a variety of techniques.
·         It improves the storability, portability, palatability, and convenience of the finished product.

Significance:  
The Indian food sector ranks fifth in terms of scale, contributing almost 6% of GDP, 13% of Indian exports, and 6% of overall industrial investment in the country
 
Benefits: 
·         Enhance farmer’s income by better utilization and value addition of agricultural produce
·         Minimize wastage at all stages in the food processing chain by the development of infrastructure for storage, transportation and processing of agro-food produce
·         Introduce of modern technology into the food processing industries from both domestic and external sources;
·         Encouraging R&D in food processing for product and process development and improved packaging
·         Provide policy support, and support for creation of Infrastructure, capacity expansion/ Upgradation and other supportive measures form the growth of this sectors
·         Promote export of processed food products
·         Generate Employment : It provides direct and indirect employment opportunities, because it acts as a bridge between Agriculture and Manufacturing
·         Reduce malnutrition: Processed foods when fortified with vitamins and minerals can reduce the nutritional gap in the population
·         Crop-diversification: Food processing will require different types of inputs thus creating an incentive for the farmer to grow and diversify crops
 
Current Scenario: 
India is the world’s second-largest producer of fruits and vegetables, after China, yet just 2% of the crop gets processed.
Despite a significant manufacturing base, the processing is little (less than 10 percent). 
Processing accounts for around 2% of fruits and vegetables, 8% of marine products, 35% of milk, and 6% of poultry.
India has the world’s greatest livestock population, with 50% of buffaloes and 20% of cattle, but only around 1% of the entire meat population is transformed into value-added goods.

Various Policy Measures taken by the Government:  
Production-linked incentive (PLI) scheme for the food processing sector
·         The Government announced this scheme this year with an outlay of 10,900 crore Rupees
·         This will help create 2.5 lakh jobs by 2026-27, boost exports and facilitate the expansion of food processing capacity to generate processed food output worth Rs 33,494 crore.
·         The effort is to take the country’s food processing to a next level amid the rising global demand for Indian ready to eat foods, organic products, processed fruits and vegetables, marine products
·         The objectives of the scheme are to support food manufacturing entities with stipulated minimum sales and that are willing to make minimum stipulated investment for expansion of processing capacity and branding abroad to incentivise the emergence of strong Indian brands
 
Other Schemes include: 
·         Inclusion of food & agro-based processing units and cold chain as an agricultural activity under Priority Sector Lending (PSL) norms in April 2015.
·         As a measure toward ease of doing business, the Food Safety and Standards Authority of India (FSSAI) through notifications in 2016 has shifted from product-by-product approval to an ingredient and additive-based approval process.
·         100% Foreign Direct Investment (FDI) approval under automatic route has been permitted for the food processing sector
·         A Special Food Processing Fund of Rs. 2000 crore was set up with National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit for investments in setting up Mega Food Parks (MFP) as well as processing units in the MFPs. 
·         In 2019, the coverage of the fund was extended to the setting up of Agro-Processing Clusters along with setting up of individual manufacturing units.
·         Also, a Designated Food Parks (DFPs) scheme would be introduced in different states for the purpose of availing affordable credit from the special funds with NABARD.

Challenges:  
The Challenges faced by the Food Processing Industries in general include:
·         There exists gaps in supply chain infrastructure which means inadequate primary processing, storage and distribution facilities
·         Insufficient connection between production and processing
·         Seasonality of operations and low capacity utilisations
·         Institutional gaps in the supply chain, for instance, there is dependence on APMC markets
·         Lack of focus on quality and safety standards, and
·         Not having enough of product development and innovation

Way Forward  
·         At present, India is processing less than 10% of its agricultural output; thus, presenting immense opportunities to boost processing levels and attract investments in this sector.so, the Government measures are in the right direction.
·         Further, the growth of the food processing sector will be led by the demand in retail and the rise of health-conscious consumers.
·          Hence, there is a need for a strong crop value chain with adequate funding and technology applications that will boost the food processing sector via the MSME sector.
 
Mains Question:
  Q: FPI is recognised as the 'Sunrise Industry' in India. In this Context, Discuss its Significance and Challenges in FPI in India?