7 million jobs in the offing: food processing

The Rs 1.5 lakh crore (Rs 1.5 trillion) processed food sector in the country is expected to provide 72.72 lakh (7.272 million) jobs during 2004-05 as a result of high production of milk, fruits and vegetables, according to a study.

India, which produces about 146 million tonnes of fruits and vegetables, the second largest after China, has high potential for employment in the processed food sector, said the McKinsey FAIDA report.

The processed food industry is estimated at Rs 1.5 lakh crore and has attracted an investment of Rs 38,531 crore (Rs 385.31 billion) during the 9th Plan, the ministry for food processing industries said quoting the study.

The investment during the 10th Plan is estimated at Rs 62,105 crore (Rs 621.05 billion), the ministry said, adding the sector is estimated to create 1.8 jobs for every Rs 100,000 invested.

Direct employment of one person in the sector also provides additional indirect employment to 3.64 persons, it said.

The study said the general issues affecting the processed food sector are high proportion of wastage, inefficient supply chain, lack of suitable infrastructure, high packaging cost, high taxation, lack of adequate credit facility to industry players and food laws.

Despite India ranking first in many an areas like milk production at 84.5 million tonne per annum, livestock population at 470 million animals (which is 53 per cent of world's buffalo and 23 per cent of sheep), the study says the country's level of processing is a mere 7 per cent as compared to 45 per cent in the Philippines and 23 per cent in China.

The FAIDA report further shows India at fifth position in the world in poultry with a population of 842 million, seventh in fisheries at 6.05 million tonnes, but still poor in processing as it is just 2-3 per cent of the fruits and vegetable sector.

In order to give a boost to the sector, the Kelkar Committee had recommended an excise duty of 6 per cent across all processed foods, which currently attracts 16 per cent along with meat and poultry products.

According to the ministry, agro-industries have been accorded high priority under its Plan schemes by providing financial assistance in the form of grant-in-aid to industry and NGOs among other cooperative and government agencies.

The thrust areas of plan assistance include setting up and modernising food processing industries, infrastructure development, quality assurance, human resource development, promotional activities and strengthening of institutions.

The ministry said one of the main impediments was multiplicity of food laws and that it was working on a modern integrated food law encompassing all provisions relating to the food sector.