The Indian government has embarked on several measures, including funds for food processing units and cold chain facilities, to help improve the country’s food processing sector and boost exports.

India is a top producer of food grains, and fruits and vegetables, but processed food exports remain stunted because only 2% of total production is currently processed in the country. Lack of food processing and cold chain facilities are also reasons behind the high wastage of food, which is estimated at up to 18% of total production.

However, there is a strong demand in the food processing sector which is now growing at the rate of around 12% per year. To encourage further growth, the government will soon unveil a comprehensive National Food Processing Policy which will drive the overall development of agricultural sector, Harsimrat Kaur Badal, Minister for Food Processing Industries (MoFPI), said yesterday.

She has also asked states to ensure a Single-Window Clearance for food processing units and added that the food processing sector will soon move from a Licence/Approval regime to a Registration regime which will reduce the need for government clearances.

Earlier in the budget, the government had allocated Rs.2,000 crore for the food processing sector and had reduced the excise duty on food processing equipment from 10% to 6%. This week, the National Bank for Agriculture & Rural Development (NABARD), said that it will disburse these special funds as term loans for establishing Food Parks and also for setting up of individual food or agro processing units.

NABARD said that the repayment period for such loans will be a maximum of 7 years, and the extent of the term loans will be up to 95% of the total project cost for the State Governments and up to 75% for others. The rate of interest will be around 1.5% less than bank rates for State governments. NABARD has also allocated Rs.1,000 crore to fund cold chain infrastructure projects in the country.