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Our Bureau

Kolkata , Jan. 30

THE Union Ministry of Food Processing Industries has recommended that foreign direct investment of up to 51 per cent be allowed in agri-businesses.

The Union Cabinet will deliberate on the matter in the next few weeks, according to Mr Subodh Kant Sahai, Union Minister of State for Food Processing Industries.

Mr Sahai was speaking to newspersons after addressing a regional conference on food processing organised here by the Federation of Indian Chambers of Commerce & Industry. He said the recommendation was part of a "comprehensive policy on food processing and agri-business" that had been sent to the Union Cabinet for the approval.

He said the proposal to allow 51 per cent FDI in agri-business was aimed at ensuring a fair price to the farmer for his produce. In India, agro-produce worth Rs 50,000 crore is being wasted annually due to lack of processing facilities. In fact, the lack of facilities for value-addition is also a hindrance to increased agricultural activity. The central government has already allowed 100 per cent foreign direct investment in the food processing sector.

"The market for processed foods cannot grow without exports. And, why would the industry produce if there were no buyers?" Mr Sahai said, adding that Rs 1 lakh crore would have to be invested in the food processing sector over the next 10 years to harness the sector's full potential.

According to him, the food processing and agri-business sector must be conferred the status of "infrastructure category" in line with airports and other infrastructure projects. This will facilitate the setting up of cold chains and help implement agri-business plans. Besides sops on the taxation front, the Ministry has suggested that agri-businesses be brought under the priority sector lending by banks.

"We have asked for the creation of a bank on the lines of NABARD (National Bank for Agriculture and Rural Development) exclusively for the food processing and agri-business sector. Alternately, a division of NABARD can be assigned to fund the food processing and agri-business sector exclusively," Mr Sahai said.

At present, barely six per cent of the fruits and vegetables produced in the country is processed. The idea is to take this figure up to 20 per cent over the next few years. Efforts are on to enhance India's share in global food processing to 3 per cent, from a mere 1 per cent at present. For this to happen, massive investments have to be made in food processing and agri-businesses. To facilitate such investments, it will be imperative for States to impose a uniform VAT of 4 per cent for the food processing sector, Mr Sahai said.

More Stories on : Agricultural Policy | Foreign Direct Investment | Foods & Food Processing

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