Food processing contribution to GVA needs to quadruple to become developed nation by 2047: Grant Thornton

India’s food processing sector’s contribution to the country’s Gross Value Added (GVA) need to quadruple to 7.2 per cent to become a developed nation by 2047, according to a report by Grant Thornton Bharat. Currently, the food processing sector’s contribution to GVA stands at 1.8 per cent.

The ”Vikasit Bharat by 2047: Role of the Food Processing Sector” report by Grant Thornton Bharat said future strategies must be aligned to achieve the target of 10.4 per cent CAGR by 2047.

India’s food processing industry, the report said, faces many challenges such as food safety, sustainability and labour shortages among others. India has a large agricultural sector but is fragmented and underdeveloped. This leads to problems such as lack of storage facilities, poor transportation infrastructure and high levels of wastage. Deficiencies in the supply chain infrastructure can lead to inadequate primary processing, storage, and distribution facilities, the report said.

Leveraging digitalisation

Introducing a thorough framework to aid the growth of this sector, Chirag Jain, Partner, Grant Thornton Bharat, said, “The 3-I Model (Innovation through Technology, Infrastructure Development, and Investment Convergence) emerges as a strategic framework for the evolution of the food processing sector. Leveraging digitalisation and technology adoption, particularly through IoT, AI, and blockchain, offers a pathway to efficiency and cost reduction. Robust infrastructure development, encompassing primary processing at the farm level and a well-integrated cold chain, is pivotal. As the government propels this vision forward through schemes like the Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) and others, the 3-I Model stands to revolutionise India’s food processing landscape.”

The report said significant investments are needed in rural infrastructure such as grading and packing centres, storage facilities, transportation, and testing laboratories. Increasing agricultural output without investing in processing facilities can harm farmers’ earnings and cause rural distress, it said. Developing strong supply chains that connect farmers to processing and marketing is crucial, it said while highlighting the need to strengthen primary processing at the farm level, including sorting/grading, packaging, drying, etc., while focusing on improved levels of value-addition. An integrated cold chain can be an industry driver that can transform India’s rural economy, the report said.

$866-billion market

Further, the report said with ongoing investments, the food and processing sector is pivotal in propelling India toward its national vision of becoming a developed and empowered country by 2047. With ongoing investments, the food and processing sector is pivotal in propelling India toward its national vision of becoming a developed and empowered country by 2047. The market size of India’s food processing sector stood at $866 billion in 2022 and is projected to grow at a CAGR of 7.3 per cent during 2022-27 and is expected to touch $1274 billion by 2027. The contribution of the food processing sector to the total Gross Domestic Product has increased by 27 per cent in the last five years.

Naveen Malpani, Partner- Consumer Industry, Grant Thornton Bharat, said, “India’s food processing industry, no longer in its infancy, holds the potential for a transformation that reduces waste, adds value, and fuels economic growth. Government policies and support are pivotal, yet investment in infrastructure and innovation is needed to unlock its full potential. By 2047, the goal is to boost its GVA contribution and establish India as a global leader in processed food exports, underlining its integral role in shaping India’s economic future.”

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