Recipe for growth of food processing sector: KPMG

Meenakshi Verma Ambwani New Delhi | Updated on April 30, 2021

Suggests increase in cold storage capacity, digitalised supply chain, smart warehousing and collaborative approach of stakeholders

Increase in cold storage capacity, digitalised supply chain, smart warehousing and collaborative approach of stakeholders is required to tap the full potential of the food processing industry, according to a report by KPMG.

The Indian food processing sector is expected to grow to $470 billion by 2025 from $263 billion now.

“There is a direct need for increasing cold storage capacity in the absence of which scalability of perishable products has been challenge. Digitised Supply chain, smart warehousing and logistics using industry 4.0 technologies can help India reduce wastage during storage and transit,” the report added.

“An inter-ministerial committee led by the Ministry of Food Processing Industries and consisting of various ministries may be constituted to bring various stakeholders together in a coordinated manner,” the report stated. It also said that a National Single Window Clearance System and Project Development Cell will help such approach.

Stating that India’s food processing exports have remained low and dominated by low value-added products, the report by KPMG also pointed out that there is a huge potential for India to enhance exports to the top 10 food importing countries of the world .

“The government can support the exporters by negotiating Free Trade Agreements (FTAs), lowering Non-tariff barriers (NTBs) and expeditious implementation of Remission of Duties and Taxes on Exported Products (RoDTEP) scheme,” the report recommended.

The pandemic has heightened focus on sustainable food chains, preference for healthy food and localised food supply with increased trade barriers. “In the post Covid-19 era, there is likely to be a surge in non–tariff measures including stringent Sanitary and Phytosanitary Measures and Technical Barriers to Trade by major economies to ensure food safety against transmitted chemicals and diseases,” the report noted.

The report also said that there will be a significant shift from non-sustainable food systems to environmentally sustainable food systems.

“Recognising the essence of food security and shortages, adoption of Information & Communication Technologies (ICTs) such as Artificial Intelligence (AI) and Big Data to improve on-farm handling, post-harvest, storage and transportation processes is likely to gain traction in future,” the KPMG report added.

While the recently announced Production Linked Scheme (PLI) Scheme is expected to encourage players in the food processing industry to enhance their processing capacities, the report said that there is also potential to enable allied industries such as ingredients, food processing equipment, food logistics and food packaging scale up.

Published on April 29, 2021

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