FDI in food processing
- February 1, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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FDI in food processing
Topic: Economy
Context:
FDI in food processing surged 86% in April-Sept FY22.
Concept:
- The food processing sector witnessed a surge in Foreign Direct Investment (FDI) inflows in FY22 after it had recorded a massive dip in inflows in the previous fiscal.
- According to the Survey, FDI in the food processing sector in April-September 2021-22stood at $410.62 million.
- This was up 86 per cent compared to the corresponding period in the previous year.
- FDI inflows in the sector in the April-September period in 2020-21 was at $220.42 million.
- Overall, in FY21, FDI inflows in the sector had declined by about 56 per cent to about $393.4 million from $904.7 million in FY 2019-20. The massive dip was likely due to the pandemic outbreak in the year.
- “The sector has witnessed FDI equity inflow of $4.99 billion during the period April2014 to September 2021.
- The FDI equity inflow in sector during April to September 2021 was $410.62 million in comparison to $220.42 million in the corresponding period last year,” the Survey said.
- The government allows 100 per cent FDI in the food processing sector under the automatic route.
- However, in case of trading of food products manufactured or produced in India, including through e-commerce, 100 per cent FDI is allowed under the Government approval route.
Food processing:
- Food processing sector in India is a composite sector comprising two broad segments viz. organized and unorganized segments.
- There are an estimated 25-lakh micro food processing enterprises in the country, which are unorganized and unregistered.
- With 7% of investment in plant & machinery, the unorganized enterprises contribute of 74.3% of employment (a third of which are women), 12% of output and 27% of value addition in the food-processing sector.
- Nearly 66 per cent of these units are located in rural areas and about 80 per cent of them are family-based enterprises.
- The organized sector with nearly 40,000 units accounts for 93% of the plant & machinery in the sector, in value terms.
- This segment accounts for 26% of employment and contributes around 90% of output and 72% GVA
Government initiatives:
The various component schemes under PMKSY being implemented by the Ministry include
- Mega food parks,
- Integrated cold chain and value addition infrastructure,
- Infrastructure for agro-processing clusters,
- Creation of backward and forward linkages,
- Creation and expansion of food processing and preservation capacities,
- Operation Greens and
- Food Testing Laboratories