Subodh Kant Sahai, Minister of Food Processing Industries gets candid in an exclusive interview with B&E
B&E: You recently mentioned that the industry needs Rs.1 trillion by 2015. Can this requirement be fulfilled, considering that the industry’s revenues are currently less than Rs.200 billion?
SKS: The extant policy permits FDI under the automatic route in most sectors/ activities, including Food Processing Industries. In fact, a total of 141 foreign direct investment inflows were approved in the food-processing sector during 11th Five Year Plan period (April 2007- March 2009) amounting to USD 171.72 million. As FDI can only supplement the domestic resource mobilisation, the government is taking steps to adequately address the requirement of capital by the industry.
B&E: The Ministry is pushing banks to open up a Food Processing Vertical for the sector and a proposed VC fund is being planned, with a targeted corpus of Rs.1 billion. What will these initiatives be aimed at?
SKS: Even though the Ministry is implementing a number of schemes for the development of the sector, additional measures such as these are aimed at increasing the flow of credit for the technology Upgradation/ Establishment /Modernization of Food Processing Industries for an upgradation of their processing capabilities. Apart from the above, these funds would cater to schemes like R&D, food quality and safety et al.
B&E: You have stressed on the need to have 0% GST rates for perishable items, once the new tax regime is in place. But won’t this prove contrary to the stand of the Ministry to push for 35% perishables going for processing over the next 5 years, as against 6% currently?
SKS: We do not think so. We believe that rationalised tax structure across the country is necessary for the faster growth of the sector. Moreover, on the basis of Vision 2015 adopted by the Ministry, an integrated strategy and action plan for the growth of the food processing industry has been drawn up. The objective of the strategy is to increase levels of processing of perishable foods from 6% to 20%, value addition from 20% to 35% and increase India’s share in global food trade from 1.6% to 3% by 2015. The level of processing for fruits and vegetables is also envisaged to increase to 10% and 15% by 2010 and 2015 respectively.
B&E: How will the biggest problem of removing bottlenecks in the export of processed food items be solved?
SKS: The procedures for the export of any item, including processed food, are established by different authorities including the Ministry of Commerce. The Ministry of Food Processing Industries has no role to play in this. However, our Ministry has been trying to address constraints of infrastructure facilities at ports as well as at inland processing centres through better storage facilities, cold chain and efficient transportation system of processed food products. Apart from this, the Ministry is also focusing on specific food varieties which have a long shelf-life and can be stored for longer durations.
B&E: You have declared that there is a huge dearth of technical know how and professionals in the sector. So, how will the R&D infrastructure be improved?
SKS: Food Processing sector relates to conversion of raw agri-produce into finished value added, variety food products, with improved and desirable quality attributes. The need for an efficient and affordable technological know-how, right from harvesting, handling and transportation to processing, packaging, storage and distribution is inevitable. With the above in view Ministry of Food Processing Industries has been extending extensive support for R&D by providing huge financial assistance to concerned institutions/organisations.
B&E: You recently mentioned that the industry needs Rs.1 trillion by 2015. Can this requirement be fulfilled, considering that the industry’s revenues are currently less than Rs.200 billion?
SKS: The extant policy permits FDI under the automatic route in most sectors/ activities, including Food Processing Industries. In fact, a total of 141 foreign direct investment inflows were approved in the food-processing sector during 11th Five Year Plan period (April 2007- March 2009) amounting to USD 171.72 million. As FDI can only supplement the domestic resource mobilisation, the government is taking steps to adequately address the requirement of capital by the industry.
B&E: The Ministry is pushing banks to open up a Food Processing Vertical for the sector and a proposed VC fund is being planned, with a targeted corpus of Rs.1 billion. What will these initiatives be aimed at?
SKS: Even though the Ministry is implementing a number of schemes for the development of the sector, additional measures such as these are aimed at increasing the flow of credit for the technology Upgradation/ Establishment /Modernization of Food Processing Industries for an upgradation of their processing capabilities. Apart from the above, these funds would cater to schemes like R&D, food quality and safety et al.
B&E: You have stressed on the need to have 0% GST rates for perishable items, once the new tax regime is in place. But won’t this prove contrary to the stand of the Ministry to push for 35% perishables going for processing over the next 5 years, as against 6% currently?
SKS: We do not think so. We believe that rationalised tax structure across the country is necessary for the faster growth of the sector. Moreover, on the basis of Vision 2015 adopted by the Ministry, an integrated strategy and action plan for the growth of the food processing industry has been drawn up. The objective of the strategy is to increase levels of processing of perishable foods from 6% to 20%, value addition from 20% to 35% and increase India’s share in global food trade from 1.6% to 3% by 2015. The level of processing for fruits and vegetables is also envisaged to increase to 10% and 15% by 2010 and 2015 respectively.
B&E: How will the biggest problem of removing bottlenecks in the export of processed food items be solved?
SKS: The procedures for the export of any item, including processed food, are established by different authorities including the Ministry of Commerce. The Ministry of Food Processing Industries has no role to play in this. However, our Ministry has been trying to address constraints of infrastructure facilities at ports as well as at inland processing centres through better storage facilities, cold chain and efficient transportation system of processed food products. Apart from this, the Ministry is also focusing on specific food varieties which have a long shelf-life and can be stored for longer durations.
B&E: You have declared that there is a huge dearth of technical know how and professionals in the sector. So, how will the R&D infrastructure be improved?
SKS: Food Processing sector relates to conversion of raw agri-produce into finished value added, variety food products, with improved and desirable quality attributes. The need for an efficient and affordable technological know-how, right from harvesting, handling and transportation to processing, packaging, storage and distribution is inevitable. With the above in view Ministry of Food Processing Industries has been extending extensive support for R&D by providing huge financial assistance to concerned institutions/organisations.
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