Imperatives of developing Indian food industry: opportunities, constraints and policy challenges

Abstract

Food is vital to India s future. India is mainly an agricultural economy yet the economic liberalization process has by passed it. This is sharp contrast to the experience of other developing economies like Thailand, Philippines, China and the like. If India has to accelerate its over all-economic growth then the food sector has to become dynamic. There have been some sporadic attempts to remove obstacles to the growth of the food industry in the last ten years. The governments at the centre as well as in the state have announced policies, which have not yet created the desired impact. The Central Ministry of food processing has been in existence since 1988. It has a basket of schemes and programmes. Still things have not improved. Hence a study was undertaken to not only identify the critical factors affecting the food industry performance but also identify suitable mechanisms and institutions to resolve these problems. This study, which was mainly undertaken in Andhra Pradesh, has covered all stakeholders in the food industry. The respondents have strongly indicated a need for the government to play a proactive catalytic role. A positive attitude without any gap between policy intentions and implementation and convergence of all policy matters under the umbrella of a separate food processing department is recommended. This will be a sign of empathy and seriousness of the Government towards the food industry. Provision of basic infrastructure, harmonizing tax regime to international levels and streamlining food legislation are other pre requisites. Another significant aspect thrown up by the study is the need to encourage market systems to integrate farm-firm linkages. Out of the several options available contract farming seems valuable to achieve effective integration of the food chain.