Overview of Food Processing Unit

Food Processing is the process under which any raw product of agriculture, dairy, animal husbandry, meat, poultry or fishing is transformed in such a way that its original physical properties undergo a change and the final product has an added commercial value. It also includes the process of value addition to produce products through methods such as preservation, the addition of food additives, drying etc., to preserve food substances effectively and enhance their shelf life and quality. Food Processing units also link the two core pillars of the Indian economy, i.e. agriculture and industry. Food processing is one of the largest sectors in terms of production, growth, and consumption in India. Since liberalisation, the government has proposed various segments of the food and agro-processing industry.

Scope of Food Processing Units in India

The Food Processing Sector has emerged as an important segment of the Indian economy. In 2019-20, it constituted as much as 9.9 per cent and 11.4 per cent share of Gross Value Addition in the manufacturing and agriculture sector, respectively. Some of these factors powering the demand for new food processing facilities today are as follows.

Massive demand for Food Processing and Packaging: India is the world's second-largest producer of fruits & vegetables after China, but hardly 2% of the produce is processed. More than 75% of this industry is in the unorganised sector. Despite a large production base, the level of processing is low (less than 10%). Approximately 2% of fruits and vegetables, 8% marine, 35% milk and 6% poultry are currently processed in India. There is also high demand for packaged, healthy and immunity booster snacks such as roasted nuts, popcorns, and roasted pulses. All these hints at a shift in focus from loose to branded packaging.

Government’s focus on the Sector: In the 'Make in India' campaign, the government has prioritised the food processing sector and promoted investments in the sector. In addition, the government has proposed to establish 18 mega food parks & 134 cold chain projects to develop the food processing supply chain. In the first phase of the newly approved Food Processing Policy of India, at least ten food processing zones, spread over 500 to 1,000 acres, will be established and scaled up to 10,000 acres by 2024-25. Entrepreneurs interested in setting up food processing units in these zones will be offered incentives.

Management of Food Waste: A strong and dynamic food processing sector plays a vital role in the reduction in wastage of perishable agricultural produce, enhancing the shelf life of food products, ensuring value addition to agricultural produce, diversification and commercialisation of agriculture, generation of employment and creating surplus for the export of agro & processed foods.

Export of Processed food: The Indian food processing Industry is primarily export-oriented. Our geographical situation gives us an advantage of connectivity to the Middle East, Japan, Europe, Singapore, Thailand, Malaysia and many other countries. One such advantage is the value of trade in agriculture and processed food between India and the Gulf region. Indian market presents a huge opportunity as we are the least saturated of global markets with small organised retail and the least competitive of all global markets in case of processed food retail. Besides, the government has also approved proposals for joint ventures, foreign collaboration, industrial licenses and 100% export-oriented units envisaging an investment.

Licences required to set up Food Manufacturing Business

Business Registration: Business registration is required to set up a legal entity for the business. This also helps the unit grow its market and expand the business as legally recognised companies have certain advantages. A food processing unit can be set up on any of the following structure

• One Person Company
• Public Limited Company
• Limited Liability Partnership
• Private Limited Liability
• Sole Proprietorship Firm
• Partnership Firm

FSSAI Licence: This licence is required by any food-related business. A state FSSAI license is required for mid-sized companies with an annual turnover of INR 12 to 20 crores, while the Central FSSAI licenses are required for large enterprises with an annual turnover of over and above INR 20 crores. The primary documents required by a food processing unit for obtaining FSSAI Licence are

• Photo Identity of the Food Business Operator.
• A Partnership Deed /Certificate of Incorporation
• Proof of the complete possession of premises
• List of food products (inputs and the final menu)
• A detailed food safety management plan.

Consent NOC: this is a pollution NOC certificate given by the concerned State Pollution Control Board (SPCB) or Pollution Control Committee (PCC) where the unit is located. Consent is given in 2 stages, i.e. Consent to Establish and Consent to Operate (CTO) to industries based on the industry list issued by CPCB (i.e. Red, orange, green and white). For instance, milk and meat processing comes under the red category, while fruits and vegetable processing units fall under the orange category. The documents required by the Food Processing unit to obtain consent from NOC (CTE and CTO) are

• Duly filled Application Form of concerned SPCB
• Signed Undertaking
• Site Plan
• Detailed Project Report, details of finished products, manufacturing process including a list of machinery, the capital cost of the unit with total investment.
• Details of different processes and point sources of effluent discharge /air emission/solid waste/hazardous waste that may be generated.
•  Land documents such as rent /lease agreement

• Balanced Sheet Certified by a CA
• Consent fee (as applicable)
• Laboratory analysis report of the trade effluent and emissions.
• Copy of any environmental clearance or other permission required from the State Government.
• Any other Document specified in the application form.

Additional Licences and Applicable Rules on Food Processing Units

• Factories Licence under the Factories Act, 1948
• MSME Registration
• Fire NOC
• Prevention of Food Adulteration Act, 1954 (PFA)
• Meat food Products order, 1973
• Vegetable oil Product Order, 1947
• Food Products Order, 1955
• Edible Oil Packaging (Regulation) Order, 1988
• The Milk and Milk Products Order, 1992
• The Essential Commodities Act, 1955
• The Essential Commodities Act, 1955

Stages in obtaining Consent NOC

Market Overview of the Food Processing Industry

In 2017-18, the food processing industry accounted for gross value addition of 7.9 per cent in manufacturing and 9.5 per cent in agriculture. FPI is a major employment provider, contributing to 11.4 per cent of organised manufacturing employment. Recognising the immense potential of FPI in promoting inclusive growth, it has been identified as one of key thrust areas under the ‘Make in India’ Programme. Market-related data on the future potential in this sector is given below.

• The food processing market in India is expected to reach US$ 535 billion by 2025-26.
•  The Indian food processing industry is expanding at a CAGR of 11%, and the food processing sector accounts for 32% of the entire food industry.
• India's exports of Processed Food were Rs. 41,460.06 Crores/ 5,559.84 USD Millions in 2021-22
• India’s food processing sector attracted US$ 4.18 billion in foreign direct investments between April 2014 and March 2020.In 2020-21, the FDI in the sector was estimated to be 2934.12 crores.
• This sector is expected to provide 9 million jobs by 2024. By 2030, Indian annual household consumption is expected to triple, making India the fifth-largest consumer of such products worldwide.

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