PRELIMS AND MAINS 2026

Gs paper – Iii
economic development

FOOD PROCESSING SECTOR

PREVIOUS YEAR QUESTIONS
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1. Elaborate the scope and significance of the food processing industry in
India. (150 words, 10 Marks) (UPSC 2022)
Introduction
Food processing industry (FPI) involves transforming agricultural produce into value-
added products, ensuring enhanced shelf life, safety, and marketability. It serves as a
crucial link between farm and fork, contributing significantly to economic development.

Scope of the Industry

• Large Raw Material Base: India is among the top global producers of milk, fruits,
vegetables, cereals, and spices—offering abundant raw material supply.
• Domestic Market: Rapidly growing driven by urbanization and income rise.
• Employment Potential: Second-largest employer after agriculture; offers
opportunities for semi-skilled and unskilled labour.
• Exports: Processed food exports at USD 7.7 billion (~₹7,701 million) in FY 23-24 (23.4%
of total agri-exports).
• FDI: ₹5,037 crore (~USD 608 million) in 2023–24.
• Emerging Segments: Organic foods, ready-to-eat meals, nutraceuticals, and
plant-based proteins offer new growth avenues.

Significance
• Reducing Post-Harvest Losses: India faces significant post-harvest losses,
estimated at ₹1.53 lakh crore (US$18.5 billion) annually, with a substantial portion of
fruits, vegetables, and other perishable crops being lost between harvest and
consumption.
• Doubling Farmers' Income: Through better price realization and demand for high-
value crops.
• Boosting Agro-based Manufacturing: Aligns with Make in India and Atmanirbhar
Bharat goals.
• Food Security and Nutrition: Fortified and processed foods help in addressing
malnutrition and anaemia.
• Rural Development: Drives allied sectors like packaging, logistics, and cold chains,
generating rural jobs.

Government Initiatives
• PM Kisan SAMPADA Yojana, Mega Food Parks, PLI scheme for FPI, Operation
Greens, and One District One Product (ODOP) support value chains and MSMEs.

Conclusion
A robust FPI can enhance farmer welfare, food exports, and rural employment. India must
integrate logistics, incentivize innovation, and strengthen quality standards for global
competitiveness.

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2. What are the challenges and opportunities of food processing sector in
the country? How can the income of the farmers be substantially
increased by encouraging food processing? (150 words, 10 Marks)
(UPSC 2020)
Introduction
The Food Processing Sector (FPS) is a vital link between agriculture and industry. It
enables value addition, reduces post-harvest losses, and enhances market access for
farmers. Despite India's rich agri-base, the sector remains underutilized.

Challenges
• Low Processing Levels: Only about 10% of agricultural produce is processed.
• Inadequate Infrastructure: Deficits in cold chains, pack-houses, and rural storage
facilities.
• Fragmented Supply Chains: Limited linkage between farmers, FPOs, and
processors.
• Financial & Regulatory Barriers: Credit constraints and complex compliance
norms.
• High Post-Harvest Losses: Estimated annual loss of ₹1.53 lakh crore due to spoilage
and inefficiencies.

Opportunities
• Export Potential: Processed food exports stood at USD 7.7 billion in 2023–24, with
scope to grow further.
• Abundant Raw Materials: India ranks among the top producers of milk, cereals,
fruits, and vegetables.
• Rising Domestic Demand: Urban consumers increasingly prefer packaged,
organic, and health-based foods.
• Government Support: Schemes like PMKSY, PLI, PMFME, Mega Food Parks, and ODOP
are enhancing infrastructure and formalisation.
• Increased Investment: FDI inflows and private investments are boosting
technology adoption and scale.

How Food Processing Increases Farmers’ Income

• Value Addition: Converts raw produce into high-value products, increasing returns
by 2–3 times.
• Reduction in Losses: Enhances shelf life and cuts waste, preserving more of the
harvest.
• Crop Diversification: Encourages high-value perishables like fruits, vegetables, and
millets.
• Better Market Access: Connects farmers directly to buyers via FPOs and integrated
chains.
• Rural Job Creation: Generates employment in processing, packaging, and
logistics, providing off-farm income.

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 Conclusion
The food processing sector holds transformative potential for Indian agriculture. By
addressing infrastructure gaps and strengthening farmer-industry linkages, it can
significantly enhance rural incomes, reduce waste, and make India a global food value
chain leader.

3. Elaborate on the policy taken by the Government of India to meet the

challenges of the food processing sector. (250 words, 15 Marks) (UPSC
2019)
Introduction
The food processing sector (FPS), contributing over 12% to manufacturing employment
and 10% to India's agri-exports, remains underutilized, with only 10% of produce
processed. Addressing its structural gaps is vital for doubling farmer incomes and
achieving food security.

Key Government Policies to Address Sectoral Challenges

Infrastructure Gaps and Wastage Reduction
• PM Kisan SAMPADA Yojana: Developed 22 Mega Food Parks, sanctioned over 370
cold chain projects, and created 6 lakh MT storage capacity.
• World’s Largest Grain Storage Scheme under PACS to minimize logistical
bottlenecks and reduce post-harvest loss (₹1.53 lakh crore annually).

Formalizing the Informal Sector

• PMFME Scheme:
✓ Aims to formalize 2 lakh micro units.
✓ Offers 35% credit-linked capital subsidy.
✓ 60% of the beneficiaries are women.
• ODOP Approach: Links district identity to unique agri-food products (e.g., Litchi in
Muzaffarpur, Pineapple in Tripura).

Boosting Investment and Scale

• PLI Scheme for Food Processing:
✓ Focused on ready-to-eat, millet-based, organic foods.
✓ Attracted ₹4,200+ crore investment and created 2.5 lakh jobs by 2025.
• 100% FDI allowed via automatic route in food retail and processing.

Technology & Skilling Push

• Deployment of AI in cold chain monitoring, blockchain for traceability under IndiaAI
Mission.
• NIFTEM & IIFPT incubated over 300 food-tech startups.
• Skilling integrated under Skill India through FICSI (Food Industry Capacity and Skill
Initiative).

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 Market Linkages and Farmer Integration
• Operation Greens (TOP to TOTAL): Price stabilization for perishables; 50% transport
subsidy extended to 22 crops.
• E-NAM Integration: 1,500+ mandis integrated, promoting direct market access.

Regulatory Simplification & Food Safety

• FSSAI reform: Online e-licensing, food fortification mandates (e.g., iron-fortified rice
in PM-POSHAN and ICDS), and Eat Right Campaign.
• Digitization of food compliance norms reduces entry barriers for small processors.

Conclusion
India’s policy approach to food processing has evolved from fragmented incentives to a
strategic, ecosystem-wide transformation model. With its integrated focus on
infrastructure, formalization, investment, and innovation, the sector is now poised to
become a core pillar of India’s rural industrialization and agri-export strategy under Viksit
Bharat @2047.

4. What are the reasons for poor acceptance of cost-effective small

processing units? How will the food processing unit be helpful to uplift
the socio-economic status of poor farmers? (150 words, 10 Marks)
(UPSC 2017)
Introduction
India, the world’s second-largest producer of food, processes only about 10% of its output.
Though 85% of food processing units are micro or informal, their adoption by
smallholders remains dismal, limiting rural income transformation and agri-
industrialization.

Reasons for Poor Acceptance

• Low Awareness: Only ~10% of produce is processed; farmers unaware of value-add
potential.
• Credit Barriers: Less than 25% of micro units access formal credit despite the
₹10,000 crore PMFME scheme.
• Tech & Skill Deficit: 65% of rural entrepreneurs lack technical skills or market
knowledge.
• High Input Costs: Packaging, power, and logistics raise operating expenses.
• Lack of Clustering: Absence of processing hubs, common facility centers.
• Fragmented Markets: Weak linkages hinder viability and scale-up.
• Regulatory Compliance: FSSAI and labor laws deter informal processors.

Socio-Economic Benefits
• Income Boost: Value-added returns are 2–3x higher than raw produce.
• Employment: Over 2.5 lakh rural jobs created under PLI (2021–25).
• Women’s Empowerment: 60% of PMFME beneficiaries are women.
• FPO-led Growth: ODOP branding enhances rural identity and bargaining power.
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 • Reduced Wastage: Saves up to 30% post-harvest loss.
• Food Security: Promotes local nutrition via fortified foods.

Conclusion
Integrating small processing units with schemes like PMFME, ODOP, and PLI can transform
India’s rural economy into a value-added agri-enterprise hub. With supportive
ecosystems—credit, skilling, logistics—these units can drive equitable growth, food
security, and rural industrialization under the Viksit Bharat 2047 vision.

5. What are the impediments in marketing and supply chain

management in developing the food processing industry in India? Can
e-commerce help in overcoming this bottleneck? (200 words, 12.5
Marks) (UPSC 2015)
Introduction
India’s food processing sector has immense potential but faces critical challenges in
marketing and supply chain integration. Only about 10% of agri-produce is processed,
with post-harvest losses estimated at 6–18%, mainly due to logistical and market
inefficiencies.

Impediments in Marketing and Supply Chain

• Fragmented Supply Chains: Only 15% of horticultural output is linked to cold
chains.
• High Logistics Costs: India’s food logistics cost remains high at 13–14% of GDP,
impacting price competitiveness.
• Limited Rural Infrastructure: Less than 30% of villages have access to modern
storage or processing facilities.
• Weak Farmer-Processor Linkages: 85% of processors are informal and lack direct
access to farmers.
• Branding and Quality Gaps: Low penetration of AGMARK and FSSAI-compliant
labeling among small processors.
• Inadequate Export Logistics: Only 10–12 agri-export zones have full processing
infrastructure.
• Information Asymmetry: Small producers lack real-time price, demand, and
market access data.

Role of E-Commerce in Addressing Bottlenecks

• Direct Market Access: Platforms like ONDC, Amazon Kisan, and BigBasket Farmer
Connect reduce intermediaries.
• Digital Branding: QR codes, GI tags, and traceability tech enhance rural brand
value.
• Smart Logistics: AI-enabled routing and blockchain reduce spoilage and boost
transparency.

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 • SHG/FPO Empowerment: Over 1.4 lakh FPOs onboarded to e-commerce under
PMFME and ODOP frameworks.
• Price Discovery & Aggregation: Enables real-time demand alignment, stabilizing
farmer incomes.

Conclusion
Integrating digital commerce with decentralized value chains can transform India’s food
processing ecosystem from local survival to global competitiveness.

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