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National Food Processing Policy

National Food Processing Policy

National Food Processing Policy 

The Indian Government has formulated a policy entitled “National Food Processing Policy” for the overall growth and development of the food processing industries sector with the aim of providing a remunerative return to farmers. The policy aims to bring immense benefits to the economy, agriculture, productivity, and employment, and raise the standard of people throughout the country.

To know about the National Food Security Act

Objectives of the Policy

  • The objectives of the National Food Processing Policy are given below:
  • To ensure farmers get remunerative prices while ensuring the availability of quality and affordable produce to the consumers.
  • To reduce wastage and to increase the market efficiency and value-added opportunities
  • To address the issues of malnourishment by ensuring the availability of nutritionally balanced foods.
  • To make the food processing sector more competitive through the innovation of adequate infrastructure facilities such as supply chain, use of modern technologies, food safety, promoting traceability, and encouraging optimum capacity utilization of assets and resources.
  • To position the Indian country as the most preferred investment destination for agribusiness and food processing. 
  • To create more opportunities for the growth of the agribusiness and Food Processing Industry, and create employment.

To know about the Food Processing Fund – NABARD

Food Processing Sector

The Food Processing Industry Sector involves any type of value addition to agricultural produce starting at the level of post-harvest. It includes even primary processing like cutting, grading, sorting, seeding, shelling packaging, etc.

The food sector comprises the below following major areas:

  • Fisheries 
  • Meat and Poultry 
  • Milk and Dairy 
  • Fruit and Vegetable
  • Grain and Cereals 
  • Consumer Industry 
  • Plantation

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Key Principles

The below following are the basic principles of the National Food Processing Policy.

Creating Enabling Environment

The Policy would seek to create a conducive environment for entrepreneurs to set up Food Processing sectors through fiscal initiatives/interventions such as rationalization of tax structure on fresh foods as well as processed foods and machinery that are used for the production of processed foods. It encourages the setting up of agro-processing facilities close to the area of agricultural production as possible to avoid wastage and to reduce the transportation cost.

Department to Promote Food Processing

In order to ensure that proper focus is provided to the Food Processing Industry and also encourage greater employment generation in the sector, it is proposed that each state set up an independent department to handle all matters related to the food processing industry. The Department would create an appropriate environment to facilitate ease of doing business thereby catalyzing investments in the sector. The Department would also disseminate information on the various schemes and programs of the Ministry of Food Processing Industry and the respective state and provide guidance to investors availing benefits from these schemes and programs. 

Infrastructural Development

The Policy will facilitate the establishment of low-cost pre-cooling and cold chain, facilities near agricultural farms. It also facilitates cold stores and grading, packing, and sorting facilities to reduce wastage, and improve the quality and shelf life of products. Under this policy, a strong infrastructural base is to be built for the production of value-added agricultural products with a special emphasis on food safety and quality matching international standards.

Promote Mega Projects

It is suggested that the mega projects with established backward linkages are supported. Dovetailing with the existing schemes would provide much-required support for strengthening the backward linkages. The establishment of a sustainable linkage between the farmers and the processors who are based on mutual trust and benefits by utilizing the current infrastructure of cooperative, village panchayats, and other institutions. The policy will promote the establishment of a marketing network with apex bodies to ensure the proper marketing of processed products.

Special Provisions

The below following would be provided with special consideration and higher priority in the Policy and plans.

  • The North Eastern Region (NER), Hilly Areas, Islands, and ITDP areas in the country would be given not only special attention and high consideration. 
  • The fiscal incentives such as excise duty/sales tax concession and the tax holidays to be granted to those units which are build up in these areas and also to those units which though build up outside these areas near the main market are engaged in processing the agricultural produce coming from these areas. 
  • The tax holiday for the food processing units, with the exception of liquor, cigarettes and aerated drinks and similar luxury items, for a time frame of 10 years. 

Scheme for Creation or Expansion of Food Processing Units

Incentives and Support measures

Below are some of the incentives and support measures provided under this Policy.

Incentives for Capital and Credit

To catalyse the investment in the food processing sector it is suggested that the incentives are granted for the establishment of new food processing unit, the equipment cost for the technology upgradation of the existing units and for setting up the cold chain is suggested to catalyse investment in the food processing sector. 

Electricity Duty Incentive

The food processing industry that is based on the seasonal perishables like fruits and vegetables must be considered as seasonal industry and electricity charges/duty is suggested to be levied for the seasonal time only and not for the whole year. It is suggested that the electricity charges be totally exempted for specific years to promote the new units.

Water charges Incentive

Under this policy, it is proposed that the water is made available on the priority basis to the Food Processing Industries. The Agro-Food Processing sector has to be treated as agriculture with regard to the water charges and quota. It is also proposed to simplify permissions needed for water connection by the Food Processing Industries. The Special incentives could be provided to food business operators undertaking efforts towards improving the groundwater levels through the development and use of new technologies for water conservation, especially in the Dark Blocks. 

VAT/SGST Incentives

Considering the huge investments would be brought in by the development of the food processing sector and the accompanied employment that the industry is projected to generate, VAT/SGST refunds which are suggested to be provided. This benefit must be provided to the new and existing units.

Registration and Stamp Duty Incentive

The registration and stamp duty incentives will be granted as follows: 

  • 100% Exemption from the payment of Stamp duty and transfer charge paid by the industry on purchase of land meant for industrial use.
  • 100% Exemption from the payment of Stamp duty for Lease of property/shed/buildings and also mortgages and hypothecations.

Incentives for Operational Excellence

Freight Subsidy

To prevent the transportation losses during the post-harvest, assure the supply of quality products to consumer and ensure farmers get remunerative price for their agricultural produce, support is suggested to be provided to farmers to support freight costs. 

Assistance in Patent

Food businesses are highly innovative and creates intellectual property. These assets if patented offer opportunities to incentive the institution filing for the patent application. The intellectual property protection in the food unit covers all the aspects of food production starting from the production of ingredients, creation of recipes, to the marketing and branding of the product. The types of intellectual property relevant to the food industry include the patents, trademarks, trade secrets copyright and design rights.

Women Entrepreneurs in Food Processing

Women have traditionally been engaged in the food processing sectors in the unorganised units such as papad making, pickle making etc. There is a need to encourage the engagement of women in the organised food processing sectors. It is proposed that the state would additional incentives to promote women-led enterprises.