Xeikon readies new strategy for India

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India’s save food initiativeFood processing and packaging get 2015 budget pushFrom shortage to surplus
By the turn of the century the crisis of shortage became a crisis of surplus. To support tumbling farm prices the government subsidized the farmer with minimum support prices and food subsidies rose along with procurement by the public sector Food Corporation of India (FCI). As subsidized rice and wheat came into the FCI godowns, procurement far exceeded the distribution and consumption of PDS rice and wheat. As the FCI godowns overflowed, storage in open yards accompanied rampant wastage, pilferage and leakages. The food commissioners appointed by the Supreme Court to investigate subsidy leaks estimated after an independent survey in August 2010, that the wastage of grain figures was more than double the government’s own estimates. Terming the wastage as criminal, the court’s commissioners said negligence by the officials was suicidal, recommending that responsibility and accountability ought to be fixed at the highest level in both central and state governments. However, the wastage continued unchecked as FCI supported by the outdated Essentials Commodity Act and a corrupt administration continued to handle the bulk of grain movement while food subsidies mounted to disproportionate levels.
Rise of processed and packaged food
As food production in
India rose, so did the demand for processed and packaged food. Urban
double income no kids (DINK) households multiplied in the metros with
couples having no surplus time but large disposable incomes. The DINK
population grew as fast as India’s IT hubs brought global practices to
its doorstep along with the culture of consuming processed and packaged
food. Indian taste buds ensured that they became more diverse and
varied. There were the powders and pastes of foodgrain, cereals, fruits
and vegetables, the ready to cook and the ready-to-eat varieties all
packaged in food grade plastics or bottles. There was also processed
meat, prawn and fish both for internal consumption as well as for
exports. Then there were fruit juices and honey and milk and a variety
of milk products which was a industry sustained by powder and packaged
milk because fresh supply was both seasonal and regional.

The
present government in its budget of last May and in this February’s
budget for 2015-16, announced several measures to help the farmer, the
consumer as well as the food processing and packaging industries. These
include measures both fiscal as well as monetary that will reduce duties
and finance the growth of industries in several identified sectors. The
bakery, dairy, grain processing, fruit processing, horticulture and
poultry industry are to benefit from both infrastructure inputs and duty
exemptions in processing, refrigeration and packaging.

Fiscal and monetary measures
A
reduction in customs duty from 10% to 6% for food processing and
packaging machinery was announced in the 2014-15 budget last February.
According to Harsimrat Kaur Badal, the minister of food processing, “The
decision to reduce customs duty on food processing machinery is likely
to usher investment in the food processing sector and reduce post
harvest losses.” In addition, a special fund of Rs 2,000 crore by the
National Bank for Agriculture and Rural Development (NABARD) to provide
affordable credit to the agro-processing units was also set up last
year.