?We?re planning new and innovative schemes to support food processing units?

Subodh Kant Sahay, minister for food processing, discusses his pet scheme of mega food parks, the steps he is taking to solve funding problems and reduce packaging costs for the sector, his ideas around the Food Safety and Standard Authority of India and the legacy that he would like to leave behind, with FE?s Kakoly Chatterjee.

The finance minister has made provisions for five mega food parks in the Budget for the current financial year (2010-11). Ten such parks are already being set up. But you still could fall short of the 11th Plan target to set up a total of 30 parks.

Currently, 10 mega food parks are being set up. It took about a year to start building these parks due to the procedures involved. While the finance minister has announced the launch of five mega food parks in the recent Budget, I would like the work on twenty more parks to begin this year so that we can complete them by the end of this Plan period. The gestation period of food parks is around two years. Food parks can positively impact farmers? income. However, it all depends on how much funds we are allocated and the Cabinet has to take a final call on this.

Have you decided on the location of the five mega food parks? Is there enough investor interest in the scheme?

We are waiting for the Cabinet clearance of the five mega food parks already announced in the budget. My ministry has asked IL&FS to prepare a report which will give us an idea about bigger and better catchment area which will in turn indicate the most suitable places to set up these food parks. We are also considering as to how keen the states are to set up mega food parks. While the southern states apparently are keen, northern states are yet to show adequate interest. The northern states probably haven?t realized that there can be better post harvest management with mega food parks. In fact, thanks to the food parks, the farmers will start producing crops which are in demand. Moreover, the growers will be aided by the industry with advanced technology and seeds and it will also encourage clustered farming and market-driven farming. Agriculture is a big focus area for this country and the importance of value-addition by processing the agricultural produce cannot be underestimated.

Technology is a very important component when it comes to food processing. Do you think the parks that are coming up would be equipped with state-of-the-art technology?

We have decided to set up joint food parks with investors from Italy and France and I have signed MOU with them. As far as location is concerned we will give priority to their preferences.

These processing units will be introducing latest technology which their Indian counterparts can pick up. These countries have experience in food processing for the last 30 years to 40 years, so that they will be able to show the ideal way to create the forward and backward integration.

Apart from bringing in latest technology in India, their expertise will come in handy with technology, packaging and quality assurance. They will also bring in big investments and it will also be a confidence building process for both the Indian and foreign firms. We are also going to have a panel of consultants who will keep a track on all the new technologies and we will be constantly conferring with them. The ultimate result of all this is that farmers do not have to go for distress sale and instead can hold their produce if there are adequate and modern storage facilities.

Reports say you are also in the process of setting up joint labs with foreign countries.

We have tied up with UK, France and Italy to set up joint labs so that quality control can take place right here in India before the shipment leaves Indian shores. It often happens that after the shipment reaches foreign shores, it is rejected resulting in a lot of wastage of money. So, it is beneficial for all if the quality assessment of the processed food is done right here on Indian soil before it is exported. In future, we will be setting up more such labs with other countries.

Do you have any plans to assist smaller processing units who are facing funding problems? What are the steps you have taken in this direction?

We are fully aware of funding woes of the SME sector and are currently in discussion with the finance ministry to set up a venture capital fund. Nabard has been provided a funding of around Rs 1,000 crore to refinance the banks as and when they lend to the food processing sector. Banks are presently very reluctant to lend to this industry. Currently, food processing is under the agricultural head in banks, we are pushing for a separate head for food processing sector. A separate financing line is required for the smaller food processing units, be it public private partnership (PPP), venture capital (VC) or microfinance.

Packaging is very expensive in this country (packaging costs have gone up by 25% in the last 3 months) and as a result, the input cost of processed food has gone up. How are you planning to tackle this problem?

It is very important for this sector that packaging costs come down. We are in dialogue with the finance ministry to give concession for the packaging materials that is being used for the food processing sector. However, since the same packaging material is used for pharmaceutical and paint industry, the finance ministry has apprehensions that the concessions given to the food processing industry can be misused. However, we are pushing for reduced rates for packaging that is used for food processing sector.

Currently, external commercial borrowing (ECB) is allowed for cold storage and cold room facility. Would you like this facility to be enhanced?

We want ECB to be allowed for the financing of all equipments associated with processing in mega food parks.

Around three years back you had announced the scheme??food street- street food.? Has the scheme made any headway?

In Delhi, we hope to start this scheme before Commonwealth Games. We hope to have more hygienic street foods and we will also ramp up important food streets like Paratha Gali in Chandni Chowk so that foreign tourists can visit these places and enjoy local flavour. We have already identified 75 cities, (50 cities for street foods and 25 cities for food streets) and we will be launching this scheme in a big way in another month or so.

How would you like Food Safety and Standard Authority of India (FSSAI) to shape up in the future?

The role of FSSAI is that of a monitoring agency. Even though now it is under the health ministry, eventually, I would like to see it develop as an autonomous body.

You have four more years to go in the current tenure. What is the legacy you would like to leave behind?

I would like to create more conducive situation for investments in the food processing sector. Right now I have succeeded in making this sector free from the onus of high taxes. The VAT rate for processed food is very moderate: 0% to 4% in different states. I would like the same rates to continue in the proposed GST regime also. I also want to introduce new and innovative schemes to encourage food processing. I would like to take the processing level to 50% from the current 10% so that all those who are associated with it, benefit.