[Solved] Discuss the factors for localization of agro- based food processing industries of North-West India. ( UPSC GS-1 Mains 2019)

Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. Agro based food processing is defined as a set of techno-economic activities, applied to all the products, originating from agricultural farm, aqua cultural sources, livestock and forests for their conservation, handling and value-addition to make them usable as food, feed, fiber, fuel or industrial raw materials.

  • Agro-based food processing industry use plant and animal based products as raw materials.
  • Hence their location is in vicinity to raw materials produced generally due to its perishability and bulkiness.
  • Similarly considering the factors for localization of agro based food processing industry in North West India are mainly related to transportation, raw material, labour, power, capital and government policies.

Localisation of Agro-based food processing industries of North-West India

North western states like Punjab , Haryana and North Rajasthan have extensive network of agro based food processing industries. Some of the factors for localization are :

• Raw material base: Punjab one of the highest producers of wheat and rice, Rajasthan important area for millet, Haryana for milk and livestock.

• Robust agri marketing infrastructure: Punjab has close to 30 agro processing clusters(one of highest in India).

• Robust infrastructure: extensive network of good roads and internal container depots.

Stable adequate and cheap energy: Most NW states are energy surplus.

• Governance: Prompt MSP procurement in these areas encourage rice millers, Support to FPIs in form of tax incentives and subsidies.

Geographical advantage: Plain areas and close location to key markets like Delhi

Climatic factors

  • Longer preservation period
    The climate in North-western India is suitable for preserving food based products for a longer duration due to its cooler climates. Other parts of country including peninsular and eastern India are more humid and is not suitable for longetivity.

Economic factors

  • Availability of raw product
    For a industry to succeed, the raw materials should be easily available at a lower cost. The North-western part is suitable in this regard due to its primarily farm based economy.
  • Readily available market
    Large markets are available nearby for selling the manufactured products in this region due to higher population concentration. This will reduce cost of transportation as well as create for profits for the owners in a short duration.
  • Cheap labour
    Cheaper labour force will reduce operating costs of such industries quite drastically. Since there is easy availability of such human resource, this region has concentration of agro industries.

Geographic factors

  • Connectivity
    The region is marked with better connectivity to all major places nearby. The transportation can be conducted through both road and rail and hence is easy for marketing products as well as movement of raw materials.

Geographical Advantages– Vast network of perennial rivers, fertile Alluvial soils, Fast Transportation because of northern plains, seasonal variations promote the variety of agro products.

Government at State and Centre are collaboratively made certain policies for the increment in the food processing Industries-

(a) Mega Food Parks

(b) National Mission on Food Processing

(c) SAMPADA Yojana

Despite, having numerous advantage the region is still facing some issues which are slowing down the growth percentage, Forests which need immediate attention are-

(a) Payment of Sugar mill Issue

(b) Focus more on domestic sell than export

(c) India’s total food processing remained below 10% of Production

(d) Mega Food parks locations become political issue many times

(e) Promotion of Contract Farming act

(f) Rationalization of MSPs

(g) Promotion of more cold storage and warehouse

Other factors

  • Infrastructure: Well-connected transportation network, subsidised electricity, irrigation facilities (such as Indira Gandhi canal and Bhakhra Nangal) and ample warehousing and storage facilities contribute to flourishing agro-based industries in the region.
  • Agricultural marketing: This region has well-developed agri-export zones, market yards, organised APMCs and mandis, etc. which have provided a conducive environment for the establishment of agro-based industries.
  • Socio-economic status: The population of the region has good literacy rate, including financial literacy, and enjoys an efficient banking network. This helps channel easy availability of credit and capital investment.
  • Policy support: The Punjab government operates an agricultural mega project policy to facilitate investment in the food processing sector. Additionally, large landholdings, single window clearance, permission to set up private sub e-markets, amendment to APMC Act, etc. have enabled agro-based industries in this region to flourish.
  • Capacity building and R&D: Capacity building of the manpower in food processing sector in India is spearheaded by the National Institute of Food Technology Entrepreneurship and Management which is located in Sonepat, Haryana. Likewise, a prominent institution for research and development to improve agricultural productivity and business opportunities is the Indian Institute of Maize Research located in Ludhiana, Punjab.
  • Government policies: High production was evident since first green revolution i.e. Availability was raw material and capital were the prime factors for localization of these industries in this region. Some of the prominent locations are Amritsar, Jalandhar, Gurdaspur, Patiala etc. o Prompt MSP procurement in these areas encourage rice Mills. o Support to FPIs in form to tax incentives and subsidies


•Agribusiness is characterized by raw materials that are mostly perishable, variable in quality and not regularly available.

•The sector is subject to stringent regulatory controls on consumer safety, product quality and environmental protection.

The  measures taken at the Union level like permitting 100% FDI through the automatic route in food processing sector and Scheme for Mega Food Parks under the Ministry of Food Processing Industries are conducive steps. However, the challenges for the industry remain such as fluctuations in the availability of raw material due to climate change, inadequate implementation of the APMC Act, multiplicity of ministries and laws to regulate food value chain, etc.

Conclusion: Agro-based industries needs to be set up at rural areas where raw material may be available in plenty helps in the up-liftment of the rural economy. It provides rural population an opportunity for employment, generates income and thereby improves economic condition of people which in turn creates potential for demand based industries.

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