Assocham proposes to set up Food Devp Bank

Mumbai, June 3: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has mooted a proposal for the creation of Food Development Bank of India (FDBI), which will be completely an autonomous body.

In a position paper on the Indian food processing industry submitted to the government, Assocham pointed out that the industry's access to institutional finance for term loans and working capital requirements have been limited in the past and continues to be restricted even now.

The government should evolve a farmer-friendly credit system by opening FDBI, which will lend money to small farmers at concessional rates and also process their loan applications expeditiously.

On the Sector Performance, the paper said between August, 1991, and January, 2006, cumulative FDI in food processing has been of the order of 1,177 million US dollars, representing only 3.6 per cent of the total FDI inflow. Yet in terms of sectoral contribution to FDI, it ranks seventh, one place above the drugs and pharmaceuticals.

It also suggested that the FDBI should be urgently created due to the increasing importance of the FPI (food processing industry), which alone accounts for 6 per cent of the GDP.

Existing institutions, local bodies, cooperatives and self-help groups should work in unison to further strengthen backward linkages between the processing industry and the farmer.

The position paper further stated that India's fast growing consumer market was slated to include 500 million consumers by 2010, with the FPI expected to treble from 6 per cent to 20 per cent. Its share in the global agro trade was expected to rise to 3 per cent.

With the creation of FDBI, Assocham believed development of food processing will spur agricultural diversification, for which the investment climate needs to be made more conducive.

UNI