For providing remunerative prices for the agricultural produce it is important that the production advantage available to India is transformed into the processing advantage. The Indian food industry has no dearth for market opportunities on account of thriving domestic consumption and new avenues of foreign demand. Food processing is an important link between agriculture and industry. Scale of operations along with a fragmented supply chain is the major impediment in the path of speedy growth of food processing in India. Concentration at the level of production, processing and retailing can provide the much needed impetus for the sector. The Government of India has identified food processing sector as the sunrise sector. A number of initiatives are being put in place for promoting primary as well as secondary processing. For an unhindered growth it becomes important to address the demand and supply side constraints of food processing in India. Agriculture will keep on playing a vital role in the Indian economy and food processing will go a long way for providing opportunities for sustainable and profitable agriculture in time to come.

While presenting the Union Budget 2007-08, the Finance Minister of India mentioned agriculture as the main challenge and recalled the words of the first Prime Minister of India, Pt. Jawahar Lal Nehru who said, "Everything else can wait, not agriculture". With more than two-thirds of the Indian population still dependent on agriculture, it becomes important that the country is able to face one of the important challenges, i.e., providing remunerative prices to farmers without incurring additional burden of subsidies. Considering the above-mentioned facts, food processing is assuming greater importance. Food processing involves any type of value addition to agricultural or horticultural produce and also includes processes such as grading, sorting, and packaging, which enhance shelf life of the produce. The importance of food processing is evident as it provides vital linkages between industry and agriculture.

With the second largest arable land in the world and advantage of diverse agro-climatic zones across its geographical spread, India produces a vast range of agricultural produce. India produces 41% of the world's mangoes, 30% of cauliflower, 28% of tea, 23% of banana, 24% of cashew nuts, 36% of green peas and 10% of onion. With the given production capacity, India can become a leading food supplier to the world and at the same time it has a vast domestic market for consumption with a population of around 1.08 billion growing at 1.6% per annum.