Food processing sub-optimal development can be represented to defective circle of higher cost of unit with less capacity, utilization and demand of high cost unit. Affordability is the major problem in food processing. In India between processed and fresh foods cost differential is very high similar to affordability, health and hygiene values of processed food. Indians earning less income are very cost sensitive since the food represents for around half of the budget of the family. In India the per capita wages is $ 650 and in United States the per capita wages is $ 41,600. The fresh and processed foods in the developed countries compare well in costs. For fresh food and eating at home the cultural preference barriers are moving away in India due to working couples, urbanization, domestic help cost, family nuclearisation, global customer emergence and media exposure. The processed food’s cost is high due to the quality and cost of farm credit, packaging, produce, processing, infrastructure, fragmented and long supply chain, lack of sales, regulations and taxes, etc. Quality and cost of farm generation suffers because of fragmented and small holdings, inferior agriculture inputs, less technology, risk aversion and uncertain market, improper variations, logistics costs and inefficient management of farm. Transportation, handling, cost of power, water, cold chain, handling, storage, etc. is greater and availability is improper or insufficient. Timeliness, cost and availability of credit are the main problems. At segmented financing, banks have viewed supply of food chain which is the major producer to retailer to processor to customer leading to regimes of high-risk lending. The credit cost for an SSI unit is around 2 to 3 percent greater than that for big units. For this food processing sector working capital is a higher issue and its inventory needs are greater. Packaging cost may higher than 20% of the cost of end consumer. Huge processed food proportion is bought and sold in small packs which exchanges into greater packaging costs (Axtell, Kocken and Sandhu, 1993).
Other than the competitiveness of cost the export problems are quality conforming to continuous innovation of brand and product, international standards and market building on global scale, capability to deal in consistency and volumes in supply. These need operations of global scale and core pockets which the Indian companies lack presently. Though India has the biggest population of livestock in the globe its share in global dairy and meat trade is negligible because of combined processing plants of meat, high feed costs and lack of modern abattoirs. Thus in future though India continues to be a major resource of seafood, raw materials shortage in spite of wide coastline, under-developed deep-sea fishing, fragmented efforts by Government agencies etc. has enhanced its development. Several agencies and ministries are enhanced in the exports promotion always with common and overlapping schemes leading to small spread of sufficient resources and thereby rendering processing of food ineffectively.