Agro processing industries and agribusinesses have been growing at a fast pace in
India in the recent years. Agro-industries have been given high priority by the
government due to their significant potential for bringing value addition to
agricultural output, and enhancing small farmer incomes and rural employment. The
priority can be traced to the vision of the father of the nation, Mahatma Gandhi, who
as early as 1920’s, saw village-based agro-industries as extremely important for
India’s development and the independence movement, see Table 1. Even today agroindustries
are given substantial importance (India, Planning Commission 2008) due to
various national priorities including enhancing value-addition to agricultural output,
rural employment and incomes, food availability, and alleviating hunger and poverty.
The sector, however, faces numerous difficulties including sourcing of quality raw
materials, rural market imperfections, supply-chain inefficiencies, financial
constraints, and product marketing challenges (Srivastava and Patel, 1989; Goyal,
1994; CII-Mckinsey, 1997; Gandhi, Kumar and Marsh, 2001).