The food processing industry in India has huge potential through value addition in terms of income and employment generation. However, very little of the fresh produce reaches the consumer due to lack of proper handling, storage and processing facilities, resulting in a low shelf-life and enormous losses. Recent changes in consumption pattern in middle and high income groups show ample opportunity for processed food segments in India, which is indicated through a strong growth in consumption of packaged and processed foods. To meet the emerging demand for processed food products it is imperative to capture the huge and exponentially growing food market in India, by adopting sophisticated technology in food processing for competitive success and survival. Analysis of productivity and efficiency changes in the food processing industry in India during pre-liberalization and post-liberalization periods is essential. In India, the large crop and raw material base offer a vast potential for agro-processing activities. For example, value is added to fruits and vegetables by processing them into a wide range of pickles, chutneys and other relishes. These small-scale operations are a major source of employment, particularly in rural villages of India. Small-scale food processing is also particularly suitable for women, who may be the specific intended beneficiaries of development programs.