New Delhi, Aug 24 (IANS): Product development and innovation are the top concerns for the Indian food processing sector, the Confederation of Indian Industry said in a report Sunday.

"While India has favourable supply side dynamics, thanks to its strong agriculture base, product development and innovation in the sector has taken a back seat due to lack of investments and incentives," the CII - Grant Thornton report titled "Indian Food and Beverage sector" said.

"Requirement of investments, lack of bank credit facility and long gestation period have been impeding the adoption of newer technologies," it added.

According to the report, given its possible role in achieving increased agriculture production by ensuring better remuneration for farmers, growth of the food processing sector would need to be a significant component of the second green revolution.

"A developed food processing industry will reduce wastages, ensure value addition, generate additional employment opportunities as well as export earnings and thus lead to better socio-economic condition of millions of farm families," it said.

The report also said the organised food sector is expected to grow on the back of favourable demographics (middle class, urbanisation) and rising disposable incomes.

"The future of the food and beverages sector looks promising with the growing demand due to change in the consumer's lifestyle and consumption patterns including food habits.

"The sector is expected to play a key role in bridging the gap between demand and supply, and addressing the key concerns of the sector - rising food prices and high levels of food wastage," it said.