The Associated Chambers of Commerce and Industry of India (Assocham) has floated a proposal for an autonomous Food Development Bank of India (FDBI). In a paper on the Indian food processing industry submitted to the government, Assocham pointed out that the industry's access to institutional finance for term loans and working capital have been limited in the past and continues to be restricted even now.

The government should evolve a farmer-friendly credit system by launching the FDBI, which will be able to lend to small farmers at concessional rates and process their loan applications expeditiously, Assocham says in its paper, quoted on www.myiris.com , website of the Investment Research Information Service (IRIS).

Between August 1991 and January 2006, the food processing industry has attracted FDI adding up to US$1,177 million, representing only 3.6% of the total FDI inflow in this period. Yet, in terms of sectoral contribution to FDI, it ranks seventh - one place above drugs and pharmaceuticals.

The FDBI, the paper recommends, should be created without delay because of the growing importance of the food processing industry, which contributes 6% of India 's GDP.

The position paper states that India 's fast-growing consumer market is slated to touch the lives of 500 million people by 2010. By then, the food processing industry's contribution to the country's GDP will mount to 20% and India 's share in the global agricultural trade will rise to 3%.

The creation of the FDBI, the Assocham paper argues, will drive the food processing industry forward, which, in turn, will spur agricultural diversification, but for all this to happen, the investment climate needs to be made more conducive.