Go Back

Indian Food Industry

December, 2014


Accounting for about 32 per cent of the country's total food market, the food processing industry is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. The total food production in India is likely to double in the next 10 years with the country's domestic food market estimated to reach US$ 258 billion by 2015.

The food processing industry forms an important segment of the Indian economy in terms of contribution to GDP, employment and investment, and is a major driver in the country's growth in the near future. This industry contributes as much as 9-10 per cent of GDP in agriculture and manufacturing sector, according to Mr J P Meena, Additional Secretary, Ministry of Food Processing Industries (GOI).

Market Size

The Indian food industry stood around Rs 247,680 crore (US$ 39.03 billion) in 2013 and is expected to grow at a rate of 11 per cent to touch Rs 408,040 crore (US$ 64.31 billion) by 2018.

Indian agricultural and processed food exports during April-May 2014 stood at US$ 3,813.63 million, according to data released by the Agricultural and Processed Food Products Export Development Authority (APEDA).

India has 85,000 bakery units, of which 75,000 operate in the unorganised sector, garnering a 65 per cent market share. The per capita consumption of bakery products, stands around 1-2kg per annum.

The Indian dairy industry has grown considerably post the white revolution and reports suggest that with current growth rate of approximately 3 per cent-4 per cent, it is thought to grow to 185 million tonne and become a US$ 24 billion organised industry by 2020 and US$ 140 billion overall including the unorganised sector.


According to the data provided by the Department of Industrial Policies and Promotion (DIPP), food processing sector in India has received around US$ 6,076.58 million worth foreign investments in the period April 2000—September 2014. Some of the major investments in this sector in the recent past are:

  • Johnson & Johnson has acquired Jagdale Industries' energy drink ORSL in a deal estimated at around Rs 750 crore (US$ 118.21 million). Under the agreement, Jagdale Industries will provide transition services in the area of manufacturing, detailing and distribution of ORSL to Johnson & Johnson.
  • American fast food chain Burger King plans to open 12 outlets in India over the next three months, six each in Delhi and Mumbai. With an investment of up to Rs 2-2.5 crore (US$ 315,221.52-394,026.69) per outlet, Burger King is eyeing other potential locations like Pune, Chennai and Bengaluru.
  • American premium burger chain Carl's Jr has planned to open its first outlet in India at New Delhi by April 2015. The chain aims to open about 1,000 outlets across India over 10-15 years. Carl’s Jr, a premium burger chain, which is known for its signature line of charbroiled thickburgers, is also among the top 10 quick service restaurants chains globally.
  • Cargill India Pvt Ltd plans to set up a new corn milling plant near Bengaluru with an investment of Rs 500 crore (US$ 78.81 million). The plant will process corn to produce glucose and other derivatives that will be used as sweeteners, thickeners and for other purposes in the food and healthcare industry.
  • Eastern Condiments has planned to build its ninth plant in the country in Bengaluru. Eastern already has three facilities in Kerala, and one in the Middle East. Eastern has been growing rapidly in the recent past clocking at 36 per cent growth in six months of the fiscal ended September 30, 2014.
  • Saraf Foods Ltd has invested Rs 15 crore (US$ 2.36 million) to increase the freeze-drying capacity by 50 per cent from 7.5 tonnes per day to 11 tonnes per day input at its facility in Vaghodia GIDC near Vadodara. The company’s freeze-dried products include sweet corn, green peas, onion, banana and green peppercorn.

Government Initiatives

The government has taken significant initiatives to improve the food processing sector in India. Some of the major ones are:

  • The Ministry of Food Processing Industries has taken some new initiatives to develop the food processing sector which will also help to enhance the incomes of farmers and export of agro and processed foods among others. The government has also approved the setting up of five numbers of Mega Food Parks in the states of Bihar, Maharashtra, Himachal Pradesh and Chattisgarh.
  • The Government of India has set up a Rs 2,000 crore (US$ 315.15 million) corpus for Nabard to help lend to food processing units at a lower interest rate. The fund will be provided to large food chains and units and also for creation of infrastructure in these parks.
  • The Indian Institute of Packaging (IIP) has planned to offer a packaging solution to the famed Tirupati ‘Laddu’ to enhance its shelf life. They have also planned to install automatic vacuum packaging system for the packaging of ‘Laddu’ with higher shelf life.
  • The State Government of West Bengal has decided to arrange land for any investment in agriculture-related units. The government has also taken up a hands-off policy regarding procurement of land for setting up industrial projects.
  • The Government has set up the Expenditure Management Commission to rationalise subsidies, among other expenditure items in India. India incurs nearly one per cent of food subsidy annually, generally utilised under the existing public distribution system (PDS) consisting of Food Corporation of India (FCI) and nearly five lakh Fair Price Shops (FPSs).

Road Ahead

In the upcoming years, the government will explore new scheme for infrastructure and cluster development of perishables. It would also facilitate solutions to industries for the issues related to FSSAI.

Furthermore, the Vision Document-2015 shall help to improve the state of the food industry in India. This document was prepared by the Food Processing Ministry, which envisaged trebling the size of investment in the processed food sector by increasing the level of processing of perishables from 6 per cent to 20 per cent, value addition from 20 per cent to 35 per cent and share in global food trade from 1.5 per cent to 3 per cent by 2015.

Exchange rate used: INR 1 = US$ 0.0157 as on December 23, 2014

References:Ministry of Food Processing Industries (MoFPI), Agricultural and Processed Food Products Export Development Authority (APEDA), Media reports and Press Releases, Department of Industrial Policy and Promotion (DIPP), Press Information Bureau (PIB), Confederation of Indian Industries (CII)