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Indian Food Processing Industry Analysis

October, 2014

India holds the second-largest arable land resources in the world and also possesses 46 of the 60 soil types in the world. The country is the largest producer of pulses, milk, tea, cashew, mangoes, and buffalo meat; and the second-largest producer of tea, wheat, sugarcane, and rice.

The domestic food processing industry in India is expected to reach US$ 200 billion in 2015 from US$ 135 billion in 2012. This industry ranks fifth in India in terms of production, consumption and exports. The sector is expected to contribute 6.5 per cent to the country's gross domestic product (GDP) by FY15. The unorganised sector accounts for 42 per cent of India's food processing industry, followed by small-scale industries at 33 per cent and the organised sector at 25 per cent.

The Government of India's strong policy support gives a boost to this sector. Some of these policies, such as encouraging the private sector by exempting the export earnings from corporate taxes, has helped in this sector's growth. The government has also allowed 100 per cent foreign direct investment (FDI) under automatic route, opened up mega food parks, assigned Agri Export Zones and provided incentives for development of storage facilities.

There is enough scope for growth in the food industry in supply chain infrastructure and contract farming. Also, the government's policies are expected to help turn the Indian food processing industry into a global outsourcing hub.

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