Advantage India
Growing
Demand
*India is the fourth largest economy in the world and expected to be the fastest-growing economy among major G20 countries, with GDP growth estimated to be around 6.9% in FY26.
*Indian food processing market size reached Rs. 30,49,800 crore (US$ 354.5 billion) in 2024 and is expected to grow to Rs. 4,584,415 crore (US$ 535 billion) by the end of FY26.
*As of 2024, it contributes around 8.80% and 8.39% of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13% of India's exports and 6% of total industrial investment.
Competitive
Advantage
*India is the largest producer of milk and spices and one of the leading producers of fruits and vegetables, poultry, and meat.
*India has access to several natural resources that provides it with a competitive advantage in the food processing sector.
Government
support
*APEDA has launched the Bharat's Hub for Agritech, Resilience, Advancement and Incubation for Export Enablement (BHARATI) initiative to empower 100 agri-food and agri-tech startups, foster innovation, improve export readiness and help India achieve Rs. 4,28,450 crore (US$ 50 billion) in agri-food exports of its scheduled products by 2030.
*The Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) offers Rs. 10,900 crore (US$ 1.3 billion) to incentivize food manufacturing, promote innovative SME products, and boost Indian brands globally.
Opportunities
*According to the Viksit Bharat@2047 report, India's food processing sector will grow significantly, reaching US$ 1,100 billion by FY35, US$ 1,500 billion by FY40, US$ 1,900 billion by FY45, and US$ 2,150 billion by FY47.
*From April 2000 to June 2025, the food processing industry received Rs. 1,15,596 crore (US$ 13.4 billion) FDI.
*The growing consumption of food is expected to reach US$ 1.2 trillion by CY26, owing to urbanization and changing consumption patterns.
Introduction
India is the fourth largest economy in the world and is projected to be the fastest growing among major G20 nations, with GDP growth expected at 6.9% in FY26. Within this growth story, the food processing sector has emerged as a vital contributor to the economy, driven by progressive policy measures of the Ministry of Food Processing Industries (MoFPI). The sector plays a crucial role in Gross Domestic Product (GDP), employment generation, and industrial investment. In 2024, it accounted for around 8.80% and 8.39% of Gross Value Added (GVA) in Manufacturing and Agriculture, respectively, while contributing 13% of India’s exports and 6% of overall industrial investment. GVA from food processing increased from Rs. 1.61 lakh crore (US$ 24.60 billion) in 2015-16 to Rs. 1.92 lakh crore (US$ 24.43 billion) in 2022-23, according to the Ministry of Statistics and Programme Implementation.
India’s diverse agro-climatic conditions provide it with a strong and sustainable raw material base. The country has established itself as a global leader in milk production, accounting for nearly 25% of global output in 2023-24. It also ranks second in the
production of vegetables, fruits, and eggs, and fifth in meat production. Moreover, India is the largest producer of spices worldwide, recording 11.80 million tonnes of production in FY24, as per the Spices Board of India.
The Indian food and grocery market is the world’s sixth largest, with retail contributing 70% of sales. The food processing industry alone represents 32% of this market, making it one of the country’s largest industries and positioning it fifth globally in terms of production, consumption, exports, and anticipated growth.
A robust food processing sector is critical for addressing India’s food and nutritional security challenges. Processed food enhances shelf life, improves convenience, enables distribution to remote regions, and ensures better accessibility for consumers. For farmers, it provides higher value realization and wider market opportunities, creating a strong multiplier effect across the economy.
Market Size
India, the most populous countries globally, is expected to maintain one of the youngest populations until 2030. Rising urbanization and changing consumption patterns are driving food consumption, which is projected to reach US$ 1.2 trillion by FY26. The processed fruits and vegetables segment alone was valued at US$ 15.4 billion in 2019, while consumer demand has been steadily increasing for ready-to-eat (RTE), ready-to-cook (RTC), dairy, and fruit and vegetable products.
The Indian food processing market reached Rs. 30,49,800 crore (US$ 354.5 billion) in 2024 and is expected to grow to Rs. 4,584,415 crore (US$ 535 billion) by the end of FY26. In the long term, the sector is projected to expand to Rs. 60,22,100 crore (US$ 700 billion) by 2030, Rs. 94,63,300 crore (US$ 1,100 billion) by 2035, Rs. 1,29,04,500 crore (US$ 1,500 billion) by 2040, Rs. 1,63,45,700 crore (US$ 1,900 billion) by 2045, and Rs. 1,84,96,450 crore (US$ 2,150 billion) by 2047, according to PHDCCI.
India’s exports in the food processing sector are also witnessing strong growth. In FY26 (April-August 2025), exports of processed fruits and vegetables stood at Rs. 6,251 crore (US$ 729 million), animal products at Rs. 10,223 crore (US$ 1,193 million), and other processed foods at Rs. 11,054 crore (US$ 1,290 million). The total exports,
including floriculture, fresh fruits and vegetables, cereals, cashew, and herbal and medicinal plants, reached Rs. 59,118 crore (US$ 6,899 million) during the same period. Exports are expected to surpass FY25 levels, supported by GST reforms and market-diversification initiatives.
The food processing industry contributes around 32% of the overall Indian food market, 13% of total exports, and 6% of industrial investment. It is also a significant source of employment, engaging approximately 1.93 million people in the registered sector and 5.1 million workers in the unregistered sector. According to the Viksit Bharat@2047 report, the sector is expected to reach US$ 1,100 billion by FY35, US$ 1,500 billion by FY40, US$ 1,900 billion by FY45, and US$ 2,150 billion by FY47, underscoring its long-term growth potential.
Recent Development/Investments
The food processing sector has seen some major developments and investments in the recent past.
- From April 2000 to June 2025, the food processing industry received Rs. 1,15,596 crore (US$ 13.4 billion) FDI. As of June 2025, Food processing is the 15th largest recipient of FDI inflow in the country.
- The Sector contributes 1.8% of total FDI inflows received from April 2000 to June 2025.
- In a major boost to the dairy industry, India’s iconic dairy brand, Amul has announced setting up the world’s largest curd (dahi) manufacturing facility in Kolkata. This new integrated dairy plant, backed by Rs. 600 crore (US$ 69.1 million) investment will significantly expand Amul’s footprint in West Bengal.
- Amul has been named the world's strongest food and dairy brand in the Brand Finance Food & Drink 2024 report, achieving an impressive Brand Strength Index (BSI) score of 91.0 out of 100 and earning a prestigious AAA+ rating. This recognition underscores Amul's leadership in the global food and dairy industries.
- As on 30th June 2024, Ministry of Food Processing Industries has approved 41 Mega Food Parks, 399 Cold Chain projects, 76 Agro-processing Clusters, 588 Food Processing Units, 61 Creation of Backward & Forward Linkages Projects & 52 Operation Green projects under corresponding component schemes of PMKSY.
- A total of 92,549 micro food processing enterprises has been approved for assistance under PMFME as on 30th June 2024.
- The Ministry of Food Processing Industries (MoFPI) was allocated Rs. 4,364 crore (US$ 505.70 million) in the Union Budget 2025-26.
- Pradhan Mantri Kisan Sampada Yojana (PMKSY) budget was allocated Rs. 729 crore (US$ 84.50 million). The food processing industry's Production-Linked Incentive Scheme was allocated Rs. 1,444 crore (US$ 167.30 billion) to promote innovation in the sector.
- An outlay of Rs. 2,000 crore (US$ 231.80 million) was allocated towards the Prime Minister Formalization of Micro Food Processing Enterprises Scheme (PMFME).
- In the Interim Budget 2024-25, the Ministry of Food Processing Industries was allocated a total Budget of Rs. 3,290 crores (~US$ 396 million), an increase of ~13% over revised estimates for fiscal year 2024.
- Of the total budget, Rs. 2,173.02 crore (~US$ 261.5 million) was allocated towards central sector schemes and projects, including the Pradhan Mantri Kisan Sampada Yojana (PMKSY) and Production-Linked Incentive Scheme for Food Processing Industry (PLISFPI).
- An outlay of Rs. 879.5 crore (~US$ 105.8 million) was allocated towards the centrally sponsored schemes including the Prime Minister Formalization of Micro Food Processing Enterprises Scheme (PMFME).
- The Ministry of Food Processing Industries hosted ‘World Food India’ event, in November 2023, in New Delhi. The event provided a distinctive platform to all the stakeholders in the food value chain including food processors, equipment manufacturers, producers, cold chain players, technology providers, logistics players, researchers, start-ups and innovators, food retailers etc. to engage and demonstrate their capabilities.
- The United Nation’s General Assembly (UNGA) declared 2023 as the International Year of Millets. The Union Budget 2023-24 included a special focus on millet, highlighting the aspirations to make India a Global Hub for Millets (Shree Anna).
- During the Presidency of G20 summit, India had organized a two-day Global Millets Conference in March 2023 in New Delhi bringing together participants from more than 102 countries facilitating discourse on important issues related to millets, including its production, consumption, nutritional benefits, value chain development, market linkages, and research and development.
- The Indian Institute of Millets Research in Hyderabad was declared as a Centre of Excellence for sharing best practices, research, and technology at national and international level.
- The Mega Food Park (MFP) Scheme was launched to integrate agricultural production with the market by bringing together farmers, processors, and retailers. The scheme follows a cluster approach, establishing modern food processing units within well-defined agri/horticultural zones. Each park includes supply chain infrastructure like collection centres, processing units, and cold chains, along with developed plots for entrepreneurs. Under the MFP scheme 41 projects were approved, of which 24 are operational as of December 2023.
- In 2022, a Special Food Processing Fund of US$ 263 million (Rs. 2,000 crore) was set up with National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit for investments in setting up units under Mega Food Parks (MFP) and Designated Food Parks (DFP).
- The Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) was approved in March 2021, with a budget of US$ 1.3 billion (Rs. 10,900 crore) to be implemented from 2021-22 to 2026-27. It is aimed at incentivizing manufacturing, promoting innovative/organic SME products, and endorsing Indian brands internationally. Additionally, a PLI Scheme for Millet-based Products (PLISMBP) was launched in FY23 with an outlay of ~US$ 96 million (Rs. 800 crore).
Government Initiatives
- India is boosting turmeric exports via the SPICED scheme, which includes quality certification, value-addition support, post-harvest upgrades, and domestic & international market linkage programs under the newly formed National Turmeric Board.
- Under Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), 1,601 food processing or preservation projects have been sanctioned as of June 2025, 1,133 of which are completed, benefiting 34.15 lakh farmers across India.
- APEDA has launched the Bharat's Hub for Agritech, Resilience, Advancement and Incubation for Export Enablement (BHARATI) initiative to empower 100 agri-food and agri-tech startups, foster innovation, improve export readiness and help India achieve Rs. 4,28,450 crore (US$ 50 billion) in agri-food exports of its scheduled products by 2030.
- The Government of India (GOI) introduced the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), administered by the Ministry of Food Processing Industries (MoFPI). The scheme aims to establish modern infrastructure and streamline supply chain management from farm to retail, fostering growth in the food processing sector. It aims to enhance farmer returns, double farmers' incomes, generate employment opportunities in rural areas, reduce agricultural wastage, increase processing levels, and boost processed food exports.
- The Agro Processing Cluster Scheme under PMKSY is aimed at developing modern infrastructure and common facilities to facilitate the establishment of food processing units based on a cluster approach. This involves connecting groups of producers/farmers with processors and markets through a well-equipped supply chain. Each agro-processing cluster includes Basic Enabling Infrastructure (such as roads, water supply, power supply, drainage, ETP) and Core Infrastructure/Common facilities (including warehouses, cold storages, IQF, tetra pack, sorting, grading) along with at least 5 food processing units requiring a minimum investment of Rs. 25 crore (-US$ 3 million). The units are established simultaneously with the creation of common infrastructure, requiring at least 10 acres of land arranged either through purchase or lease for a minimum of 50 years.
- The "Integrated Cold Chain and Value Addition Infrastructure" Scheme under PMKSY was launched to establish uninterrupted cold chain facilities from farm to consumer, including pre-cooling, storage, and distribution. It encompasses various temperature-controlled storage, packing, and transportation facilities for diverse products like horticulture, dairy, and meat.
- The cold chain infrastructure created by 372 completed cold chain projects under this scheme until October 2023 involve 10.3 lakh MT of Cold Storage, Controlled Atmosphere (CA)/Modified Atmosphere (MA) Storage and Deep Freezer, 335 MT per hour of Individual Quick Freezing (IQF), 175.8 Lakh Litres Per Day (LLPD) Milk Processing/Storage, and 1860 reefer vehicles.
- Milk production has increased by 63.56% over the past 10 years from 146.3 million tonnes during FY15 to 239.2 million tonnes during FY24, with an annual growth rate of 5.7 % during the past 10 years.
- The Mega Food Park (MFP) Scheme was launched under PMKSY to integrate agricultural production with the market by bringing together farmers, processors, and retailers. The scheme follows a cluster approach, establishing modern food processing units within well-defined agri/horticultural zones. Each park includes supply chain infrastructure like collection centres, processing units, and cold chains, along with developed plots for entrepreneurs. Under the MFP scheme 41 projects were approved, of which 24 are operational as of December 2023.
- MoFPI initiated the PM Formalisation of Micro food processing Enterprises Scheme (PMFME) nationwide to aid micro food processing enterprises with financial, technical, and business assistance for upgrading operations.
- The One District One Product (ODOP) scheme under PMFME was launched to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products. It aims to provide the framework for value chain development and alignment of support infrastructure. ODOP approved for 713 districts in 35 States/UTs with 137 unique products.
- The Branding and Marketing support scheme provides 50% financial grant to groups of FPOs, Self Help Groups (SHGs), cooperatives to promote their existing or proposed brands to market their processed food products under the scheme.
- Food processing units qualify for complete profit exemption in the first five years and 25 percent (30 percent in case of companies) for next 5 years. 100% deduction permitted on capital expenditure for cold chain or warehouse.
- Loans to food and agro-based processing units and cold chain have been classified under agriculture activities for Priority Sector Lending (PSL).
- Government allows 100% FDI in the food processing sector under the automatic route, facilitating a straightforward and efficient investment process.
Road Ahead
The Indian food processing sector offers a promising growth journey ahead and presents several opportunities with the sector being recognised as a key priority industry under the “Make in India” initiative. The MoFPI has undertaken several initiatives aimed at enhancing infrastructure and fostering food processing industries to stimulate investment in this domain. The Indian Government has sought to involve multiple stakeholders to improve interactions between farmers, processors, distributors, and retailers to establish strong supply chains linking farmers to processing and marketing to empower them with nearby grading and storage facilities which will enhance the value of their products.
There are substantial investment prospects totalling US$ 2.36 billion across 31 projects under Common Infrastructure for Industrial Parks which includes facilities such as specialized processing units, effluent treatment plants, testing laboratories, common warehouses, and logistics support. Foreign investment opportunities in India's food processing sector are also promising due to favourable policies, a vast consumer market, and government initiatives focused on improving the sector's competitiveness and sustainability.
Note: Conversion rate used in July 2025 is Rs. 1 = US$ 0.011
References: Ministry of Food Processing Industries (MoFPI), Press Information Bureau, Nivesh Bandhu Investor Portal, Source: Agricultural & Processed Food Products Export Development Authority (APEDA), News Articles, Department for Promotion of Industry, and Internal Trade (DPIIT), Union Budget 2023-24, Interim Budget 2024-25, Union Budget 2025-26, Grant Thornton - Viksit Bharat by 2047: Role of the food processing sector, India Investment Grid, Startup India.
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