India is the fifth largest economy in the world and expected to be the fastest-growing economy among major G20 countries, with GDP growth estimated to be around 8% in FY24. The food processing sector has become a key contributor to India's economy over the past few years, thanks to progressive policy measures by the Ministry of Food Processing Industries (MoFPI). The sector has performed exceptionally well with an impressive average annual growth rate of 7.3% from 2015 to 2022. It has significantly contributed to Gross Domestic Product (GDP), employment, and investment, accounting for 10.54% of Gross Value Added (GVA) in Manufacturing and 11.57% in Agriculture sector in 2020-21.
India has access to several natural resources that provide it with a competitive advantage in the food processing sector. Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material base suitable for food processing industries. The Indian food processing sector encompasses sub-sectors like fruits and vegetables, poultry and meat, dairy, fisheries and marines, food grains, spices, nutraceuticals, and ready-to-cook/ready-to-eat food segments.
India was a global leader in milk production contributing ~25% to global milk production, in 2022-23. Milk production in the country has grown at the Compound Annual Growth Rate (CAGR) of 5.85% from 2014-15 to 2022-23. The country ranks 2nd and 5th in global egg and meat production, respectively. Egg production has grown at CAGR of 7.35% per annum, while meat production has increased at 4.3% over the eight years till 2022-23.
India was the 2nd largest producer of vegetables and fruits with India's horticulture production in 2022-23 projected at 351.92 million tonnes. Additionally, India is the largest producer of spices in the world. India produced 11.26 million tonnes of major spices in 2022-23, as per the third advanced estimate by spices board of India.
As of 2024, the Indian food and grocery market is the world's sixth largest, with retail contributing 70% of the sales. The Indian food processing industry accounts for 32% of the country's total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.
According to a Deloitte study on Level of Food Processing in India in 2020-21, processing levels were at 2.7% for vegetables, 4.5% for fruits, 15.4% for fishery, 21.1% for milk, and 34.2% for meat.
Food processing industry contributes 32% to this food market and is also one of the largest industries in the country, contributing 13% to total exports and 6% of industrial investment.
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.
In the last eight years ending 2022-23, Food Processing sector has been growing at an Average Annual Growth Rate (AAGR) of around 5.35%.
Growth in India is projected to remain strong at 6.3% in 2024. In 2023, India imported US$ 21 billion of processed foods and related products from all sources, while exports totalled US$ 17 billion.
Milk production of India is estimated to reach 236.35 million tonnes in 2023-24 registering a growth of 2.5% over 230.58 million tonnes in 2022-23.
India is one of the largest populated countries in the world and is expected to continue having one of youngest populations in the world till 2030. The market size of food processing sector in India is estimated to reach US$ 1,274 billion in 2027 from US$ 866 billion in 2022, backed by this rise in population, changing lifestyle and food habits due to rising disposable income and urbanization.
Conducive policies for encouraging FDI, tax benefits, and favourable Government schemes coupled with promising growth prospects have helped the food processing industry attract private investments. The food processing industries have attracted US$ 12.96 billion between April 2000-September 2024, constituting around 1.83% of the total FDI equity inflow in all sectors, placing it in top 15 sectors.
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.
The cold chain infrastructure created by 372 completed cold chain projects until October 2023 involves 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 processing capacity is expected to double from 53.5 MMT to 108 MMT by 2025.
Initiatives like planned infrastructure spend of around US$ 1 trillion and US$ 300 billion (Rs. 25 lakh crore) to boost the rural economy have put the food processing sector on a high growth trajectory. The food processing industry, within the registered factory sector, The market size of food employs about 1.93 million people. The unregistered sector also employs approximately 5.1 million workers.
Ministry of Food Processing Industries (MoFPI) has provided financial assistance to eligible entities for setting up of food processing projects wherein 948 cold storages with the capacity of 18.16 lakh MT have been established under various component schemes of Pradhan Mantri Kisan Sampada Yojana (PMKSY) till January 2024.
Under the Atmanirbhar Bharat Abhiyan, MoFPI implemented the Pradhan Mantri Formalization of Micro food processing Enterprises (PMFME) Scheme, offering financial, technical, and business aid to establish or upgrade micro food processing enterprises. This scheme will be operational from 2020-21 to 2024-25 with a budget of US$ 1.2 billion (Rs. 10,000 crore) and aims to support 2 lakh micro food processing enterprises.
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).
India’s agricultural and processed food exports have also gone up to more than US$ 50 billion in 2022-23, accounting for 22.6% of the overall agri-food exports. India exports key processed food products such as pulses, processed vegetables, processed fruits and juices, groundnuts, guargum, cereal preparations, milled products, alcoholic beverages, oil meals, etc.
During April-March FY24, processed fruits & Juices accounted for US$ 682.58 million, processed vegetables accounted for US$ 787.28 million, dairy products accounted for US$ 272.64 million, poultry products accounted for US$ 184.58 million, and miscellaneous processed items accounted for US$ 1326.24 million.
In FY25 (April-October) export of processed fruits and vegetables stood at US$ 1,094 million, Lives stock products at US$ 1,819 million and other processed foods stand at US$ 2,212 million.
Exports of processed fruits and vegetables increased by 9.34% year-on-year in April-February (FY23-24) while exports of livestock products increased by 12.72% and exports of other processed foods increased by 6.32% during the same period.
Exports of processed fruits and vegetables accounted for 8.19% of total exports in FY23 while exports of livestock products and other processed foods accounted for 14.75% and 18.78%, respectively. India exported US$ 1,113.17 million worth of Ready-to-Eat products, US$ 497.87 million worth of Ready-to-Cook products and US$ 537.84 million worth of Ready-to-Serve products from April to December in FY24. The major destinations of RTE export during this period were the U.S.A, U.A.E, and Canada while the major export destinations for RTC export were Bangladesh, U.S.A, Nepal, and U.A.E. The share of processed food exports in Agri-exports has increased substantially from 13.7% in 2014-15 to 25.6% in 2022-23.
The food processing sector has seen some major developments, investments, and support from the Government in the recent past.
- 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.
- 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 crore (~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 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.
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.
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 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. These facilities are designed to support the industry's manufacturing processes and ensure compliance with environmental regulations while promoting efficient production and export capabilities.
The food processing sector in India boasts over 3,300 recognized startups, employing 33,000 people and spread across 425 districts. Supported by incubators, accelerators, and funds, startups hold immense potential to drive innovation and economic growth in the food processing industry. There are several food and agriculture value chain funds like the Startup India Seed Fund Scheme, Startup India Tax Exemption Benefits, etc. that support the startups in the food processing industry.
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, Grant Thornton - Viksit Bharat by 2047: Role of the food processing sector, India Investment Grid, Startup India
Note: Conversion rate used in January 2025, Rs. 1 = US$ 0.012
