Food Processing
Introduction
India is the world's second-largest producer of food and has the potential to be the biggest with the food and agriculture sector. 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 sector has the potential to attract US$ 33 billion of investment over the next decade and generate employment of 9 million person-days. India's food processing industry accounts for 32% of the country's total food market.
Market Size & Growth
The Indian food processing industry is expected to reach US$ 535 billion by 2025-26. India's food and grocery market is the world's sixth-largest, with retail contributing 70% of the sales.
The country produces about 296 million tonnes of food grains, 191 million tonnes of fruits and vegetables, 146 million tonnes of milk, and 7.7 million tonnes of fish annually. However, only about 10% of fruits and vegetables, 2% of meat and fish, and 7% of milk are currently processed.
FDI Policy
FDI in food processing sector:
- 100% FDI allowed under automatic route for food products manufacturing
- 100% FDI allowed for trading, including through e-commerce, in respect of food products manufactured in India
- No minimum investment or employment conditions
- Foreign technology collaborations are permitted
Government Initiatives
Key government initiatives for food processing:
- Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) with allocation of US$ 1.4 billion
- Mega Food Parks scheme to create modern infrastructure
- Operation Greens for promoting Farmer Producer Organizations (FPOs)
- PLI Scheme for food processing industry with outlay of US$ 1.2 billion
- Cold chain infrastructure development
- National Mission on Food Processing (NMFP)
- Ease of Doing Business initiatives for the sector
Investment Opportunities
The sector offers opportunities across the value chain including primary processing, cold chain infrastructure, retail and distribution, organic food processing, ready-to-eat products, dairy processing, seafood processing, and food testing laboratories.
With rising health consciousness and changing lifestyles, there is growing demand for processed, packaged, and convenience foods, offering significant opportunities for investors.
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