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Food processing 'A sunrise sector'

With a massive food market that is fast expanding, exciting growth in the retail sector and attractive economic policies and fiscal incentives, India's food ecosystem is the place to be in. Food sector has emerged as high growth and high-profit sector due to its immense potential for value addition, particularly within the food processing industry. The Industry is rapidly expanding with 42 mega food parks being set up with an allocated investment of USD 2.3 bn.

  •  By 2020, Indian dairy industry is expected to double to USD 140 bn
  •  By 2020, Indian food and retail market is projected to touch USD 482 bn
  •  By 2020, food processing sector has the potential of attracting USD 33 bn of investment in coming years  
  •  By 2030, Indian annual household consumption to treble, making India 5th largest consumer

100% FDI is permitted under the automatic route in food processing industries

100% FDI is allowed through government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India.

For more details refer FDI Policy 2017


  • World's largest producer of milk
  • World's largest processor and third largest producer of cashew nuts
  • World's second largest producer of food grains,fruits and vegetables

Industry Scenario

The processed food market , currently valued at USD 322 bn in 2016, is expected to grow to USD 543 bn by 2020 at a CAGR of 14.6%.

Food processing has an important role to play in linking Indian agriculture to consumers in the domestic and international markets. The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments across the value chain. The sector has a total of 38, 603 registered units with fixed capital of USD 29.7 bn (INR 19,199,360 Lakh), around 1.77 mn persons engaged and aggregate output of around USD 144.6 bn (INR 9,341,49 crores). Major industries constituting the food processing sector are grains, sugar, edible oils, beverages and dairy products.

  • Major food categories and their share in the food processing sector are as follows: 
    •   Dry food grocery: 34.7%
    •   Milk & dairy products: 16%
    •   Fresh produce: 15.6%
    •   Perishables: 8%
    •   Spices: 6%
    •   Others: 19.7%
  •   Indian food processing industry has two major sub-segments:
    •   Food and grocery retail (92%)
    •   Foodservice market (8%)

Growth Drivers

Food GD
  • Share in India's Food market


  • Employment share


  • Constitution of Indian exports


  • Cropping intensity


Key policies

Nivesh Badhu

To improve ease of doing business and boost investors’ confidence, a dedicated investors’ portal "Nivesh Bandhu" has been set up by MoFPI aimed at easing the process for investors.

Dairy Processing & Infrastructure Development Fund

The Cabinet Committee on Economic Affairs,  chaired by Prime Minister Shri Narendra Modi has approved a Dairy Processing & Infrastructure Development Fund” (DIDF) with an outlay of Rs 10,881 crore during the period from 2017-18 to 2028-29.

The project will focus on building an efficient milk procurement system by setting up of chilling infrastructure & installation of electronic milk adulteration testing equipment, creation/modernization/expansion of processing infrastructure and manufacturing faculties for Value Added Products for the Milk Unions/ Milk Producer Companies

Pradhan Mantri Kisan Sampada Yojana

The Ministry of Food Processing Industries has been implementing several schemes under the umbrella of the ‘Pradhan Mantri Kisan Sampada Yojana’ . These schemes, with an allocation of INR 60 billion (US$ 900 million) for the period 2016 to 2020, are expected to leverage investments of INR 314 billion (US$ 5 billion) for development of infrastructure in the food processing sector

The following schemes will be implemented under PM Kisan SAMPADA Yojana:
• Mega Food Parks
• Integrated Cold Chain and Value Addition Infrastructure
• Creation / Expansion of Food Processing & Preservation Capacities
• Infrastructure for Agro-processing Clusters
• Creation of Backward and Forward Linkages
• Food Safety and Quality Assurance Infrastructure
• Human Resources and Institutions

PM Kisan SAMPADA Yojana is expected to leverage investment of Rs. 31,400 crore for handling of 334 lakh MT agro-produce valued at INR 1,04,125 crore, benefiting 20 lakh farmers and generating 5,30,500 direct/indirect employment in the country by the year 2019-20


The Government of India encourages farmers in taking up projects in select areas by subsidizing a portion of the total project cost. All these projects aim at enhancing capital investment, sustained income flow and employment areas of national importance.

FDI Facts

  • FDI inflows (in USD) in April 2000 - September 2017

  • FDI equity inflows (in USD) in April 2014 - March 2017

  • Share in total FDI inflows

Recent Investments

  • November 2017 - ITC, would invest over USD. 1.55 bn in food processing and logistics facilities, PepsiCo, along with its partners, would invest USD 2 bn in the next 5 years. Hershey Co is likely to invest USD 50 mn in the next 5 years

  • November 2017 - Cargill, a leading food and agriculture player is planning to invest USD 240 mn in India over the next 5 years

  • November 2017 - Coca-Cola Company, its bottling partners and its fruit suppliers and processors in India, will contribute more thanUSD 1.7 bn in the agri ecosystem of the country over the next 5 years, spanning the entire supply chain from Grove to Glass through a unique concept called the Fruit Circular Economy.

  • March 2017 - Global e-commerce giant, Amazon is planning to enter the Indian food retailing sector by investing USD 515 mn in the next 5 years

Major Investors