The food processing industry in India is anticipated to reach $1,274 billion in 2027 from $866 billion in 2022, driven by an ever-changing lifestyle and food habits due to growing disposable income and urbanization.
India is amongst the most populated nations of the world and is projected to maintain one of the world's youngest populations until 2030. Food consumption is likely to grow to $1.2 trillion by 2025-26, driven by urbanization and shifting patterns of consumption. According to the Viksit Bharat@2047 report, the food processing industry of India will rise significantly, achieving $1,100 billion by FY35, $1,500 billion by FY40, $1,900 billion by FY45, and $2,150 billion by FY47.
The Ministry of Food Processing Industries (MoFPI) has provided financial assistance to eligible parties for the formation of food processing projects where 948 cold storages of a capacity of 18.16 lakh MT have been set up under different component schemes of Pradhan Mantri Kisan Sampada Yojana (PMKSY) until January 2024.
Several initiatives, such as planned infrastructure expenditure of approximately $1 trillion and $300 billion (Rs. 25 lakh crore) towards strengthening the rural economy, have placed the food processing industry on a high growth path. The food processing industry, under the registered factory sector, sector, provides employment to around 1.93 million individuals. Even the unregistered sector employs around 5.1 million individuals.
The Atmanirbhar Bharat Abhiyan, MoFPI, introduced the Pradhan Mantri Formalization of Micro food processing Enterprises (PMFME) Scheme, providing financial, technical, and business support to set up or scale up micro food processing enterprises. The scheme will be in operation from 2020-21 to 2024-25 with a budget of $1.2 billion (Rs. 10,000 crore) and will facilitate 2 lakh micro food processing enterprises.
The government also provides low GST for food products, around 73% of food products are in the 0% & 5% slab. There is zero GST on milk and its products, Meat, Fish, vegetables, nuts and fruits. In the same vein, services of preconditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables, which do not change or modify the fundamental characteristics of fruits and vegetables, are also charged zero GST.
Why Food Processing?
Robust Demand
Shifting consumer tastes, an increasing middle class, and growth in health-conscious consumption patterns are driving the demand for organic, packaged, and plant-based foods.
Competitive Advantage
India is the key producer of milk and spices and is one of the top producers of vegetables and fruits, meat, and poultry. India has access to many natural resources that give it a competitive edge in the food processing industry.
Policy Support
The Government of India has announced many schemes and policies, such as Production Linked Incentive (PLI) Scheme, Pradhan Mantri Kisan Sampada Yojana (PMKSY), Pradhan Mantri Matsya Sampada Yojana (PMMSY), Agri-Export Policy, and many others, to increase the food processing sector.
Opportunities
The food and grocery market of India is the sixth largest in the world. Growing urbanization and the working population are fueling demand for processed and convenience foods. The increasing consumption of food is anticipated to reach $1.2 trillion by 2025-26, owing to shifting consumption patterns and rapid urbanization.
