India’s food processing ministry is designing a new incentive framework to build on the current PLI scheme, which concludes in 2027. The government is engaging with industry leaders to focus on specialized areas like plant-based proteins and food waste reduction technology. This policy shift aims to support the government's target of increasing farm output processing to 25% by 2031.
The Ministry of Food Processing Industries has begun consultations to develop a successor to its current Production Linked Incentive (PLI) scheme. While the existing program is set to run until March 31, 2027, the government is already evaluating new structures to maintain momentum in the sector. Unlike the current model, which focuses primarily on rewarding incremental sales growth, the new framework may offer more targeted support for specific segments.
Impact of the Current Scheme
The outgoing PLI initiative has served as a significant driver for capital spending in the food processing industry. Official data indicates that the scheme attracted ₹9,207 crore in investments, surpassing the initial commitment of ₹7,722 crore. This influx of capital has expanded processing and preservation capacity by 3.4 million tonnes per year. Furthermore, the initiative is credited with creating approximately 329,000 jobs, providing a boost to employment in rural regions where these processing units are often located.
Strategic Focus Areas
In discussions with industry stakeholders, the ministry has highlighted several key growth areas for the next phase of support. These include plant-based proteins, specialized nutrition products, and dairy by-products. Additionally, there is a strong emphasis on funding technologies that reduce food waste during the processing stage. By focusing on these high-value segments, the government intends to help companies move toward premium products that cater to changing consumer habits, such as the rising demand for healthier and more convenient food options.
Future Growth and Industry Outlook
The broader goal for the Indian food processing sector is to increase the level of farm output processing from 17% in 2023 to 25% by 2031. With projections suggesting the market could reach $600 billion by 2030, the policy framework will play a major role in encouraging private companies to invest. However, the success of this transition will depend on predictable government policies regarding export rules, taxation, and long-term investment incentives. Industry experts have suggested that establishing time-bound working groups with measurable milestones will be essential to ensure these new incentives lead to actual expansion rather than just temporary benefits.
Investors should monitor the specific guidelines and eligibility criteria of the proposed successor program as they are finalized. Key monitorables include the focus on capital-intensive technology projects, the duration of the new incentives, and whether these measures can successfully balance the need for rapid processing capacity growth with the long-term profitability of the companies involved.