Whalesbook
PLI Scheme Drives Massive Investment
The Indian food processing sector has attracted approximately ₹9,207 crore in investment from 168 approved entities under the Production-Linked Incentive Scheme for Food Processing Industries (PLISFPI). As of December 31, 2025, this has facilitated the creation of about 35 lakh metric tonnes per annum of new processing and preservation capacity nationwide. The government has disbursed ₹2,714.79 crore in incentives so far. Notably, 69 of the approved applicants are Micro, Small, and Medium Enterprises (MSMEs), alongside cooperative entities and those focusing on innovative or organic food products, indicating a wide reach for the scheme. The PLISFPI aims to develop leading Indian food manufacturers, promote brands globally, increase off-farm employment, and ensure fair prices for farm produce.
Infrastructure Growth Under PMKSY
The Pradhan Mantri Kisan Sampada Yojana (PMKSY) is strengthening essential infrastructure for the food processing industry. As of January 31, 2026, 41 Mega Food Park projects and 401 Cold Chain projects have been sanctioned, with 25 Mega Food Parks and 302 Cold Chain facilities now operational. The rest are in development. These initiatives support the government's goal of building a robust food processing ecosystem ready for increased production and distribution. The broader Indian food processing sector is projected to reach approximately $535 billion by the end of FY26, a significant rise from an estimated $336.4 billion in 2023, fueled by demand, exports, and policy interventions.
Gaps Remain in Realizing Full Potential
Despite substantial investment and capacity creation under the PLISFPI and PMKSY, the sector's full potential relies on efficiently utilizing this new capacity and improving farmer incomes, a key objective of the PLI scheme. India's overall food processing rates remain below global levels, particularly for fruits and vegetables. This gap presents opportunities to reduce waste and increase value for agricultural goods. Exports of agricultural and processed food products have grown strongly, surpassing $49 billion in FY2024-25. Processed food exports alone were an estimated $12.5 billion in FY2025, marking a 15% annual increase. However, India's share of global food trade remains around 1.5%, signaling a need for greater global competitiveness. Exports from PLISFPI-approved companies have seen a 13.23% annual growth rate since the 2019-20 period.
Challenges in Infrastructure and Scheme Uptake
Despite government initiatives, significant structural issues persist. Gaps in infrastructure, particularly cold storage, contribute to major post-harvest losses, estimated at over 30% of produce. Some food sector companies have reportedly faced issues with subsidy disbursement under the PLI scheme due to not meeting investment thresholds or stipulated growth targets. This indicates that the scheme's benefits may not be universally accessible, requiring strict adherence to guidelines for effective uptake. Ensuring fair prices and higher incomes for farmers needs continued focus to translate increased processing capacity into tangible economic benefits for rural communities. While key industry players like ITC, Britannia, and Nestle dominate by leveraging their networks, enabling smaller players and cooperatives to fully benefit from new capacities remains a challenge.
Future Growth Outlook
The Indian food processing sector is set for continued growth, with projections anticipating it could reach $735.5 billion by 2032. This expansion is expected to be fueled by increasing domestic consumption, driven by urbanization and rising incomes, alongside a growing export market and continued policy support from schemes like PLISFPI and PMKSY. Emerging trends, such as growing demand for organic foods and plant-based diets, plus the integration of technologies like AI and smart packaging, are anticipated to influence the sector's future. Government allocations in the Union Budget 2025-26 for central sector schemes, including PMKSY and PLISFPI, underscore an ongoing commitment to this vital industry.