Policy Update
Deepankshi Agnihotry
According to the Food Processing Market Report 2025 (Global Edition), the global food processing market is projected to grow from USD 170,254.2 million in 2024 to USD 273,391.04 million by 2031, registering a CAGR of 7.00% from 2024 to 2031. The food processing industry involves the transformation of raw agricultural products into consumable food items through various physical, chemical, and mechanical processes. This sector plays a crucial role in enhancing the shelf life, safety, and quality of food, thus meeting the demands of a growing global population.
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Factors such as urbanization, changing lifestyles, and increased disposable income also contribute to expansion. Additionally, a growing focus on sustainability and clean labeling is shaping the industry, prompting innovation in food offerings to meet evolving consumer preferences.
India’s Food Processing Sector: Growth and Contribution
India has emerged as a major player in the global food processing market, contributing significantly to both GDP and employment. The food processing sector has become an integral part of India’s economic growth, with continuous development and a favorable policy environment.
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This incredible feat achieved by India in the Food Processing Industry (FPI) has been made possible through the efforts of the government, led by the Ministry of Food Processing Industries under the guidance of Union Cabinet Minister Shri Chirag Paswan.
Ministry Of Food Processing Industries
Established in July 1988, the Ministry of Food Processing Industries to promote food processing sector, was restructured into a Department under the Ministry of Agriculture in 1999 and later reinstated as a Ministry in 2001.
Goals and Roles
The Food Processing Industry all over the world provides vital linkages between the two important pillars of the economy- agriculture and Industry. Thus, it has a direct impact on the lives of the people as well as the environment.
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In the era of economic liberalization, the private, public, and cooperative sectors play crucial roles in the food processing industry, with the Ministry of Food Processing Industries actively promoting their participation. The Ministry aims to make food processing a national initiative by facilitating quality investments from both domestic and international sources. Its key objectives include:
- Enhancing farmer income through better utilization and value addition of agricultural produce.
- Minimizing food wastage by developing infrastructure for storage, transportation, and processing.
- Introducing modern technology in food processing from domestic and global sources.
- Encouraging R&D for product and process innovation and improved packaging.
- Providing policy and infrastructure support to drive capacity expansion and sectoral growth.
- Promoting exports of processed food products to boost global trade.
In order to ensure the overall development of Food Processing Sector and to help it to overcome various challenges, Ministry of Food Processing Industries (MoFPI) is implementing Central Sector Umbrella Scheme viz Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) and Centrally Sponsored Scheme PM Formalization of Micro food processing Enterprises (PMFME).
Pradhan Mantri Kisan SAMPADA Yojana (PMKSY)
Source-PMKSY logo
The food processing sector, characterized by its diverse processing units, has traditionally faced limited private investment in essential infrastructure and shared facilities. To address this challenge and encourage private sector participation, the Ministry of Food Processing Industries (MoFPI) has introduced various schemes focused on infrastructure development, capacity expansion, and overall sectoral growth.
A comprehensive review of these initiatives revealed critical gaps, leading to the formulation of new schemes to bridge them effectively. To enhance efficiency and maximize impact, these schemes were integrated under a single framework—the Pradhan Mantri Kisan Sampada Yojana (PMKSY)—which was launched on May 3, 2017.
Initially known as the Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters (SAMPADA), it was approved by the Cabinet Committee on Economic Affairs (CCEA) in 2017. PMKSY is a holistic program aimed at developing modern infrastructure and establishing an efficient supply chain from farm to retail. It seeks to enhance farmers’ earnings, generate employment especially in rural areas, reduce agricultural wastage, increase processing levels, and boost exports of processed foods. The scheme plays a pivotal role in accelerating the sector’s growth and contributing to the objective of doubling farmers’ income.
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In Budget 2018-19, the government introduced a new scheme, Operation Greens, as a vertical under PMKSY, focusing on the integrated development of the Tomato, Onion, and Potato (TOP) value chain. In Budget 2021-22, its scope was expanded to cover 22 perishable products, including mango, banana, apple, pineapple, carrot, cauliflower, and beans, to enhance value addition in these perishables.
Initially allocated ₹6,000 crore for 2016-20 under the 14th Finance Commission cycle, PMKSY was later extended to FY 2020-21. With the approval of the Department of Expenditure, it was extended for another year, and now, the Government of India has sanctioned its continuation with an allocation of ₹4,600 crore until March 31, 2026, aligned with the 15th Finance Commission cycle. The scheme that will continue to be implemented by MoFPI are shown below-
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However, components such as Mega Food Parks, Creation of Backward & Forward Linkages, Promotional Activities, Skill Development, and HACCP (a part of Food Safety and Quality Assurance Infrastructure) have been discontinued under the 15th Finance Commission cycle, with provisions made only for existing commitments.
By 2025-26, PM Kisan Sampada Yojana is expected to mobilize ₹11,095.93 crore in investments, benefiting 28,49,945 farmers and generating 5,44,432 direct and indirect employment opportunities across the country.
Brief overview of its key schemes
| Parameter | Integrated Cold Chain & Value Addition Infrastructure | Creation/Expansion of Food Processing & Preservation Capacities | Agro Processing Cluster (APC) Scheme | Operation Greens (OG) |
| Objectives | – Establish cold chain infrastructure to reduce food wastage- Strengthen linkages with markets for better farmer returns- Support for post-harvest storage, preservation, and transportation | – Establish new food processing units- Expand existing food processing units- Enhance value addition and processing of agricultural produce- Reduce post-harvest losses- Improve food quality and shelf life | – Establish modern infrastructure for agro-processing- Connect farmers to the market through better logistics- Provide farm-to-consumer preservation facilities- Reduce post-harvest losses and improve value addition | – Improve farmers’ income by reducing distress sale- Minimize post-harvest losses- Enhance market linkages and value realization for perishable crops- Support agro-logistics for improved supply chain |
| Focus Sector | Perishable food (fruits, vegetables, dairy, meat, etc.) | General food processing & value addition | Horticulture & agricultural production zones | Tomato, Onion, Potato (TOP) → Expanded to 22 perishable crops |
| Eligible Applicants | Individuals, FPOs, NGOs, PSUs, Private Firms | PSUs, Joint Ventures, FPOs, SHGs, NGOs, Pvt. Companies | Private firms, FPOs, NGOs, Joint Ventures, Government bodies | FPOs, Agri-entrepreneurs, Cooperatives, State Agencies, Private Investors |
| Investment Requirement | No fixed minimum | No fixed minimum | ₹25 Cr per unit | No fixed minimum; based on project proposal |
| Financial Assistance | 35% in general areas, 50% in difficult areas (Max ₹10 Cr) | Subsidy based on eligibility & location | 35%-50% of project cost (Max 40% for infrastructure) | Grants-in-aid based on approved project proposals |
| Land Requirement | Not specified | Not specified | Min. 10 acres (Owned/Leased for 50+ years) | Not specified |
| Key Components | Cold storage, ripening chambers, IQF, packaging, logistics, Reefer trucks, Farm-gate infrastructure, Pre-cooling units, Value addition centers | Food processing units, Modernization & Expansion of existing units, Technology upgradation, Packaging, Quality control labs, Market linkage support | Common facilities like Sorting & grading units, Testing labs, Dry warehouses, Cold storage, Pre-cooling chambers, IQF (Individual Quick Freezing), Boilers, Specialized packaging | Farm-gate infrastructure, Agri-logistics (transportation hubs, market linkages), Storage facilities, Food processing units, Marketing & Branding support |
| Employment Potential | Indirect job creation across supply chain | Expansion of existing workforce | 500–1,500 jobs per cluster | Employment via FPOs & market integration |
| Recent Approvals | Discontinued for fruits & vegetables after 2022 | Ongoing approvals based on fund availability | ₹234.68 Cr for 7 projects, 7,750 jobs | ₹634.59 Cr grant approved for 53 projects (Total project cost: ₹2457.49 Cr) |
| Implementation Mode | Demand-driven through EoIs | Demand-driven through eligible applicants | Project Execution Agencies (PEAs) | Proposals via EoI on SAMPADA portal |
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Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) Scheme
Source-PMFME LOGO
Launched on 29th June 2020, the PMFME Scheme is a Centrally Sponsored Scheme by the Ministry of Food Processing Industries (MoFPI). It is designed to tackle the challenges faced by micro-enterprises and to leverage the potential of groups and cooperatives in supporting their upgradation and formalization.
The Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) Scheme is implemented across India for the unorganized food processing sector, with a total outlay of ₹10,000 crore. The expenditure is shared between the Government of India (GOI) and the States in a 60:40 ratio.
Objectives
- Improve Access to Finance: Credit support for formalization and upgradation of micro-enterprises.
- Increase Revenues & Profitability: Revenue generation through skill development and capacity building.
- Enhance Compliance with Standards: FSSAI compliance and adherence to food quality and safety regulations.
- Strengthen Support Systems: Technical & skill support for enterprise growth and market linkage.
- Facilitate Formalization of the Sector: Formalization of unorganized enterprises into a regulated sector.
- Focus on Women Entrepreneurs: Support for women in micro-enterprises, promoting equal opportunities.
Key Features
- Atmanirbhar Bharat & Vocal for Local Initiative: Part of the Self-reliant India mission, boosting local food processing enterprises.
- Targeting Micro Enterprises: Promotes competitiveness of new and existing micro-enterprises in the food processing sector.
- Focus on One District One Product (ODOP): Scaling up procurement, marketing, and common services for specific products.
- Waste-to-Wealth Products: Encourages recycling & utilization of food waste in food processing.
- Support for Minor Forest Produce: Special support for tribal districts and processing forest-derived products.
- Focus on Aspirational Districts: Incentives for enterprises in economically weaker regions (Aspirational Districts).
| Operational period | 2020-21 to 2025-26 (5 years) |
| Target | 2,00,000 micro-enterprises |
| Eligibility for Individual Micro-Enterprises | – 35% credit-linked capital subsidy (up to ₹10 lakh)- Beneficiary contribution of at least 10%- Remaining funded through loans- On-site skill training and technical upgradation support |
| Eligibility for FPOs, SHGs, and Cooperatives | – Seed capital of ₹4 lakh per SHG for loans to members- 35% credit-linked capital subsidy (up to ₹3 crore) for common infrastructure- Up to 50% grant for branding and marketing- Capacity-building training and technical support |
| Support Available for Individual/Group Enterprises | – 35% credit-linked capital subsidy (up to ₹10 lakh per unit) |
| Support Available for SHGs | – Seed capital of ₹40,000 per SHG member (up to ₹4 lakh per SHG) |
| Support for Common Infrastructure | – 35% capital subsidy (up to ₹3 crore) for FPOs, SHGs, Cooperatives, and Government Agencies |
| Capacity Building & Skill Training | – Tailored Entrepreneurship Development Skilling (EDP+) for the food processing industry |
| Handholding Support | – District Resource Persons (DRPs) to help micro-enterprises with FSSAI compliance and statutory regulations |
| Scheme Purpose | Formalize unorganized micro food processing sector, enhance market linkages, and promote sustainability |
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National Mission on Edible Oils – Oil Palm (NMEO-OP)
The National Mission on Edible Oils – Oil Palm (NMEO-OP) is a new centrally sponsored initiative launched by the Government of India to increase the area and productivity of oil palm in India, with a particular focus on the North-Eastern region and the Andaman and Nicobar Islands. This mission aims to reduce the country’s reliance on imports, promote self-sufficiency in edible oils, and significantly boost domestic oil palm production.
Source-NMEO-OP
Scheme Outlay and Outcomes
The scheme has a financial outlay of Rs. 11,040 crore, with Rs. 8,844 crore from the Government of India and Rs. 2,196 crore from state governments, which also includes provisions for viability gap funding (VGF). The mission will subsume the existing National Food Security Mission-Oil Palm programme.
The mission is expected to cover an additional 6.5 lakh hectares by 2025-26, with a long-term target of reaching 10 lakh hectares under oil palm cultivation. Crude Palm Oil (CPO) production is projected to reach 11.2 lakh tonnes by 2025-26, with further growth to 28 lakh tonnes by 2029-30.
| Key Components | Details |
| Price Assurance (Viability Price – VP) | – Price protection for oil palm farmers from CPO price fluctuations.- VP = 14.3% of average CPO price (last 5 years), adjusted for Wholesale Price Index.- Monthly Formula Price (FP) and VGF mechanism to cover shortfall.- VGF paid via Direct Benefit Transfer (DBT) until November 2037.- Special provision: Additional 2% CPO price for North-East & Andaman & Nicobar Islands. |
| Assistance for Inputs/Interventions | – Support for high-quality planting materials, fertilizers, micro-irrigation systems, water harvesting, farm machinery, and intercropping.- Establishment of mills in the North-East.- Long-term contracts for FFBs purchase and CPO processing. |
| Seed Plan & Infrastructure Development | – 5-year rolling seed plan via ‘SATHI Portal’ for timely access to seeds.- 65 new seed hubs and 50 seed storage units in the public sector.- 600 Value Chain Clusters across 347 districts.- Expert training on Good Agricultural Practices (GAP) and pest/weather management. |
| Focus on North-East & Andaman & Nicobar Islands | – Special packages with increased subsidies and infrastructure (mills, processing facilities).- Government support for making oil palm cultivation viable in these regions. |
| Post-Harvest Units & Crop Diversification | – Support for post-harvest units (cottonseed, rice bran, corn oil, Tree-Borne Oils – TBOs).- Promoting crop diversification: targeting fallow lands from rice and potato crops and encouraging intercropping. |
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The NMEO-OP aims to transform India’s oil palm sector by offering price assurance, increased subsidies, and infrastructure development. By focusing on expanding cultivation, especially in the North-East and Andaman & Nicobar Islands, and providing long-term support, the mission is expected to increase domestic oil palm production, reduce reliance on imports, and ensure the self-sufficiency of edible oils. With these measures, the government intends to create a favorable environment for farmers and industry stakeholders, contributing to India’s edible oil sector’s growth and sustainability.
Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)
The Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) was approved by the Union Cabinet on 31st March 2021, with a budget of ₹10,900 crores, set to be implemented from 2021-22 to 2026-27. This scheme aims to strengthen India’s food processing industry by supporting food manufacturing entities that meet certain criteria for sales and investment in expanding their processing capacity.
| Category | Details |
| Key Features | |
| Manufacturing Incentives | Supports four major food product segments: Ready to Cook/Ready to Eat (RTC/RTE) foods, processed fruits & vegetables, marine products, and mozzarella cheese. Also includes innovative and organic products from SMEs like free-range eggs, poultry meat, and egg products. |
| Branding and Marketing | Grants provided for in-store branding, shelf space renting, and marketing to enhance the global presence of Indian food brands. |
| Investment in Capacity Building | Selected entities must meet minimum sales and investment requirements in plant & machinery over the first two years (2021-22 & 2022-23). Investments made in 2020-21 will also be considered. |
| Scheme Duration | 2021-22 to 2026-27 |
| Objectives | |
| Promote Global Champions | Foster the creation of global food manufacturing champions. |
| Brand Visibility | Strengthen Indian food brands and ensure wider global acceptance. |
| Employment Generation | Create significant off-farm employment opportunities, generating nearly 2.5 lakh jobs by 2026-27. |
| Farmer Benefit | Ensure remunerative prices for farm produce and increase farmers’ income. |
| Implementation | |
| Project Management Agency (PMA) | Responsible for appraising applications, verifying eligibility, and processing incentive claims. |
| Monitoring and Evaluation | Empowered Group of Secretaries, chaired by the Cabinet Secretary, will monitor the scheme. Third-party evaluation and mid-term review will assess progress. |
| Impact | |
| Processed Food Output | Expected to reach ₹33,494 crores by 2026-27. |
| Employment Generation | Approximately 2.5 lakh jobs created by the end of 2026-27. |
| PLI Scheme for Millet-based Products (PLISMBP) | Launched in FY 2022-23 with a budget of ₹800 crore, utilizing savings from PLISFPI. Focues on boosting millet-based product manufacturing. |
| Overall Goal | Strengthen India’s food processing industry by incentivizing both manufacturing and branding activities, ensuring competitiveness in the global market, and supporting employment generation and farmer welfare. |
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Emerging Issues
1. Regulatory Complexity and Compliance Costs
- The food processing industry must comply with stringent food safety, labeling, and quality regulations set by government agencies.
- Adhering to these standards requires substantial investments in quality control, staff training, and documentation.
- Non-compliance can lead to penalties, product recalls, and reputational damage.
- Evolving regulatory frameworks pose continuous challenges to operational efficiency and innovation.
2. Impact of COVID-19 on the Food Processing Market
- The pandemic caused supply chain disruptions, labor shortages, and increased operational costs due to health and safety protocols.
- Consumer demand for packaged and processed foods surged due to online grocery shopping and convenience preferences.
- The crisis heightened awareness of food safety and hygiene, prompting the industry to innovate and adapt.
- Long-term shifts in consumer behavior and industry operations have reshaped market dynamics.
3. Non-Tariff Barriers and Market Hindrances
- Trade restrictions, varying international quality standards, and import/export regulations create obstacles for market expansion.
- Non-tariff barriers (NTBs) increase compliance costs and limit access to global markets.
- Companies must align with international food safety and quality standards (Codex Alimentarius, ISO, HACCP) to facilitate trade.
- Regulatory harmonization is crucial for reducing trade barriers, ensuring product acceptance, and promoting global market growth.
The Ministry of Food Processing Industries (MoFPI) is addressing key challenges in the sector through regulatory reforms, financial aid, and global trade facilitation. To ease compliance, MoFPI aligns food safety regulations with international standards and supports modernization through PMKSY and PLISFPI. In response to COVID-19, it provided financial aid and expanded Operation Greens to stabilize supply chains. To tackle non-tariff barriers, MoFPI collaborates with international bodies and strengthens cold chain infrastructure to meet global food safety standards. Recent policy updates focus on harmonization with Codex, ISO, and FSSAI, enhancing trade competitiveness and industry resilience.
Way forward
The 8th edition of Indusfood Export 2025, inaugurated by the Ministry of Food Processing Industries (MOFPI), marked a significant milestone in enhancing India’s global trade relations. The event highlighted the rising demand for processed food, driven by evolving lifestyles, presenting immense growth potential for the food processing sector.
The event featured three concurrent trade fairs: Indusfood Food & Beverage, Indusfood Manufacturing, and Indusfood Agri-Tech, all designed to foster synergies across the entire farm-to-fork value chain. In line with the commitment to food safety, the government announced the establishment of 100 new food testing labs to ensure compliance with international food safety standards.
Additionally, the National Institute of Food Technology Entrepreneurship and Management (NIFTEM-K) hosted an international delegation from ECOWAS, the National Fortification Alliances, and the West African Health Organization (WAHO). The collaboration provided a platform for sharing India’s expertise in food fortification and technological innovations aimed at enhancing global nutrition security.
This collaboration aligns with India’s Vocal for Local initiative, in line with PM Modi’s commitment to enhancing India’s role in global food trade. The event further contributes to the fulfillment of the Sustainable Development Goals (SDGs), particularly in the areas of hunger eradication and poverty alleviation.
The New budget for 2025-26 also highlights the importance of the Ministry of Food Processing Industries in India’s aim for Viksit Bharat by 2047. The government has allocated a total outlay of ₹10,000 crore for the PMFME Scheme. This initiative, along with other schemes like PM Matsya Sampada Yojana and the Agriculture Infrastructure Fund, establishment of National Institute of Food Technology, Entrepreneurship, and Management in Bihar, reflects the government’s commitment to strengthening the food processing sector, promoting formalization, and enhancing infrastructure to support farmers and entrepreneurs. These steps are crucial to achieving sustainable growth and fostering innovation in the food processing industry.
References
- Cognitive Market Research. (2025). Food processing market report. Retrieved from https://cognitivemarketresearch.com/food-processing-food-market-report
- Ministry of Food Processing Industries. (n.d.). About Operation Greens. Retrieved from https://www.mofpi.gov.in/Schemes/about-operation-greens
- Press Information Bureau. (2024). Press release: Food processing industry updates. Retrieved from https://pib.gov.in/PressReleasePage.aspx?PRID=1988181
- PepsiCo. (2024). PepsiCo launches “Taste of Tomorrow” to bring flavor and funding to HBCU students. Retrieved from https://www.pepsico.com/our-stories/press-release/pepsico-launches-taste-of-tomorrow-to-bring-flavor-and-funding-to-hbcu-students-08282024
- Invest India. (n.d.). Food processing sector overview. Retrieved from https://www.investindia.gov.in/sector/food-processing
- World Food India. (n.d.). Investor portal. Retrieved from https://worldfoodindia.gov.in/investor
- India Brand Equity Foundation. (n.d.). Food processing industry overview. Retrieved from https://ibef.org/industry/food-processing
- Ministry of Food Processing Industries. (2023). Annual report 2023. Retrieved from https://www.mofpi.gov.in/sites/default/files/english_annual_report_final-ilovepdf-compressed_1.pdf
- Government of India. (n.d.). Pradhan Mantri Kisan Sampada Yojana. Retrieved from https://www.india.gov.in/spotlight/pradhan-mantri-kisan-sampada-yojana
- Ministry of Food Processing Industries. (n.d.). Mega Food Parks Scheme. Retrieved from http://mofpi.nic.in/Schemes/mega-food-parks
- Press Information Bureau. (2024). Press release on food processing industry updates. Retrieved from https://pib.gov.in/PressReleseDetailm.aspx?PRID=2036980®=3&lang=1
- Invest India. (n.d.). Cold chain infrastructure in India and its future potential. Retrieved from https://www.investindia.gov.in/blogs/cold-chain-infrastructure-india-and-its-future-potential
- India Filings. (n.d.). Scheme for integrated cold chain and value addition infrastructure. Retrieved from https://www.indiafilings.com/learn/scheme-for-integrated-cold-chain-value-addition-infrastructure/
- NITI Aayog. (n.d.). Policy viewer: Food processing industry updates. Retrieved from https://www.nitiforstates.gov.in/policy-viewer?id=SNC2234C000108
- Ministry of Food Processing Industries. (n.d.). Production Linked Incentive Scheme for Food Processing Industry (PLISFPI). Retrieved from https://www.mofpi.gov.in/en/PLISFPI/central-sector-scheme-production-linked-incentive-scheme-food-processing-industry-plisfpi
- National Food Security Mission. (n.d.). National Mission on Edible Oils – Oil Palm Guidelines. Retrieved from https://nfsm.gov.in/Guidelines/NMEO-OPGUIEDELINES.pdf
- Ministry of Food Processing Industries. (n.d.). Scheme for creation of infrastructure for agro-processing clusters. Retrieved from https://www.mofpi.gov.in/en/Schemes/agro-processing-cluster
- Press Information Bureau. (2024). Press release on food processing fund (NABARD). Retrieved from https://pib.gov.in/PressReleasePage.aspx?PRID=1946647
Disclaimer- Sources for the data in pictures and google sheets are mentioned in references
About The Contributor: Deepankshi Agnihotry is a research intern at IMPRI and holds a postgraduate degree in Electronics, is curious and passionate about sustainability and impactful policy solutions.
Acknowledgement: The author would like to express sincere gratitude to Dr.Vaishali Singh, Aasthaba Jadeja and the IMPRI team for giving the opportunity for writing the article. Also extend gratitude to Riya Rawat and Aditi Kumari for their constructive criticism.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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