Food Processing Sector Set for Massive Surge as Govt Consults Industry on New Incentive Framework

Food Processing Sector Set for Massive Surge as Govt Consults Industry on New Incentive Framework​

The Government has initiated comprehensive consultations with industry stakeholders to define the scope and incentive structure for the next phase of the Production-Linked Incentive Scheme for the Food Processing Industry (PLISFPI). This move is aimed at building an evidence-based, industry-led framework to propel India toward becoming a global hub for food processing through innovation and stronger value chains.

Food Processing Industries Secretary Avinash Joshi emphasized that the upcoming policy will be designed to boost domestic manufacturing and sharpen India's competitive edge globally. The strategy is set to encourage technology adoption, push innovation, ensure greater benefits reach farmers and MSMEs, and build sustainable job creation within the sector.

Review of PLI Scheme's Track Record​

A presentation held during the consultation highlighted the scheme's significant performance against its targets. Against a committed investment of ₹ 7,722 crore, companies backed by the PLISFPI have actually invested over ₹ 9,207 crore across 212 manufacturing units located in 22 states, exceeding the initial target by nearly 20 per cent.

The economic momentum shown by the scheme is substantial. Sales of PLI-linked products demonstrated a compound annual growth rate (CAGR) of 10.82 per cent, climbing from ₹ 58,758 crore in FY20 to ₹ 1,08,854 crore in FY26. Concurrently, exports achieved an 11.05 per cent CAGR, reaching a value of ₹ 20,840 crore during the same period.

Impact and Growth Drivers within Food Processing​

The PLISFPI has already generated significant socio-economic impact. The scheme is credited with creating approximately 3.35 lakh direct and indirect jobs across the industry landscape. Furthermore, over ₹ 3,265 crore in investment has been directed into notified tribal areas.

Millet-based processed foods emerged as a particularly successful vertical. This category saw sales expand at an impressive CAGR of 104 per cent, while millet procurement witnessed a concurrent rise of 97 per cent annually.

Industry Demands for Future Incentive Framework​

Industry participants present during the meeting voiced strong demands for greater flexibility and outcome-driven metrics in the next phase. Stakeholders suggested that incentives must be differentiated based on specific goals such as R&D, exports, capital investment, innovation, import substitution, and employment generation.

Participants also called for a concentrated push toward automation and quality upgrades within processed food manufacturing. Strong backing for overseas branding and marketing was sought, alongside the need for smoother reimbursement processes and rationalized eligibility norms.

Focus Areas for Next-Generation Food Processing​

The consultation identified several high-potential "sunrise" categories critical for domestic and export growth. These include nutraceuticals, functional foods, plant-based proteins, dairy ingredients, marine value-added products, animal feed, and pet food.

To support this growth, participants stressed the need for a robust innovation ecosystem. This includes dedicated research infrastructure, clinical validation facilities, Centres of Excellence, and enhanced export promotion support. A key policy push demanded by stakeholders is focused on indigenous ingredient development and import substitution.

Government's Commitment and Future Actions​

Secretary Joshi assured all attendees that their recommendations would be closely examined as the ministry moves forward. In addition to charting the next phase of incentives, the ministry announced it will set up two dedicated working groups. One group will focus on countering negative and misleading perceptions surrounding processed foods. The other group is tasked with driving a coordinated push to strengthen the sector by building a science-based, growth-oriented narrative for India's food processing industry.