Indusfood Manufacturing -Transforming food with Technology India – the Future Food Manufacturing Economy

India’s food processing technology industry is rapidly evolving into a promising sector with significant investment opportunities, supported by a robust food ecosystem. Favorable economic policies, increasing production capacities, appealing fiscal incentives, and strong market demand are fueling this growth.

According to a report by Ministry of Food Processing Industry (MOFPI), the Indian food industry output is anticipated to reach a size of US$ 535 billion by FY 2025-26. Presently, it commands a 10.4% share in exports and employs 11.6% of the workforce, with the unregistered segment providing livelihoods to 5.1 million individuals. Foreign direct investment (FDI) equity inflows amounted to US$ 12.5 billion from April 2000 to December 2023, accounting for 1.87% of total FDI equity flows.

The sector’s growth is underpinned by the expanding consumption of processed food that now extends to Tier-II and Tier-III cities, mirroring trends observed in metropolitan areas. Key sectors within this domain include grains, sugar, edible oils, beverages, and dairy products (Coinmen Consultants, 2019).

Industry performance

India has one of the world’s largest food processing industries. Gross value added of the industry has grown from Rs 1.79 lakh crore (US$21.5 billion) in 2016-17 to Rs 2.37 lakh crore (US$ 28.5 billion) in 2020-21, growing at a CAGR of 7.2%.  The sector directly employs over 2 million individuals and contribute to 8.9% of the manufacturing value added (MVA), encompassing food and beverage sectors (UNIDO IAP, 2023). The sector has received around Rs 7,126 crore (US$ 857.7 million) worth of investments by the end of 2023 under the Production Linked Incentive (PLI) scheme for Food Processing.

As Indian food processing technology industry grows in size and sophistication, it is also increasingly showing potential for expansion into the international market. Exports* of processed food machinery reached US$ 3.1 billion in 2023, growing at a 5-year CAGR of 8%. Top export markets for India include the US, Singapore, Saudi Arabia, Nepal, Nigeria, UAE and Bangladesh.

The burgeoning food processing sector in the country also provides immense opportunity to global technology players  for trade, investment and business collaboration. Imports* of these technologies have reached a value of US$ 5.5 billion in 2023, growing at a 5-year CAGR of 6%. Top supplying countries include China, Germany, Italy, Republic of Korea, Japan and the US.

Key growth drivers of the Indian food processing technology sector

  • The country has a robust agricultural production base, being among the world’s largest producers of various agricultural commodities including cereals, dairy, fruits & vegetables, marine products, spices, tea, coffee, etc.
  • By 2030, India’s household consumption is expected to quadruple, making it the 5th largest consumer market in the world. The country has a growing F&B market, with estimated retail size of US$ 504.92 billion by 2027 (Inc42).
  • Government support through liberalised FDI regime and supportive policies including Pradhan Mantri Kisan Sampada Yojana (PMKSY), Pradhan Mantri Formalization of Micro Food Processing Enterprises (PMFME) Scheme and PLI Scheme for Food Processing.
  • Technological advancements fuelled by market demand are ushering in a revolution in the food processing technology sector across segments.
  • Notably, India’s processed food exports (HS 16-22) have grown at a 5-year CAGR of 17.1% to reach US$ 8.9 billion in 2023, showing robust trade prospects.
  • Food processing infrastructure is coming up at a brisk pace. Twenty four mega food projects are now operational out of 41 projects envisaged under the Mega Food Park Scheme. Similarly, cold storage capacity of 8.4 lakh metric tonnes has been created as of December 2022.
  • India’s workforce represents a formidable asset, poised to drive economic growth, innovation, and competitiveness on both domestic and international fronts. 
  • The country has built and nurtured a strong entrepreneurial ecosystem, that is catalysing innovation and growth in its food processing industry.

Opportunities for investors/entrepreneurs in India’s food Processing Technology Industry

The India’s food processing technology industry offers a range of opportunities for entrepreneurs/investors. Some of the key segments of opportunity are as follows:

  • Fruits and vegetables: Preserved, candied, glazed and crystallized fruits and vegetables, juices, jams, jellies, purees, soups, powders, dehydrated vegetables, flakes, shreds and ready-to-eat curries.
  • Food preservation by fermentation: wine, beer, vinegar, yeast preparation, alcoholic beverages. fruit- and cereal-based beverages.
  • Dairy: Liquid milk, curd, flavored yogurt, processed cheese, cottage cheese, Swiss cheese, blue cheese, ice cream, milk-based sweets.
  • Food additives and nutraceuticals: Preservatives, colourants, flavor enhancers, emulsifiers, stabilizers, antioxidants, sweeteners, vitamins, minerals, omega-3 fatty acids, probiotics, herbal extracts, amino acids, fiber supplements, etc.
  • Confectionery and bakery: Cookies and crackers, biscuits, bread, cakes and frozen dough.
  • Meat and poultry: Eggs, egg powder, cut meats, sausages and other value-added products. Fish, seafood and fish processing – processing and freezing units.
  • Grain processing – Rice, pulse milling and flour milling sectors.
  • Food preservation and packaging: Metal cans, aseptic packs.
  • Food processing equipment: Canning, dairy and food processing, specialty processing, packaging, frozen food/refrigeration and thermo-processing.
  • Consumer food: Packaged food, aerated soft drinks and packaged drinking water. Spice pastes

Supportive Government Policies

India’s government has taken significant steps to ensure the growth and stability of the agricultural sector, positioning the country as a future leader in the global food economy. Key initiatives include the Pradhan Mantri Fasal Bima Yojana (PMFBY) which provides crop insurance, and the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) aimed at improving irrigation facilities. Additionally – the government’s focus on doubling farmers’ income by 2022 through improved technology, better market access, and financial inclusion underscores its commitment to agricultural advancement. These policies not only protect farmers but also encourage investment and innovation in the agricultural sector.

Supportive Government Policies

India’s government has taken significant steps to ensure the growth and stability of the agricultural sector, positioning the country as a future leader in the global food economy.

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Robust Agricultural Production Base

India is one of the world’s largest producers of a variety of agricultural commodities. The country leads in the production of staples like rice, wheat, and pulses, and is a top producer of fruits, vegetables, and dairy. This strong production base is bolstered by a diverse climate that supports a wide range of crops and agricultural activities year-round. With over 140 million hectares of arable land, India’s vast and fertile landscape provides a solid foundation for sustained agricultural productivity and growth.

Robust Agricultural Production Base

India is one of the world’s largest producers of a variety of agricultural commodities. The country leads in the production of staples like rice, wheat, and pulses, and is a top producer of fruits, vegetables, and dairy.

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Rapidly Evolving Food Processing Sector

India’s food processing sector is rapidly expanding, driven by technological advancements and increasing investments. Government initiatives like the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) are enhancing infrastructure for food processing including the establishment of mega food parks, cold chain logistics, and agro-processing clusters. This sector not only adds value to agricultural produce but also reduces waste, increases shelf life, and improves the nutritional quality of food. The rise of modern retail, online food delivery services, and an emphasis on ready-to-eat products further underscore the sector’s dynamic growth.

Rapidly Evolving Food Processing Sector

India’s food processing sector is rapidly expanding, driven by technological advancements and increasing investments.

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Strong Consumer Market

India’s population of over 1.4 billion people represents a massive consumer base with evolving dietary preferences and increasing disposable incomes. Urbanisation and a growing middle class are driving demand for diverse, high-quality food products. Additionally, there is a rising awareness of health and wellness leading to greater consumption of organic and nutritionally fortified foods. The sheer scale and diversity of the Indian market make it an attractive destination for food businesses and a pivotal player in the global food economy.

Strong Consumer Market

India’s population of over 1.4 billion people represents a massive consumer base with evolving dietary preferences and increasing disposable incomes.

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Ease of Doing Business

India has made significant strides in improving its ease of doing business, particularly in the agricultural and food processing sectors. Reforms have streamlined processes related to starting a business, obtaining permits, and accessing credit. The introduction of the Goods and Services Tax (GST) has simplified the taxation system, making it easier for businesses to operate across state lines. Furthermore, initiatives like Digital India and Make in India are enhancing connectivity, infrastructure, and technology adoption, creating a more conducive environment for business growth and investment.

Ease of Doing Business

India has made significant strides in improving its ease of doing business, particularly in the agricultural and food processing sectors.

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As one of the largest producers and exporters of raw as well as processed/value added F&B products, India is a highly attractive destination for the food processing technology sector. The country is at the forefront of driving growth, entrepreneurial dynamism and cutting edge innovation in this sector, backed by its inherent economic drivers, rapidly growing market and supportive policy environment.

The global food processing equipment market is expected to reach US$ 69.2 billion in 2031, growing at a CAGR of 5.7% between 2023-31 (Transparency Market Research). The sector’s growth is driven by increasing consumer preferences for safe and hygienic processed foods that also offer high convenience and choice. Given the dynamic, and innovation-driven nature of this technology intensive sector, the ability to assess market demands and serve them in timely manner forms a key success factor.

Furthermore, AI and ML are critical interventions in the food processing technology industry. They provide opportunities to enhance efficiency, quality, safety, and sustainability throughout the entire production process and also drive innovation. The industry needs to play its role in addressing growing environment concerns such as reducing waste, greenhouse gas emissions, and water consumption.

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