National Food Processing Policy: Boosting India’s Food Sector

India’s food processing sector holds immense potential to transform the country’s agricultural landscape, boost farmer incomes, and position the nation as a global food processing hub. The draft National Food Processing Policy aims to create a conducive environment for entrepreneurs while addressing critical challenges like supply chain gaps, food safety standards, and infrastructure deficits. With the sector contributing approximately 9.9 percent of Gross Value Added (GVA) in manufacturing and 11.4 percent in agriculture, this policy framework seeks to unlock the industry’s full potential through strategic interventions and reforms.

Understanding the National Food Processing Policy 🔗

The draft National Food Processing Policy was unveiled in November 2019 and circulated for comments from Ministries, State Governments, and stakeholders. However, the economic challenges arising from the COVID-19 pandemic necessitated substantial revisions to the original framework. The policy seeks to create favorable conditions for entrepreneurs entering the food processing sector through fiscal initiatives, tax rationalization, and streamlined regulatory processes.

The policy framework addresses several key challenges facing the sector, including supply chain infrastructure gaps, relatively low levels of processing, technological limitations, lack of seamless linkages between agricultural production and processing, and credit availability constraints. It promotes a cluster-based approach, convergence of services across different government departments, and strengthened support for unorganized food processing units.

Core objectives of the policy 🔗

The National Food Processing Policy focuses on three primary objectives. First, it aims to achieve higher growth through significant investment in strengthening supply chain infrastructure and expanding processing capacity, particularly for perishable items. Second, it seeks to improve competitiveness through technology upgradation, research and development, branding, and strengthening India’s unique selling proposition in the food sector. Third, the policy targets long-term sustainability through efficient use of water and energy, adoption of eco-friendly technologies in processing, storage, and packaging, and responsible management of waste from the food processing industry.

Infrastructure development initiatives 🔗

A cornerstone of the National Food Processing Policy is the development of robust infrastructure to support the entire value chain from farm to consumer. This includes establishing cold chain networks, packaging facilities, processing clusters, and logistics systems that can handle the diverse requirements of different food products.

Cold chain and value addition infrastructure 🔗

The Integrated Cold Chain and Value Addition Infrastructure scheme aims to provide seamless preservation facilities from the farm gate to the consumer. This comprehensive approach covers pre-cooling, weighing, sorting, grading, and waxing facilities at the farm level, along with multi-product cold storage, controlled atmosphere storage, packing facilities, individual quick freezing units, blast freezing in distribution hubs, and refrigerated transport.

As of June 2025, 395 integrated cold chain projects have been approved under the Cold Chain Scheme since its launch in 2008. Of these, 291 projects are operational, creating preservation capacity of over 25 lakh metric tonnes per year and processing capacity exceeding 114 lakh metric tonnes annually. These completed projects have generated approximately 1.74 lakh jobs across the country, demonstrating the employment potential of such infrastructure investments.

Mega food parks and processing clusters 🔗

The Mega Food Park Scheme operates on a cluster-based approach, creating state-of-the-art support infrastructure in well-defined agricultural zones for modern food processing units. These parks typically include supply chain infrastructure such as collection centres, primary processing centres, central processing centres, cold chain facilities, and fully developed plots for entrepreneurs to establish food processing units.

Currently, 25 Mega Food Parks are operational across India, including facilities in Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Telangana, Tripura, Uttarakhand, Haryana, and West Bengal. The Pradhan Mantri Kisan Sampada Yojana (PMKSY) serves as the umbrella scheme creating modern infrastructure with efficient supply chain management from farm gate to retail outlet.

Food safety and quality standards 🔗

The policy emphasizes strengthening food safety and quality assurance mechanisms to prepare Indian food products for global competition. The Food Safety and Standards Authority of India (FSSAI) plays a central role in laying down science-based standards for food articles and regulating their manufacture, storage, distribution, sale, and import.

Quality certification and compliance 🔗

The Ministry of Food Processing Industries assists the food processing industry in adopting quality certification systems including Total Quality Management (TQM), ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP), and Good Hygienic Practices (GHP). These certifications are essential for meeting both domestic and international quality requirements.

FSSAI has established multiple regulations covering food product standards, licensing, packaging, labelling, contaminants, and food safety protocols. The authority operates through 22 referral laboratories, 72 state and union territory laboratories, and 112 NABL-accredited private laboratories for food testing purposes.

Financial incentives and support mechanisms 🔗

The policy framework includes several fiscal initiatives designed to make food processing an attractive investment destination. These incentives aim to address the credit availability challenges that have historically constrained the sector’s growth.

Credit and investment support 🔗

A special fund of Rs 2,000 crore has been established with NABARD to provide credit at affordable rates for the food processing sector. This fund supports setting up, modernizing, and expanding food processing units, as well as developing infrastructure in designated food parks. Additionally, food and agro-based processing units, along with cold chain infrastructure, have been included as priority sectors under the Reserve Bank of India’s Priority Sector Lending norms.

The government also permits 100% Foreign Direct Investment through the automatic route for the food processing sector, making it easier for international companies to invest without requiring government approval. The Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) provides additional support, though implementation has faced challenges with fund utilization.

Tax rationalization measures 🔗

The policy emphasizes rationalization of the tax structure on both fresh and processed foods, as well as machinery used for production. This approach aims to reduce the cost burden on processors and make Indian products more competitive in domestic and international markets. The government has also implemented measures such as reduced excise duty on refrigerated containers and lower basic customs duty on processing equipment.

Addressing sector challenges 🔗

Despite significant progress, the food processing sector continues to face structural challenges that the policy aims to address through targeted interventions.

Reducing post-harvest losses 🔗

India faces substantial post-harvest losses, with 25-30% of fruits and vegetables being lost or damaged annually due to inadequate transportation and distribution infrastructure. The cold chain development initiatives directly target this issue by creating farm-level infrastructure linked to distribution hubs and refrigerated transport networks. Scientific storage and processing helps preserve freshness, nutrition, and overall quality while extending shelf life and creating new market opportunities.

Supporting small and micro enterprises 🔗

The policy recognizes that multiple clearances required for setting up food processing units create barriers, particularly for small processors who must navigate the same processes as larger units. The Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) Scheme specifically targets this segment, providing support for upgrading and formalizing the unorganized food processing sector where women have traditionally been engaged in activities like papad and pickle making.

Enhancing global competitiveness 🔗

A key objective of the National Food Processing Policy is positioning India as a preferred investment destination for agribusiness and food processing while increasing exports of processed food products.

Export promotion strategies 🔗

Currently, only 25% of agricultural exports are processed or value-added products, a figure that has remained stagnant for a decade. This compares unfavorably with global averages and competitors like China. The policy promotes the creation of export zones with streamlined clearance processes and development of country-specific strategies focusing on product customization and marketing.

India’s diverse agro-climatic conditions provide a competitive advantage with a wide-ranging raw material base suitable for food processing industries. The market size of the food processing sector is expected to reach approximately USD 1,274 billion by 2027, up from USD 866 billion in 2022, indicating significant growth potential if infrastructure and policy challenges are adequately addressed.

Technology and innovation adoption 🔗

The policy encourages adoption of modern processing technologies and supports research and development initiatives. Food irradiation facilities, for example, play a crucial role in reducing post-harvest losses and minimizing wastage of perishable agricultural produce by extending shelf life. The proposed 50 multi-product food irradiation units are expected to create preservation capacity of 20-30 lakh metric tonnes per annum.

Implementation framework 🔗

The Government of India serves as a coordinator and facilitator for implementing the National Food Processing Policy. A Food Processing Development Council, headed by the Minister of Food Processing, provides overall guidance with representation from all stakeholders including concerned Ministries, state governments, FSSAI, industry and trade bodies, and research and development institutions.

The policy promotes convergence of services provided by different departments and emphasizes the need for state governments to facilitate supply of water to processing units while promoting water-efficient technologies. Environmental sustainability is also prioritized, with incentives extended to processing units that adopt water recycling and eco-friendly practices.

What do you think? How can India better leverage its agricultural diversity and young workforce to become a global leader in food processing? What role should private sector partnerships play in developing the infrastructure and technology needed to reduce post-harvest losses and improve food safety standards?

References

1. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1780034
2. https://www.mofpi.gov.in/en/Schemes/cold-chain
3. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2197506
4. https://www.mofpi.gov.in/en/Schemes/mega-food-parks
5. https://sampada-mofpi.gov.in/
6. https://fssai.gov.in/cms/about-fssai.php
7. https://fssai.gov.in/cms/food-safety-and-standards-regulations.php
8. https://www.investindia.gov.in/blogs/cold-chain-infrastructure-india-and-its-future-potential
9. https://www.drishtiias.com/daily-updates/daily-news-editorials/revolutionizing-india-s-food-processing-landscape
10. https://www.drishtiias.com/daily-updates/daily-news-analysis/pm-formalization-of-micro-food-processing-enterprises-scheme-2
11. https://www.nextias.com/ca/current-affairs/20-09-2024/food-processing-sector-in-india