Ministry of Food Processing Industries 35-50% Subsidy for Food Processing Units


The food processing industry plays a crucial role in enhancing the value of agricultural produce and meeting the growing demands of consumers. To support entrepreneurs in this sector, the Ministry of Food Processing Industries has outlined a comprehensive subsidy framework. This article provides an overview of the subsidy calculation process, eligible sectors, processing activities, and items deemed ineligible for grant calculation.

1. Subsidy Calculation and Cost of Project:

The subsidy is determined based on the project cost as under:

i. Open category projects – 35%

ii. Difficult area projects or SC/ST category projects – 50%,

capped at a maximum of Rs. 5 crore

The subsidy is released in two stages: first when 50% of the bank loan and promoter contribution has been spent, and second after incurring 100% of these costs. Project costs include both building and plant/machinery expenses. The project cost must be a minimum of Rs. 3 Crores for General Category and Rs. 1 Crores for SC/ST. The value of several machineries are prescribed under the scheme and the project cost will be calculated on those rates if the actual rates exceed them.

Dovetailing of Assistance: It is pertinent to note that subsidy can be claimed under this scheme as well as any other State/Central scheme however it is to be ensured that no duplication of assistance for the same component/activity of the project is done.

Government Subsidy for Food Processing Units

2. Timelines for Application under the scheme

The last date to apply under this scheme for general category applicants in 22nd of November, 2023. For SC/ST applicants the due date is over in September.
For new projects the project should be initiated after the scheme date 9th October, 2023 and incase of expansion of existing projects the expansion should have started after the said date.

3. Eligible Sectors for Subsidy:

Several sectors fall under the eligible categories for the 35% cash subsidy, including fruits & vegetables processing, milk processing, meat/poultry/fish processing, and various others. The extensive list is as under:

(a) Fruits & vegetables processing,

(b) Milk Processing,

(c) Meat/ poultry/ fish processing.

(d) Ready to Eat/ Ready to Cook Food Products/ Breakfast cereals/ Snacks/ bakery and other food products including nutritional health foods.

(e) Grains/ pulses, oil seed milling and processing based on modern technology.

(f) Modern Rice milling,

(g) Other agri-horti products including spices, coconut, soybean, mushroom processing, honey processing.

(h) Fruits/honey-based wines,

(i) Natural Food flavours, food additives/ food extracts & colours, oleoresins, guar gum, cocoa products.

(j) Manufacturing jaggery from sugarcane and value-added products from jaggery (as raw material) except sugar mills,

(k) Any other sector that makes food products fit for human consumption.

(l) Animal feed manufacturing unit (s), already setup or being set up , in Mega food parks or Agro Processing clusters approved by the ministry from time to time .

(m) Carbonated drinks – beverages containing fruit juice/ pulp (more than 5 % in case of lime/ lemon and more than 10% incase of other fruits ) will be considered for financial assistance under the scheme .A maximum of two (2) units in a mega food park (MFP) and one ( 1) unit in agro processing cluster ( APC ) can be sanctioned under this category.


(i) Activities related to manufacturing of aerated water ( other than that covered under serial no ( xiii) above and packaged drinking water will not be considered for financial assistance under the scheme .

4. Eligible Processing Activities:

The eligible processing activities encompass a broad range, from sorting and grading to packaging and transportation as under:

(a) Sorting, grading, washing, peeling, cutting, sizing:

(b) Blanching, crushing, extraction, pulping:

(c) Drying, de-husking, de-hulling, splitting, depoding, deseeding.colour sorting, pulverization, extrusion, freeze drying/ dehydration, frying:

(d) Pasteurization, homogenization, evaporation, concentration;

(e) Packaging facilities like canning, aseptic packaging, vacuum packaging, bottling, edible packaging, labelling, any other specialized packaging:

(f) Chemical preservation, pickling, fermentation or any other specialized facility required for preservation activities: (g) Individual Quick Freezing (IQF), blast freezing, plate freezing, spiral quick freezing:

(h) Controlled temperature transport like coolers and refrigerated/ insulated/ventilated transport:

(i) Other processing/ preservation/ transport/ storage facilities adjunct to value addition and shelf life enhancement of food products:

(j) Fire Fighting equipment and insect repellents.


The above list is only illustrative and not exhaustive. Food Processing Industry is fast evolving and several innovative processing technologies are being developed day by day which can also be considered under this Scheme if deemed fit. The project should include and result in creation/ increase in processing capacity.

5. Ineligible Cost Items for Calculation of Grant:

Certain items are deemed ineligible for grant calculation as under:

(a) Compound wall

(b) Approach road/internal roads

(c) Cost of land and site development

(d) Administrative office building

(e) Canteen

(f) Labour rest room and quarters for workers

(g) Security/ guard room or enclosure

(h) Non-technical civil works not related to the components of the scheme

(i) Margin money, working capital and contingencies

(j) Fuel, consumables, spares and stores

(k) Transport vehicles except Controlled temperature vehicles like coolers and refrigerated/ insulated/ventilated transport

(l) Pre-operative expenses

(m) Service charges, carriage and freight charges or other such charges/fees

(n) Expenditure on painting of machinery

(o) AC ducting, furniture, computers and allied office items.

(p) Closed Circuit TV Camera and security system related equipment.

(q) Consultancy fee, taxes, etc. on plant and machinery.

(r) Stationery items

(s) Plant & machinery not directly related to components of the scheme .

(t) Fly catchers, hand washer, laundry

(u) Reconditioned/ refurbished/ second hand/ old plant & machinery.

Note: The list is only indicative and the Project Approval Committee holds the final authority in deciding the eligibility of items for grants-in-aid.


Entrepreneurs in the food processing industry can benefit significantly from the outlined subsidy scheme. Understanding the intricacies of subsidy calculation, eligible sectors, and processing activities is crucial for successful project approval. This subsidy framework aims to propel the growth of the food processing industry, contributing to both economic development and increased processing capacity.

The author can be reached at +91-9407557572 &

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CA Kartik Chawla is a highly accomplished professional, content creator, and educator. With a strong background in finance and law, he has established himself as a prominent figure in the field of Indirect Taxation. As a partner at A C K & Associates, he has demonstrated exceptional expertise an View Full Profile

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December 2023