Introduction: Prime Minister Narendra Modi, while addressing the second edition of World Food India in November, 2023, highlighted the remarkable growth of India’s food processing sector, branding it as a “sunrise” industry. Over the past nine years, the sector has witnessed a staggering influx of ₹50,000 crore in Foreign Direct Investment (FDI). This surge, coupled with a 150% increase in the export of processed food and a substantial rise in domestic processing capacity, positions India as a key player in the global food processing landscape.
FDI Landscape: India’s commitment to fostering FDI in the food processing sector is evident in the regulatory reforms undertaken. With the goal of attracting foreign investments, the FDI policy was revamped, particularly in the manufacturing segment. Notably, under the 100% automatic route, manufacturers are empowered to sell their products, including through e-commerce, without the need for prior government approval. Additionally, 100% foreign investment, under the government approval route, is permitted for trading in food products manufactured or produced in India.
Sectoral Impact: The sector’s contribution to India’s economy has been significant. The agriculture and allied sector, representing 18.3% of the Gross Value Added (GVA) at current prices in 2022-23, plays a pivotal role. With a 12.22% share in total employment in registered factory sector and 14.18% in unregistered manufacturing sector, the sector serves as a vital source of livelihood for millions. The worth of agricultural and processed food products exported in 2022-23 reached a substantial $51 billion, indicating the sector’s global footprint.
Growth Projections: India’s food processing sector, already one of the world’s largest, is poised for exceptional growth. Projections indicate that the sector’s output will soar to an impressive $535 billion by 2025-26.
Conclusion: As India’s food processing sector emerges as a beacon of economic growth, the strategic focus on attracting FDI underscores the government’s commitment to fostering innovation, technology, and global partnerships. The revamped FDI policies, especially in manufacturing and trading, position India as an attractive destination for foreign investors looking to capitalize on the sector’s immense potential.
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The author is a Partner at Mohit Vijay and Associates, Chartered Accountant and can be reached at prachi@mpvassociates.com.
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Source: https://www.thehindu.com/news/national/50000-cr-fdi-in-food-processing-sector-in-last-9-years-pm-modi/article67492502.ece
https://www.investindia.gov.in/sector/food-processing
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