Food & Beverages

Food Processing Sector Attracts USD 2.2 Billion in FDI in FY25

• By Jayesh J
• 2025-05-03

India’s food processing sector witnessed a significant inflow of foreign direct investment (FDI), reaching $2.2 billion in FY25, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT). This is one of the largest yearly investments in the industry, underscoring the growing interest in India's consumer-driven food markets and developing agri-based economy on a worldwide scale. Multinational corporations are increasing their investments in processing facilities, cold chains, and food innovation hubs throughout the nation, propelled by regulatory changes, infrastructure upgrades, and incentives under the Production Linked Incentive (PLI) program. In the face of wider economic uncertainty, the sector has become a major force in luring foreign investment due to its durability and potential for export-led growth.

PLI Scheme Drives Industrial Investment Surge in Food Processing

A major factor in drawing in both foreign direct investment (FDI) and domestic capital has been India's Production Linked Incentive (PLI) program for the food processing industry, which runs from FY 2021–22 to FY 2026–27 with a budget of INR 109 billion (US$1.3 billion). With a focus on four main areas—Mozzarella cheese, processed fruits and vegetables, marine products, and ready-to-eat goods—the program also helps SMEs market creative and organic products. Companies taking part in the program have invested INR 71.26 billion as of H1 FY25, resulting in total sales of INR 498.25 billion (US$5.97 billion). FY22 alone saw the disbursement of incentives totaling INR 5.84 billion (US$70.04 million), demonstrating the scheme's momentum in increasing industrial output and Indian food processing's competitiveness internationally.

Rising Consumption Fuels Sectoral Investment Momentum

The fast growing food consumption in India, which is expected to exceed US$1.2 trillion by FY2025–2026, is a major factor pushing up investor interest in the food processing industry. The demand for packaged and processed foods has increased due to urbanization, rising incomes, and changing dietary choices, making India a desirable location for both global and domestic businesses. The PLI program and other strong policy support are in line with this increase in spending, which is fostering a climate that is conducive to the $2.2 billion in FDI inflows that were recorded in FY25. Analysts anticipate that innovation and infrastructural improvements throughout the value chain will be accelerated by this development trajectory.

According to Spherical Insights, the global market for ready-to-eat foods is expected to reach USD 269.1 billion by 2033, expanding at a compound annual growth rate (CAGR) of 4.14%. India's food processing industry is well-positioned to benefit from this growing demand. The nation has become a desirable location for foreign investment due to its strong value chain and government-supported programs like the PLI scheme. The industry received $2.2 billion in foreign direct investment (FDI) in FY25, reflecting this momentum and demonstrating the trust that international companies have in India's ability to provide scalable, processed food solutions to both domestic and export markets.

Infrastructure Push Fuels Rising FDI in Food Processing

Growing international trust in India's food processing industry is shown in the increase of foreign direct investment (FDI), which reached $2.2 billion in FY25 and was supported by significant infrastructure projects undertaken by the Ministry of Food Processing Industries (MoFPI). With 24 of them now in operation, the government has authorized 41 Mega Food Parks as of FY25, which together have a processing capacity of more than 4 million metric tonnes (MMT). 209 food safety labs, 400 cold chain projects that add more than 35 MMT of storage, and 76 agro-processing clusters have all been launched concurrently. Because of these calculated investments, which have increased value addition, reduced post-harvest losses, and brought the industry into compliance with international quality standards, India is becoming a more alluring location for investors in the global food industry.