New Delhi — India’s food-processing sector is on track for a sharp expansion and is widely projected to reach about US$535 billion by the end of FY2025-26 (FY26). That projection — repeated by industry bodies and government-linked publications after recent industry events — is being driven by rising domestic consumption, expanding organised processing, government incentives and faster build-out of cold-chain and processing infrastructure.
What the $535 billion figure means
When analysts and industry groups say “$535 billion by FY26,” they are talking about the size of the overall processed-food market (value of processed goods, ingredients, packaged foods, organised retail and related services) rather than a single product line. Hitting this milestone would mark a major step up from recent years and reflect faster value-addition across fruits & vegetables, dairy, meat, cereals, ready-to-eat foods, ingredients and exports.
Key drivers behind the surge
1. Rising domestic demand and changing diets
India’s growing middle class, higher disposable incomes and changing lifestyles are increasing demand for convenience foods, processed dairy, ready-to-cook products and packaged staples. These consumer shifts are expanding the addressable market for organised food processors.
2. Government push and targeted schemes
A range of central schemes — including the Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME), Pradhan Mantri Kisan Sampada Yojana (PMKSY) and Production-Linked Incentive (PLI) packages for food processing — have helped funding, credit access, and infrastructure growth (cold chains, mega food parks, consumer packaging lines). Official releases and recent press notes show continued approvals for projects and large numbers of micro-units receiving support.
3. Cold chains, storage and logistics
A major bottleneck historically has been post-harvest loss. Investments in cold storage, pack houses, refrigerated transport and modern warehousing are reducing wastage, improving quality for export and enabling year-round value-added processing. MoFPI and state programs report steady approvals for cold chain projects and food parks.
4. Innovation in ingredients and premium / organic categories
Demand for organic, plant-based and health-oriented foods is rising quickly. Industry notes and market reports cited by business outlets place strong growth expectations for the organised organic segment — a complementary growth area that lifts the overall market value.
5. Exports and global linkages
As Indian processors meet international quality and safety standards, exports of processed foods, spices, dairy and prepared foods have room to scale. Improvements in packaging, traceability and certification are helping smaller processors access overseas buyers.
Economic importance and employment
The processed-food sector already contributes a notable share of India’s manufacturing output and is a significant employer. Industry estimates place the sector’s share of manufacturing and linkages to rural incomes as material — hundreds of thousands of micro and small enterprises have been formalised under PMFME and related interventions, while organised processing supports millions of direct and indirect jobs. Scaling to $535 billion would thus deepen rural value chains and create higher-paid jobs in logistics, quality control, R&D and packaging.
Risks and constraints to watch
The $535 billion pathway depends on a few critical success factors:
- Quality and standards enforcement: To win export markets and consumer trust, processors must meet global food-safety and packaging norms.
- Finance for MSMEs: Many micro and small processors still face working-capital and technology adoption constraints. Continued credit and grant support will be important.
- Infrastructure rollout pace: Cold chains and reliable power/logistics must keep pace with demand; otherwise post-harvest loss can blunt gains.
These challenges are recognised in government white papers and industry roadmaps that accompany growth forecasts.
Why Indian consumers and farmers stand to gain
For consumers: a larger processed-food industry typically means more product choice, consistent quality, longer shelf life and wider availability of nutritious and convenience foods. For farmers: stronger processing capacity creates steady demand for higher-grade produce, improves farmer bargaining power through contracted supplies and reduces seasonal gluts that depress farmgate prices. Properly implemented, the shift can raise farm incomes while lowering food-system waste.
The outlook — practical takeaways for policy and industry
The repeated projection that India’s food-processing industry could reach around US$535 billion by FY26 reflects a convergence of strong domestic demand, government incentives, infrastructure investment and growing sophistication among processors. If the structural gaps — especially in cold storage, credit access for MSMEs, and standards enforcement — are addressed, the sector’s expansion can be a major driver of value-added growth, rural incomes and employment in the coming years.
- India Brand Equity Foundation (IBEF) — Industry profile and FY26 projection.
- Economic Times / Times of India coverage of industry estimates and event reporting
- Press Information Bureau / Ministry of Food Processing Industries (MoFPI) — policy updates and scheme details.
- PTI / Deccan Chronicle — market commentary and organic-segment data.
- CII / industry white papers on long-term vision (Food Processing Vision 2047).
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Last Updated on: Tuesday, September 9, 2025 5:17 pm by Business Byte Team | Published by: Business Byte Team on Tuesday, September 9, 2025 5:10 pm | News Categories: Business
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