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India’s food processing industry stands at a turning point
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Saturday, 13 December, 2025, 08 : 00 AM [IST]
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Ashwin Bhadri
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For decades, India has been known for producing vast quantities of agricultural goods - milk, spices, fruits, vegetables, grains, poultry, and more. Yet much of this bounty has left the country in raw or minimally processed form. Today, with changing consumer demand, better technology, and strong policy support, India has a real chance to shift from being a supplier of raw ingredients to becoming a global powerhouse in processed foods.
But the journey is not automatic. Fragmented supply chains, post-harvest losses, uneven infrastructure, and regulatory complexities continue to hold the sector back. This article outlines how India can bridge these gaps and lays out a clear roadmap from foundational reforms to global leadership by 2035.
A Sector on the Rise
The food processing sector is increasingly central to India’s economy. According to the Indian Brand Equity Foundation (IBEF), it contributed 8.80% to manufacturing GVA and 8.39% to agriculture GVA in 2024. The market was valued at about Rs 30.5 lakh crore (US$354.5 billion) in 2024, and is expected to reach Rs 45.8 lakh crore (US$535 billion) by FY26.
The sector supports millions of livelihoods, with more than 40,000 registered processing units and over 2 million jobs in the formal factory sector alone, not counting the vast unorganised segment.
India also enjoys enormous natural advantages. It is the world’s largest producer of milk and spices, and one of the top producers of fruits, vegetables, cereals, meat, poultry, and seafood. With rising incomes, growing urbanisation, changing dietary habits, and the expansion of organised retail, consumer demand for packaged, ready-to-eat, and value-added foods is climbing rapidly.
The potential is undeniable. Realising it, however, requires removing long-standing bottlenecks.
Where the Gaps Lie
1. Low Levels of Processing
Despite high production volumes, India processes only a small share of its agricultural output: 2% of fruits and vegetables; 6% of poultry; 21% of meat; 23% of marine products. This “value gap” means lost income for farmers, limited domestic industry growth, and untapped export opportunities.
2. Weak Infrastructure
Cold chains, packhouses, refrigerated logistics, and modern sorting and grading facilities remain uneven across states. As a result, 20–30% of perishable produce is lost after harvest losses that could have been prevented with better handling and storage.
3. MSME Challenges
Most food processing units are small or medium enterprises. Many face: outdated machinery; limited access to finance; difficulties meeting quality and compliance norms; fragmented regulatory processes. These factors slow down scaling and modernisation.
4. Limited Technology Adoption
Globally, food processing is rapidly integrating automation, robotics, computer vision, and AI for: grading; inspection; packaging; traceability; supply chain optimisation. Many Indian units still rely on manual processes, reducing efficiency and consistency.
5. Weak Global Branding
Although India exports commodities like rice and spices, its presence in higher-value branded processed food areas is limited. Global markets demand consistent quality, traceability, and strong brand identity areas where India must improve.
A Three-Phase Roadmap for 2025-35
A clear, phased approach can help India systematically scale up from foundational improvements to global competitiveness.
Phase 1 (2025–27): Strengthen the Base
This phase focuses on building the infrastructure and systems needed for sustainable growth.
Modernise Supply Chains: Expand cold storage and refrigerated transport; Build packhouses near production hubs; Introduce modern sorting, grading, and primary processing centres. These steps can significantly reduce spoilage and improve quality.
Create Cluster-Based Food Parks
Develop agro-processing clusters around high-production belts (fruits, vegetables, dairy, and marine). These clusters provide: shared infrastructure; quality labs; logistics support; common effluent treatment.
Clusters improve efficiency and attract investment.
Digital Traceability
Integrate IoT, blockchain, and digital platforms to track food from farm to fork. This enhances quality control and export readiness.
Skill Development
Launch training programmes for food safety, packaging, processing, and quality management, especially for MSMEs and rural workers.
Simplify Regulations
State-level single-window clearances, combined with central schemes like PMKSY and the PLI for food processing, will make it easier for businesses to expand.
Outcome by 2027:
Lower post-harvest losses, higher processing volumes, and stronger participation of farmers and small processors in formal supply chains.
Phase 2 (2027–30): Scale Up and Diversify
Once the foundation is built, the next step is to expand into high-value categories and develop global market linkages.
Push Value-Added Products
India must shift from exporting raw commodities to offering: ready-to-eat (RTE) and ready-to-cook (RTC) foods; health snacks; functional and nutraceutical foods; plant-based proteins; processed dairy (cheese, lactose-free products). These categories offer higher margins and stronger export demand.
Boost R&D and Innovation
Establish food-tech incubators focusing on fermentation, alternative proteins, shelf-stable foods, and functional nutrition, in partnership with universities and startups.
Strengthen Market Linkages
Improve connections with: modern retail; e-commerce platforms; export markets; global retail chains.
Build a strong “Brand India” for processed foods.
Adopt Sustainable Practices
Encourage: water recycling; waste-to-value conversion; energy-efficient processing; carbon-neutral operations.
Sustainability will become a key differentiator in global markets.
Enhance Export Infrastructure
Develop specialised corridors, cold-chain hubs, and testing labs near ports to fast-track export certification.
Outcome by 2030: A much larger share of value-added production and a stronger presence in high-margin global categories.
Phase 3 (2030–35): Become a Global Leader
With scale and innovation in place, India can aim for global leadership.
Embrace Advanced Technology
Adopt AI-based grading, computer vision for sorting, robotics in packaging, and predictive analytics across the supply chain for consistent global standards.
Build Global Brands
Create Indian processed food brands recognised worldwide for: safety; quality; reliability; sustainability.
Strategic trade agreements can support market expansion.
Lead in Sustainability
Make India a pioneer in: circular food economy; upcycled food waste; regenerative farming-linked supply chains; carbon-neutral packaging.
Establish Food Innovation Hubs
Develop “Food Silicon Valleys” focused on innovations like alternative proteins and personalised nutrition.
Improve Rural Prosperity
Use digital platforms to tightly connect farmers, FPOs, aggregators, and processors, ensuring farmers benefit from the shift toward value addition.
Outcome by 2035:
India ranks among the top three global exporters of processed foods, backed by powerful brands and world-class technology.
High-Potential Segments to Watch
Dairy: Move beyond liquid milk to cheese, healthy beverages, and functional products; Fruits & Vegetables: Freezing, dehydration, and RTE fruit snacks have strong export potential; Meat & Marine: Value-added exports like ready meals and processed cuts; Snacks & RTE/RTC: Strong domestic and global demand from urban lifestyles; Millets & Health Foods: Rising global interest in nutrition-rich indigenous crops.
Essential Enablers
For the roadmap to succeed, India must strengthen: Policy support: Continue PLI, cluster funding, and export incentives; Access to finance: Use fintech, easier credit, and risk-sharing for MSMEs; Technology adoption: Encourage automation, AI, and digital traceability; Quality infrastructure: More testing labs and support for compliance; Skilled workforce: Training programmes in processing, supply chain, and quality control.
Looking Ahead: India’s 2035 Vision
If implemented well, India’s food processing sector could achieve: Post-harvest losses cut by half; Value-addition rising from 10% to over 30%; Top-three global exporter status; Globally recognised Indian brands; Millions of new jobs across rural and urban areas; A sustainable, tech-enabled, inclusive food economy.
India has the natural advantages needed to build one of the world’s most dynamic food processing industries abundant raw materials, strong domestic demand, and an increasingly supportive policy environment. The challenge now is to convert this potential into a long-term growth story.
The next decade will decide whether India becomes a global leader or remains a supplier of unprocessed commodities. The early movers those who invest in modern supply chains, adopt advanced technologies, a focus on higher-value categories, and tapping global markets will define the industry’s future.
The opportunity is open, and the momentum is here. The only question is how quickly India can act.
(The author is founder & CEO at Equinox Labs)
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