Over the last ten years, India’s processed food sector has undergone a remarkable transformation, fueled by evolving consumer preferences, economic growth, and strategic government initiatives. This shift has reshaped the nation’s dietary habits and positioned India as a significant player in the global processed food industry.
Rising Demand
The Indian food processing market has grown substantially, increasing in value from USD 263 billion in 2019-20 to a projected USD 535 billion by 2025. This expansion mirrors a broader global trend, with the processed food industry expected to grow from USD 1,925.7 billion in 2020 to USD 3,407.2 billion by 2030, at a compound annual growth rate (CAGR) of 5.2%.
A major contributor to this growth is the increasing consumption of ultra-processed foods (UPFs) across India. Retail sales of UPFs have risen at a CAGR of 13% from 2011 to 2021, signaling a shift from traditional home-cooked meals to processed alternatives. This trend is evident in both urban and rural areas, with studies showing growing popularity of UPFs across diverse socioeconomic groups.
State-wise food processing units
| State | Number of food processing units | Key contributions |
| Maharashtra | 2,791 | Accounts for ~13% of India’s food processing output. Leading in wine production (~90% of India’s total). Significant processor of mangoes and onions. |
| Uttar Pradesh | 2,105 | Major contributor in sugar production. Recent decline in sugar output due to delayed operations. 2024/25 sugar production: ~1.29 million tons. |
| Andhra Pradesh | 5,653 | Houses a substantial number of food processing units. Significant contributor to the state’s economy. |
| Tamil Nadu | 4,982 | Focuses on dairy, poultry, and seafood processing. Among the leading contributors to India’s food processing sector. |
| Gujarat | 2,245 | Significant player in dairy products. One of the leading milk-producing states in India. |
Government Initiatives
The Indian government has implemented several initiatives to strengthen the food processing industry. The Production-Linked Incentive (PLI) scheme, with an outlay of INR 10,900 crore, is aimed at boosting domestic manufacturing, promoting exports, and creating employment in the sector.
Furthermore, the government has set ambitious targets to enhance India’s share in the global processed food market, currently valued at USD 4 trillion. India’s share stands at just 2.4%, but efforts are underway to increase value-added exports by 40% over the next few years. The organic food market also holds considerable promise, with plans to quadruple India’s share from 2.5% in the next five years.
Top Food Processing Companies
| Rank | Company Name | Market Capitalization (Rs Lakh Cr) | Notable Brands | Product Diversification | Sustainability Initiatives |
| 1 | ITC Limited | 5.84 | Aashirvaad, Sunfeast, Bingo! | Diversified portfolio including packaged foods, personal care, and more. | Focus on sustainable agriculture and responsible sourcing. |
| 2 | Hindustan Unilever Ltd. | 5.62 | Knorr, Kissan, Brooke Bond | Extensive range in personal care, home care, and food products. | Commitment to reducing environmental footprint and sustainable sourcing. |
| 3 | Nestlé India Limited | 2.10 | Maggi, Nescafé, KitKat | Focus on nutrition and wellness with a wide array of food and beverage products. | Initiatives towards sustainable packaging and reducing carbon footprint. |
| 4 | Varun Beverages Limited | 1.88 | PepsiCo beverages | Beverages including carbonated drinks and fruit juices. | Efforts in water conservation and energy efficiency. |
| 5 | Britannia Industries Ltd. | 1.18 | Good Day, Marie Gold, Tiger | Bakery products including biscuits, bread, and dairy items. | Focus on sustainable manufacturing practices. |
Criteria for Ranking
- Market Capitalization: Indicates the company’s market value, size, and investor confidence.
- Revenue and Profitability: Reflects annual sales and profit margins, showing financial health.
- Brand Equity: The strength and recognition of a company’s brands.
- Product Diversification: The company’s ability to innovate and meet consumer preferences.
- Supply Chain Efficiency: How effectively a company manages sourcing, manufacturing, and distribution.
- Regulatory Compliance: Adherence to food safety and quality standards.
- Sustainability Initiatives: Efforts towards environmental sustainability and corporate social responsibility.
Technological advancements
To support these goals, investments in technological innovations and infrastructure development are being prioritized. The redesigned Agricultural and Processed Food Products Export Development Authority (APEDA) portal offers improved user experience and valuable information for stakeholders. Additionally, the new Agri Exchange portal provides a user-friendly platform for data analysis and report generation on agricultural exports.
Moreover, the introduction of TraceNet 2.0, an upgraded traceability platform under the National Programme for Organic Production (NPOP), aims to streamline operations and enhance regulatory oversight. These digital initiatives are designed to boost transparency, efficiency, and compliance within the sector.
Changing consumer preferences
Consumer preferences in India have shifted significantly over the past decade. A report by the State Bank of India reveals a decline in the consumption of cereals and pulses by over 5% in both rural and urban areas. This reflects changing dietary habits and increased demand for diverse and convenient food options, which the processed food industry is well-equipped to cater to.
The ready-to-eat (RTE) segment has particularly benefited from these changing preferences. Constant product innovation to meet evolving consumer demands is expected to push the RTE market to 25 billion Indian rupees by 2025. Additionally, there’s a growing acceptance of plant-based and vegan options, further diversifying the market.
Economic impact
The processed food sector plays a critical role in India’s economy, contributing to GDP, exports, investment, and employment. The sector directly employs approximately 2.005 million people across 40,579 registered food processing factories. Foreign direct investment (FDI) has also been substantial, with the sector attracting $12,955.90 million in FDI equity from April 2000 to September 2024, making up 1.83% of India’s total FDI inflows.
In the 2023-24 period, the processed food segment contributed 23.5% to agri-food exports, underscoring its importance in India’s export landscape. The government’s focus on enhancing the blue economy, highlighted by initiatives like the Aqua Goa Mega Fish Festival, also complements the growth of the food processing sector by promoting fisheries and related industries.
Health implications and regulatory challenges
While the growth of the processed food sector presents economic opportunities, it also raises health concerns. The rising consumption of ultra-processed foods, often high in sugars, fats, and additives, has been linked to various health issues, including obesity and non-communicable diseases. A World Health Organization (WHO) report highlights the rapid increase in UPF sales in India over the past decade, prompting calls for regulatory measures to address the trend.
In response, there’s growing emphasis on food safety and quality standards. The establishment of 100 new food testing labs aims to ensure food safety for all. Additionally, efforts are underway to extend the shelf life of perishable items to minimize losses and boost export potential. The government’s commitment to bridging the gap between policy and industry is clear through initiatives that promote Indian food brands abroad, such as the Production Linked Incentive Scheme for Food Processing Industries (PLISFPI).
Processed Foods: Health Implications and Level of Processing
| Food Category | Examples | Level of processing | Health implications |
| Cereals & Grains | Rice, Wheat, Maize | Processed into flours, breakfast cereals, snacks | Can be healthy if minimally processed (whole grains), but refined grains may lead to weight gain and blood sugar spikes. |
| Fruits & Vegetables | Canned fruits, Fruit juices, Pickles | Canned, preserved, or juiced | Can be healthy, especially when minimally processed; excessive added sugar and preservatives may be harmful. |
| Dairy Products | Milk, Yogurt, Cheese, Butter | Pasteurized, fermented, or powdered | Generally healthy if minimally processed, but full-fat varieties and excessive consumption may increase cholesterol. |
| Meat & Poultry | Sausages, Ready-to-eat meals | Cured, canned, or packaged | Risky when processed heavily (e.g., nitrates in sausages); high salt and fat content can lead to cardiovascular diseases. |
| Beverages | Soft Drinks, Juices, Alcohol | Bottled, carbonated, sweetened | Sugary drinks are unhealthy (linked to obesity and diabetes); fruit juices can be healthy if without added sugars. |
| Ultra-Processed Foods | Instant noodles, Packaged snacks, Sugary beverages | High processing, additives, preservatives | Unhealthy; high in added sugars, unhealthy fats, and sodium, contributing to obesity, diabetes, and heart disease. |
| Minimally Processed Foods | Whole grain flour, Frozen fruits, Frozen vegetables | Lightly processed for convenience | Generally healthy as they retain most nutrients and are minimally altered. |
| Fortified Foods | Fortified cereals, Fortified milk | Added vitamins and minerals | Beneficial, especially for addressing nutrient deficiencies like iron or vitamin D. |
Health considerations
Unhealthy processed foods: Ultra-processed foods, such as instant noodles, sugary snacks, and beverages, tend to have high levels of unhealthy fats, added sugars, and salt. Regular consumption of these can lead to obesity, heart disease, and type 2 diabetes.
Healthier processed foods: Minimally processed foods, like whole grain flours, frozen vegetables, and dairy products, retain most of their nutrients and offer convenience. Fortified foods, such as cereals and milk, address nutrient deficiencies, particularly in rural areas, improving public health outcomes.
Impact of raw material prices on the food processing industry
Fluctuations in raw material prices significantly influence production costs, pricing strategies, and consumer demand. Here’s a breakdown:
Production costs and profit margins: Rising costs of essential ingredients, like wheat, elevate production costs. Companies may adjust prices to maintain profit margins, potentially affecting consumer purchasing behavior.
Consumer demand: Price-sensitive consumers may opt for alternative or unprocessed foods, which can reduce demand for processed items. However, the sector’s growth depends on consumer purchasing power and adaptability to price increases.
Government policies and support: Interventions to stabilize raw material prices and infrastructure investments, such as the Pradhan Mantri Kisan Sampada Yojana, are aimed at reducing volatility and enhancing supply chain efficiency.
Long-term growth: Despite short-term challenges, the sector is projected to grow at a CAGR of 15%, reaching $535 billion by 2025/26, driven by increased consumption in Tier-II and III cities, government support, and foreign investments.
Future outlook
The processed food sector in India is poised for significant transformation. With supportive government policies, technological advancements, and a strong focus on quality and safety, India is well-positioned to enhance its presence in the global processed food market. The convergence of these factors, combined with the dynamic nature of consumer preferences, suggests a promising future for the industry, in line with the country’s broader goals of economic development and global integration.
