Foreign Direct Investment (FDI) in India’s food processing sector dropped by nearly 30% in 2023–24, totaling ₹5,037.06 crore, compared to ₹7,194.13 crore in the previous fiscal, according to data presented by the Ministry of Food Processing Industries in the Lok Sabha.
The decline marks the second major dip in three years. FDI inflows stood at ₹5,290.27 crore in 2021–22, ₹2,934.12 crore in 2020–21, and ₹6,414.67 crore in 2019–20. The highest inflows in the past decade were recorded at ₹5,835.62 crore in 2017–18.
Despite policy measures aimed at attracting investment, the latest figures indicate slowing foreign interest in India’s food processing space, a sector crucial for value addition, employment, and export growth.
To boost FDI, the government allows 100% foreign investment through the automatic route in food processing activities, subject to sectoral regulations. It also permits 100% FDI under the government approval route for trading—including via e-commerce—of food products manufactured or produced in India.
The sector further benefits from reduced GST rates, with over 71% of food products covered under the 0% and 5% tax slabs, and the exemption of processed foods from the licensing requirements of the industries (Development and Regulation) Act, 1951.
Adding to the slowdown, India’s exports of processed food products fell 17% in FY24 to USD 10.88 billion, down from USD 13.07 billion in FY23.
The Ministry is currently implementing three flagship programs — the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), the Production Linked Incentive Scheme for Food Processing Industry (PLISFPI), and the Prime Minister Formalization of Micro Food Processing Enterprises (PMFME) scheme.
These schemes are aimed at building modern infrastructure, improving farm-to-retail supply chains, reducing post-harvest losses, creating employment opportunities, and enhancing exports of processed foods.
While policy support remains robust, the sharp fall in FDI and exports underscores the need for stronger global investor confidence and competitive reforms to sustain India’s ambitions of becoming a global food processing hub.