FDI Inflows to Food Processing Industries

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Important initiatives by the Indian government have led to significant growth in FDI Inflows to Food Processing Industries. While FDI Inflows to Food Processing Industries are estimated to reach USD 325.93 million by 2009, a target of USD 25.07 billion worth of FDI Inflows to Food Processing Industries has been set to be achieved by 2015.

Food processing industry is a predominant segment in the Food Industry in India and accounts for 32 percent share in the industry. The food processing industry comprise of 2 percent of fruits and vegetables and 15 percent of processed milk.

The food processing industry contributes to 6.3 percent of the Gross Domestic product of India, 19 percent to the Indian industry, and 13 percent to the export production. The export production in food processing sector has increased from USD 6.98 billion in 2002-03 to USD 20.51 billion in 2006-07, accounting for a phenomenal rise of 193.83 percent. The government of India has set a target of USD 25.07 billion of FDI Inflows to Food Processing Industries to be achieved by 2015 which will increase India's global food trade from 1.6 percent to 3 percent along with a rise in perishable processed food items from 6 percent to 20 percent. The food processing industry is expected to witness a growth of 10 percent in the recent years to come.

Important Aspects of FDI Inflows to Food Processing Industries in India

  • Government of India gave an estimation of Foreign Direct Investments (FDI) Inflows to reach USD 325.93 million by 2009 keeping in view the rising demand among the corporate players in Indian retail industry

  • A number of active measures have been taken up by the government to ameliorate the food processing units in terms infrastructure, human resource, and research and development

  • 100 percent FDI is permitted in almost all the food processing units with the exception of alcohol.

  • Enactment of the Food Safety and Standards Bill 2005 has introduced a governing body for the food processing sector.

  • This legislation has also allowed a 100 percent tax deduction on profits for five years and 25 percent for the next five years especially to the upcoming agro-processing industries.

  • Most of the items in food processing sector are exempted from license agreement excepting those which are kept in reserve for the small-scale sectors.

Last Updated on 4/23/2011