FDI In India's Food Processing Sector Drops 30% To ₹5,037 Crore

The government has exempted all processed food items from the purview of licensing under the Industries (Development and Regulation) Act, 1951.

Source: Unsplash

Foreign direct investment in India's food processing sector experienced a 30% decline in the previous fiscal year, totalling Rs 5,037.06 crore, according to official figures. The FDI stood at Rs 7,194.13 crore in the fiscal year 2022–23.

The Food Processing Industries Ministry reported to the Lok Sabha that the FDI in the food processing sector was Rs 5,290.27 crore in 2021–22 and Rs 2,934.12 crore in 2020–21. The FDI figures were Rs 6,414.67 crore in 2019-20, Rs 4,430.44 crore in 2018-19, Rs 5,835.62 crore in 2017-18, Rs 4,865.85 crore in 2016-17, and Rs 3,312 crore in 2015-16.

To boost foreign investment in the food processing sector, the ministry has implemented several initiatives. These include allowing 100% foreign direct investment through the automatic route, subject to sectoral rules. Additionally, 100% FDI is permitted under the government approval route for trading, which includes e-commerce, concerning food products manufactured or produced in India.

The government has exempted all processed food items from the purview of licensing under the Industries (Development and Regulation) Act, 1951.

There is a lower GST for raw and processed products. More than 71.7% of food products under various chapter heads/sub-heads are covered in lower tax slabs of 0% and 5%.

The export of processed foods declined 17% to $10,881.81 million in 2023-24 from $13,078.3 million in the preceding fiscal.

For the development of this sector, the ministry is implementing the Pradhan Mantri Kisan SAMPADA Yojana and Production Linked Incentive Scheme for Food Processing Industry and Prime Minister Formalization of Micro Food Processing Enterprises schemes.

All these three schemes are demand-driven and implemented across the country.

These schemes are aimed at creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet, and to help in providing better returns to farmers, creation of employment opportunities, reducing wastage, increasing the processing level and enhancing the export of processed foods.

(With PTI Inputs)

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