PLI Scheme for Food Processing Sector: Success Spurs Plans for Next Phase

Livemint - Economy · 20 Jul 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

The government is considering a new incentive framework for the food processing sector, building on the success of the current PLI scheme which has exceeded investment and employment targets, with consultations underway to shape the next phase.

Key points

Production-Linked Incentive (PLI) Scheme for food processing, set to expire on 31 March 2027, has achieved significant success with investments of ₹9,207 crore against a target of ₹7,722 crore.

The scheme has added 3.4 million tonnes per annum of food processing capacity and generated 329,000 jobs, directly and indirectly, boosting rural employment and off-farm sectors.

Sales of PLI-supported products grew at a CAGR of 10.58%, while exports registered a CAGR of 7.41%, despite global macroeconomic challenges.

[GS3-Economy] The scheme aligns with India's goal to increase food processing levels from 17% of farm output in 2023 to 25% by 2031, crucial for reducing post-harvest losses and enhancing farmer incomes.

The government is consulting industry stakeholders to design a successor scheme, focusing on segments like plant-based proteins, nutrition products, dairy by-products, and food waste reduction technologies.

The current PLI scheme, part of a ₹1.91 trillion outlay across 14 sectors, has strengthened India's manufacturing ecosystem and global competitiveness in food processing.

A Crisil report indicates India's food processing level rose from 10% in 2010 to 17% in 2023, demonstrating the sector's growth potential with policy support.

[GS2-Governance] Experts recommend establishing industry-government working groups with clear objectives and stable policy frameworks to sustain growth and attract private investment.

Way Forward: The government should prioritize stable export and taxation policies, invest in technology for food waste reduction, and enhance rural infrastructure to support the next phase of growth in food processing.

Key terms

DPIIT (Department for Promotion of Industry and Internal Trade)

A central government department under the Ministry of Commerce and Industry, responsible for formulating and implementing policies to promote industrial growth and internal trade. It's key for UPSC as it oversees critical schemes like PLI and FDI policies.

Production-Linked Incentive (PLI) Scheme

A government initiative offering financial incentives to companies based on incremental sales, aimed at boosting domestic manufacturing and reducing import dependence. For UPSC, it's significant as it aligns with Atmanirbhar Bharat and impacts sectors like electronics, pharmaceuticals, and food processing.

Food Processing Sector

The sector involves transforming raw agricultural produce into value-added products. It's crucial for UPSC as it links agriculture with industry, reduces post-harvest losses, and generates rural employment, contributing to doubling farmers' income.

Compounded Annual Growth Rate (CAGR)

A measure of growth over multiple time periods, used to assess the performance of investments or sectors. For UPSC, it's relevant in evaluating economic policies, sectoral growth, and export-import trends.