Decline in FDI in India’s Food Processing Sector in 2023-24

Foreign direct investment (FDI) in India’s food processing sector experienced a significant decline of 30% in the fiscal year 2023-24, totaling Rs 5,037.06 crore, down from Rs 7,194.13 crore in 2022-23. This decline follows a series of fluctuating FDI levels over recent years, with previous figures including Rs 5,290.27 crore in 2021-22, Rs 2,934.12 crore in 2020-21, and higher amounts in preceding years.

Historical FDI Trends

• 2019-20: Rs 6,414.67 crore
• 2018-19: Rs 4,430.44 crore
• 2017-18: Rs 5,835.62 crore
• 2016-17: Rs 4,865.85 crore
• 2015-16: Rs 3,312 crore

Government Measures to Boost Investment

To enhance foreign investment in the food processing sector, the Indian government has implemented several measures:

100% FDI: Permitted through the automatic route subject to sectoral regulations.

Government-Approval Route: Allows 100% FDI for trading (including e-commerce) of food products manufactured or produced in India.

Licensing Exemptions: Processed food items are exempt from licensing under the Industries (Development and Regulation) Act, 1951.

GST Reductions: Lower GST rates for raw and processed food products, with over 71.7% of food products covered under lower tax slabs of 0% and 5%.

Export and Scheme Impacts

Export Decline: The export of processed foods dropped by 17% to USD 10,881.81 million in 2023-24 from USD 13,078.3 million in the previous fiscal.

Government Schemes

The Ministry is implementing several schemes to boost the sector:

• Pradhan Mantri Kisan SAMPADA Yojana (PMKSY)
• Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)
• Prime Minister Formalization of Micro Food Processing Enterprises (PMFME)