Production Linked Incentive Scheme For Food Processing Industry (2025)

Policy Update
Atharva Salunke

Background:

The Indian food processing industry is among the largest industries and involves units ranging from micro to large-scale units and acts as a key intermediary between agriculture, industry, and markets. With a rich endowment of natural resources, a huge domestic consumer market, and a large potential export market, India is highly competitive in the food processing industry. However, achieving its full potential involves enhancing the global competitiveness of Indian firms through greater scale of production, increased productivity, value addition, and better integration into global value chains.

With this in mind, the Government of India initiated the Production Linked Incentive Scheme for Food Processing Industry (PLISFPI), a Central Sector Scheme under the AatmaNirbhar Bharat Abhiyaan. Sanctioned by the Cabinet on March 31, 2021, at a cost of ₹10,900 crore, the scheme will help promote global food manufacturing champions and Indian brands in overseas markets. The scheme will be rolled out between FY 2021-22 to FY 2026-27.

Scheme Objectives:

1. Support Food manufacturing entities with stipulated minimum Sales and willing to make minimum stipulated investment for expansion of processing capacity and Branding abroad to incentivise emergence of strong Indian brands.
2. Support creation of global food manufacturing champions;
3. Strengthen select Indian brand of food products for global visibility and wider acceptance in the international markets;
4. Increase employment opportunities of off-farm jobs,
5. Ensuring remunerative prices of farm produce and higher income to farmers.

Functioning:

The Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) functions through three broad components aimed at strengthening India’s competitiveness in the global food market. The first component provides incentives for manufacturing in four major product segments, Ready to Cook/Ready to Eat foods (including millet-based products), Processed Fruits and Vegetables, Marine Products, and Mozzarella Cheese. This seeks to promote large-scale investments, improve processing capacity, and enhance value addition.

The second element targets the promotion of Innovative and Organic products of Small and Medium Enterprises (SMEs), including sub-segments such as free-range eggs, poultry meat, and egg products. This promotes diversification of products, sustainability, and the development of niche markets while offering opportunities for smaller enterprises to link into value chains.

The third component supports branding and marketing of Indian food products abroad to promote strong global recognition of Indian brands, enabling them to compete effectively in international markets.

The scheme is fund-limited, meaning the cost will not exceed the approved outlay of ₹10,900 crore. The maximum incentive payable to each beneficiary is pre-determined and capped, regardless of performance levels. Implementation is expected to expand processing capacity and generate additional processed food output of ₹33,494 crore, while creating nearly 2.5 lakh jobs by 2026-27, contributing significantly to the vision of an AatmaNirbhar Bharat.

Performance:

Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) has gone a long way in stimulating India’s food processing industry and its global reach. To date since its clearance in 2021, 278 food processing units of 170 applicants have been incentivized under the scheme. A total of ₹1,726.60 crore has been disbursed as incentives to the beneficiaries by June 2025. Such support has directly helped increase India’s food processing capability by 35 lakh metric tonnes (MT) annually.

One of the key successes of the scheme has been its effect on job creation. Direct and indirect employment opportunities of around 3.39 lakh have been generated so far, supplementing off-farm employment opportunities and rural economies alike. The scheme has also played a key role in establishing Indian food brands overseas. The agricultural and processed food exports by PLISFPI-approved applicants have increased at a strong Compound Annual Growth Rate (CAGR) of 13.23% from 2019-20 to 2024-25.

The plan makes the incentives acceptable only when the whole link of production, including primary processing, is carried out within India, thus strengthening the vision of AatmaNirbhar Bharat. With enhanced competitiveness, value addition, and support for branding, PLISFPI has been able to position India as an emerging global food manufacturing hub.

Table 1: State-wise number of units under PLISFPI

Impact:

The Scheme has been one of the crucial driving forces in consolidating India’s food processing industry by spurring investment, increasing exports, and creating jobs. Since its introduction in 2021, the scheme has garnered investments of ₹7,126 crore, leading to beneficiary sales of ₹49,825 crore as of September 2023. Incentives totaling ₹584.30 crore have been released under segments including Ready to Cook and Ready to Eat foods, Processed Fruits and Vegetables, Marine Products, Mozzarella Cheese, and Organic Products, marking its extensive sectoral spread.

The introduction of a dedicated ₹800 crore fund under FY 2022-23 for millet-based items gave momentum to India’s superfood legacy and promoted value addition. Additional initiatives such as World Food India events in 2017, 2023 and 2024, FDI-friendly measures, and infrastructure projects such as PMKSY and PMFME supplemented the scheme’s impact. Agricultural and food processing exports amounted to USD 49.4 billion in 2024-25, with 20.4 percent being of processed food, which speaks volumes about the enhanced credibility of India as a global base for food processing.

Emerging Issues:

Although the Scheme has achieved significant gains, some issues require being addressed. The scheme running for merely six active years constrains its long-term contribution, representing a possible bottleneck in maintaining the momentum of growth and investment it has produced. Further, while promoting processed fruits and vegetables encourages value addition and exports, excessive promotion of these products in the absence of regulation may have health implications in the long term and become a threat to nutritional security.

Even though the scheme includes organic products, there is room to improve its design by adding transparent regulatory protocols and nutritional protection for processed categories. Solving these problems will be key to guaranteeing that the scheme is not just adding to industrial development but also to the health of the people and sustainable growth.

Way Forward:

It would be best if the balance of surplus funds under the Scheme be tactically deployed to increase the duration of the scheme beyond the present six years. An extension will give the industries more time to consolidate their development, become more competitive, and transition towards self-sustainability. Through the provision of continuity of support until the industry matures, the scheme can elicit more profound structural change, reinforce India’s position in world food markets, and prevent stagnation after the removal of incentives.

It is recommended that the extant fee pattern under the Scheme, which is ₹1,00,000 for Category-I applicants, ₹10,000 for Category-II applicants, and ₹10,000 for SMEs and ₹50,000 for other applicants in Category-III, be restructured into a more lenient format. A lenient fee regime for MSMEs is necessary to promote their larger participation since excessive entry charges can deter smaller entities from taking advantage of the scheme’s benefits. The new framework may also be brought in line with programs like StartUp India, allowing early-stage businesses to gain access to incentives at a lower cost.

References:

1. Ministry of Food Processing Industries. (2021, May 2). Operational guidelines of the new central sector scheme “Production Linked Incentives Scheme for Food Processing Industry” (PLISFPI) (F. No. 11-18/3/2021-PLIS Division). Government of India. https://mofpi.gov.in/sites/default/files/guidelines_plisfpiwithcoveringltr_0.pdf
2. Ministry of Food Processing Industries. (n.d.). Production Linked Incentive Scheme for Food Processing Industry (PLISFPI). Government of India. Retrieved August 30, 2025, from https://www.mofpi.gov.in/en/PLISFPI/central-sector-scheme-production-linked-incentive-scheme-food-processing-industry-plisfpi
3. Press Information Bureau. (2024, December 6). Production linked incentive scheme for food processing industries. PIB Delhi. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2081393
4. Press Information Bureau, Government of India. (2021, March 31). Cabinet approves Production Linked Incentive Scheme for Food Processing Industry. PIB Delhi. https://www.mofpi.gov.in//sites/default/files/cabinet_approves_production_linked_incentive_scheme_for_food_processing_industry_1.pdf
5. Press Information Bureau, Government of India. (2023, July 25). Production Linked Incentive Scheme for Food Processing Industry. PIB Delhi. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1942525
6. Press Information Bureau, Government of India. (2023, December 12). Incentives under Production Linked Incentive Scheme for Food Processing Industry. PIB Delhi. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1985375
7. Press Information Bureau, Government of India. (2025, July 31). Infrastructure and investment support for food processing industries. PIB Delhi. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2150877
8. Press Information Bureau, Government of India. (2025, August 21). PLISFPI boosts food processing with ₹1,726 Cr incentives, 35 lakh MT capacity, and 3.39 lakh jobs: Indian processed food exports under PLI scheme grow at 13.23 % CAGR since 2019-20. PIB Delhi. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2159018

About the Contributor:

Atharva Salunke is a Policy Research Associate at NITI TANTRA and a Research Intern at IMPRI. He has recently graduated with a Bachelor’s degree in Political Science from Sir Parashurambhau College, Pune.

Acknowledgement: The author extends his sincere gratitude to the IMPRI team and Ms. Aasthaba Jadeja for her invaluable guidance throughout the process.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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