The Union Budget 2026 was a decisive moment for India’s food processing sector. With an allocation of ₹4,061.43 crore to the ministry of food processing industries, the government has reinforced its intent to transform agricultural abundance into economic value. The sector’s projected market size of $535 billion by the close of this financial year reflects both scale and strategic relevance to India’s growth ambitions.
Capital at this scale creates the conditions to convert investment into performance. Government plays a critical role in providing capital, policy direction, and institutional frameworks. Industry complements this with market insight, quality discipline, and execution capability. When these strengths align, infrastructure is fully used, supply chains deepen and integrate, and farmers are able to capture a greater share of the value they generate.
India’s food processing sector has demonstrated resilience, with Gross Value Added rising from ₹1.34 lakh crore in 2014-15 to ₹2.24 lakh crore in 2023-24. Processed food now accounts for 20.4% of agricultural exports, up from 13.7% a decade ago. However, post-harvest losses cost the Indian economy approximately ₹1.53 trillion annually. 30-40% of fruits and vegetables are lost between harvest and consumption – a gap that can be narrowed through better-designed handling, storage, processing, and market linkages.
Countries with developed food processing sectors process the majority of their agricultural output. India, by contrast, processes only a small fraction of its perishable output, which limits value capture and contributes to avoidable losses. The Netherlands demonstrates what this looks like in practice, with cold chains, quality assurance, and logistics designed to work as one. It is the world’s second-largest agricultural exporter, with exports reaching €128.9 billion in 2024, food processing contributing 1.7% of GDP, and the sector sustaining over 163,000 jobs. This integrated approach has made the Netherlands a base for multinational food companies and a reliable hub for processed food into European markets.
For India, replicating this end-to-end design means ensuring produce moves reliably from harvest to handling, from handling to processing, and from processing to market, so that farmers are better positioned to capture the full value of what they grow. At scale, food processing also creates formal market structures through stable procurement relationships that connect smallholder farmers to consistent industrial demand, reducing the price volatility that has long undermined rural income.
Government initiatives targeting integrated cold chains, 50 multi-product food irradiation units, and 100 food testing laboratories create the physical backbone required for a modern supply chain. The Production Linked Incentive (PLI) Scheme reinforces this through cumulative investments of approximately ₹9,207 crore that have generated employment for more than 3.4 lakh people historically dependent on seasonal farm income. Yet cold storage capacity remains heavily concentrated in a handful of states, and infrastructure in less-served regions often goes underused simply because the connections to farms and markets are not yet in place.
Infrastructure investment delivers returns when the operational ecosystem around it is designed with equal care. Capital must drive ecosystem design, where procurement standards, logistics integration, and market linkages work together to ensure that what government has built is fully activated. Private sector expertise converts this physical and financial investment into a functioning ecosystem, where processing capacity serves farmers, quality infrastructure opens export markets, and capital deployment drives long-term sectoral growth.
Effective deployment of capital begins with aligning processing infrastructure to viable production clusters, where agricultural output is concentrated, supply is consistent, and proximity reduces the cost and degradation risk between harvest and facility. Infrastructure anchored to actual production geography and market demand creates the conditions for sustained utilisation.
Quality and traceability standards, when embedded across the value chain from procurement through processing, enable Indian food products to meet international requirements reliably. Technology makes this achievable at scale. Precision farming tools and AI-driven advisory systems bring standardisation to the farm gate, while digital platforms link supply to processing demand in real time and give buyers visibility into origin, handling, and compliance.
Measuring outcomes against clear benchmarks like utilisation rates, reduction in post-harvest losses, export readiness, and farmer income, grounds deployment decisions in performance rather than intent. This enables India to move from processing simply what is grown to processing what global markets actively demand, converting agricultural abundance into a competitive export proposition.
When public investment and private execution converge, the outcomes will extend well beyond infrastructure utilisation or export volumes. Farmers would gain stable, predictable income streams as processing demand creates year-round markets for their produce. Supply chains, in turn, can become reliable enough to sustain consistent quality and open access to premium domestic and international markets.
A well-functioning food processing sector is also, fundamentally, a food security asset. When supply chains are efficient and losses are minimised, more of what India grows reaches consumers in a form that is safe and nutritious. The Union Budget 2026 represents a significant opportunity–deployed effectively, it can advance not just industrial capacity but India’s long-term food security.
(The views expressed are personal)
This article is authored by Himmat Kunwar Singh, director, Corporate Affairs, Nestle India.
