The core tension: the largest factory base, a below-average growth rate
Food and Agro has a high factory count relative to the other sectors reviewed (47,238 in 2023-24, up from 41,922 in 2014-15) and Gross Value of Output that has more than doubled over the decade, from ₹9.75 lakh crore to ₹22.41 lakh crore, a 129.9% increase. Firm-level financial performance has improved alongside that scale: PAT margin rose from 1.19% (2014-15) to 5.92% (2024-25), and ROE nearly tripled, from 5.28% to 15.04%.
But by the IIP, the sector ranks only 8th of 10 on both level and full-period CAGR (1.37%), a below-average growth rate for a sector of its scale. What distinguishes Food and Agro is stability rather than either strength or weakness: it is the 2nd-least-volatile sector among those reviewed, weathering the COVID year with one of the mildest shocks recorded (-6.7% in 2020-21) and recovering quickly. The value-added share of GVO has drifted down slightly over the decade (11.0% to 10.7%), the same pattern of scale outrunning value capture documented in several other sectors reviewed, though less pronounced here than in, for instance, Electronics.
Trade: a real surplus, built on a narrow commodity base
Food and Agro runs a healthy trade surplus (₹1.20 lakh crore in FY24-25) with exports growing at 9.6% year-on-year, but imports are growing faster still (17.9% YoY, and a 17.4% five-year CAGR against exports' 12.9%): import dependency stands at 41.9%. The trade pattern is narrowly concentrated: rice alone (semi/wholly milled, HS 100630) accounts for roughly a quarter of total export value at ₹1,00,721 crore, with frozen shrimp and boneless meat rounding out the top exports. On the import side, the entire top-5 list is edible oils and one nut (crude palm, soya bean, sunflower/safflower, refined palm oil, and cashew nuts), a structural gap between India's oilseed production and its edible-oil consumption that shows up clearly in the trade data. The USA is the leading export partner (₹46,363 crore) while Russia leads on imports (₹23,287 crore), reflecting India's large-scale sunflower-oil imports from the Black Sea region.
Investment: a growing private pipeline, a PLI scheme running behind its own budget
New investment in Food and Agro reached ₹44,734 crore in 2024-25, up sharply from ₹33,128 crore the prior year, and remains overwhelmingly private (Indian Private Sector at ₹36,117 crore, roughly 81% of the total), with a meaningfully larger Foreign Private share (~16%) than most other sectors reviewed. Dropped-investment cost rose 2.7 times in the latest year (₹5,114 crore to ₹13,628 crore), while completed-investment value fell (₹10,916 crore to ₹7,483 crore). On policy, the Production Linked Incentive Scheme for Food Processing Industries (PLISFPI) touches specific product categories within this sector, ready-to-eat foods, marine products, processed fruits and vegetables, mozzarella, and select organic/innovative products, with a total approved multi-year outlay of ₹10,900 crore (2021-22 to 2026-27). Cumulative disbursement stands at ₹2,162.55 crore since launch, as of February 2026, as reported by the government.
Geography: the most evenly spread sector reviewed
Maharashtra leads by a narrow margin (13.2% of national GVO, ₹2,96,292 crore) ahead of Uttar Pradesh (12.4%, ₹2,78,350 crore) and Gujarat (11.5%, ₹2,58,244 crore), with Karnataka and Tamil Nadu rounding out the top five. The top-5 states together account for only around 51% of national output, a comparatively unconcentrated geography, a pattern consistent with food processing following agricultural raw-material availability across many states rather than clustering around a small number of industrial hubs. Karnataka pairs the highest wages per worker among the top-5 (₹2,28,987) with a mid-table factory count, while Tamil Nadu has by far the most factories (5,708) but the lowest wages per worker, suggesting a larger number of smaller-scale operations.
Clusters: profiled hubs are all in Gujarat
Every cluster profiled for this sector sits in Gujarat, spanning seafood processing (Veraval), onion dehydration (Bhavnagar/Mahuva), spice and psyllium trading (Unjha), and the country's best-known dairy cooperative federation (Anand/GCMMF-Amul, with FY2024-25 turnover of ₹65,911 crore). But Gujarat is only the sector's 3rd-largest state by GVO share, behind Maharashtra and Uttar Pradesh, neither of which has a cluster profiled here. Food-processing clusters are well documented elsewhere in the country, including Nashik's grape and onion processing, Punjab's food-grain milling belt, and Andhra Pradesh's aquaculture-processing hubs.
R&D: among the lowest intensities in the series
R&D spend as a share of sales has held at roughly 0.07%–0.10% for the entire decade (0.083% in 2024-25), among the lowest of the ten sectors reviewed (only Leather, Metals and Construction Materials report less), below even Textiles' 0.10%. This is consistent with a sector whose largest firms, ITC, AWL Agri Business, Patanjali Foods, Pernod Ricard, and the beverage majors, compete primarily on brand, distribution and formulation rather than sustained process or product R&D, and should be read as a structural feature of branded-FMCG competition rather than a policy failure.
Explore the sector: interactive mindmap
Food and Agro is India's largest manufacturing sector by factory count and one of its steadiest by output growth, but "steady" is the operative word rather than "fast": it ranks in the bottom half of this series on both IIP level and CAGR, even as firm-level margins and returns have improved substantially. Its trade position is healthy but rests on a narrow commodity base (rice and shrimp exports, edible-oil imports) exposed to global crop and price cycles more than domestic manufacturing competitiveness. And its R&D intensity is among the lowest in the series, which points the same direction: this is a sector that competes on scale, distribution and brand rather than process innovation.
References
Methodological Notes
Institute of Manufacturing and Economy · Sector Snapshots · August 2026 · NIC Divisions 10, 11, 12 · Primary research: Anurag Kumar · Compiled by: Riddhi Bhargava
Author's Profile
Anurag Kumar is a BSM (Hons) student majoring in Economics and Finance, Class of 2029. He interned at the Institute of Manufacturing and Economy and conducted the primary research for this sector snapshot.