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Industrial Subsidy for Food Processing Startups and MSMEs

India’s food processing industry is one of the fastest-growing sectors, contributing over 10% to the country’s GDP and employing millions. To boost this growth, the Government of India and various state governments provide industrial subsidies for food startups and MSMEs, encouraging innovation, exports, and sustainable food manufacturing.

If you are planning to start a food processing unit, you can claim up to 75% subsidy on machinery, cold storage, packaging, and infrastructure under various central and state-level schemes.

What is Industrial Subsidy?

An industrial subsidy is a financial incentive provided by the government to reduce the operational cost of industries. It can be in the form of:

  • Capital investment subsidy
  • Interest subsidy on loans
  • Reimbursement on power tariffs
  • Export incentives
  • Technology upgradation assistance

For the food processing industry, these subsidies help in setting up manufacturing units, purchasing advanced machinery, improving quality standards, and entering export markets.

How Much Subsidy is Provided to New Food Business Setups?

The government offers different subsidy percentages based on the nature of the project and location.
Here’s an overview of what new food startups can expect:

Scheme/AuthoritySubsidy OfferedRemarks
PM Kisan Sampada Yojana (MoFPI)Up to 50% of eligible project costFor Mega Food Parks, Cold Chains, and Agro-Processing Clusters
Pradhan Mantri Formalisation of Micro Food Enterprises (PMFME)35% subsidy (max ₹10 lakh)For small food startups and MSMEs
State Industrial Policies25–75% subsidyVaries by state
Export Subsidy Schemes5–10% on export valueFor processed and packaged food

According to the Ministry of Food Processing Industries (MoFPI), over ₹10,900 crore has been disbursed since 2019 under different food processing subsidy programs across India.

Levels of Food Business in India

The food business sector in India operates at three main levels:

  1. Micro & Small Enterprises (Home-Based Units) – Jam, pickles, bakery, snacks, etc.
  2. Medium Enterprises (Regional Brands) – Packaged food, ready-to-eat, dairy, etc.
  3. Large Enterprises (National/Export Brands) – Processed and frozen foods, meat, beverages, and large-scale exports.

Each level has different eligibility criteria and subsidy amounts depending on the investment size and operational scale.

Eligibility Criteria for Industrial Subsidy in Food Processing

To apply for government subsidies, startups and MSMEs must meet certain conditions:

  1. Business Type: The unit must be engaged in food processing, packaging, cold chain, storage, or value addition.
  2. Registration: Must have a valid Udyam/MSME registration and FSSAI license.
  3. Investment Limit: Investment in plant and machinery should fall within MSME guidelines.
  4. Location: Units in rural or backward districts get higher subsidies.
  5. Bank Funding: Must have term loans sanctioned from banks or financial institutions.
  6. Women and SC/ST entrepreneurs are eligible for additional 10–15% subsidy under specific schemes.

State-Wise Subsidy on Food Processing Industry

1. Haryana

  • Subsidy: 50% on capital investment up to ₹50 lakh for food processing units.
  • Special benefit: 15% extra for women entrepreneurs.
  • Scheme: Haryana Enterprises and Employment Policy (HEEP 2025).

2. Uttarakhand

  • Subsidy: Up to 40% for food and agro-based industries.
  • Additional Benefits: 100% GST reimbursement for 5 years.

3. Bihar

  • Subsidy: 35% to 50% on plant & machinery for food processing startups.
  • Scheme: Bihar Industrial Investment Promotion Policy 2021.

4. Madhya Pradesh

  • Subsidy: 40–60% on fixed capital; interest subsidy up to 5%.
  • Special Zone: Agro Processing Cluster Policy 2024.

5. Punjab

  • Subsidy: 25% on fixed capital investment; 50% for cold storage units.
  • Scheme: Punjab Agro Industrial Policy.

6. Rajasthan

  • Subsidy: 30–50% on food processing infrastructure.
  • Extra 10% for women-led MSMEs.

7. Uttar Pradesh

  • Subsidy: 25–35% capital subsidy + 100% stamp duty exemption.
  • Scheme: UP Food Processing Industry Policy 2022.

8. Gujarat

  • Subsidy: Up to 50% for primary and secondary processing units.
  • Export Incentive: 7% on exports for food startups.

9. Himachal Pradesh

  • Subsidy: 50% on machinery and cold storage setup in hilly areas.
  • Additional Support: 100% transport subsidy under HADP.

10. West Bengal

  • Subsidy: 30% on capital investment; 20% on technology upgradation.

Export Subsidy on Food Processing Industry

For businesses exporting food products, the Government of India provides incentives under:

  • MEIS (Merchandise Exports from India Scheme) – up to 10% on export value.
  • RoDTEP (Remission of Duties and Taxes on Exported Products) – refund on export taxes.
  • APEDA Assistance – up to ₹2 crore for export infrastructure and branding.

Big Food Startups That Benefited from Subsidy Schemes

  1. Licious – Benefited under cold chain infrastructure support.
  2. Paper Boat – Received government support for modern packaging technology.
  3. Haldiram’s – Utilized industrial subsidies for food processing automation.
  4. Amul – Received dairy development and export subsidies.
  5. Mother Dairy – Benefited from cold storage and logistics schemes.

These examples show how government subsidies help small startups scale to national brands.

Popular Central Subsidy Schemes for Food Processing

  1. PM Kisan Sampada Yojana – Mega Food Parks, Cold Chain, Agro-Processing Clusters.
  2. PM Formalisation of Micro Food Enterprises (PMFME) – For micro-level entrepreneurs.
  3. Operation Greens (TOP to TOTAL) – For perishable goods like tomato, onion, potato.
  4. Agro Processing Cluster Scheme – 35–50% government grant for cluster-based development.
  5. National Mission on Food Processing (NMFP) – For technology and R&D support.

How StartupFlora Helps You Get Subsidy Easily

At StartupFlora, we guide startups and MSMEs through every stage of the food processing subsidy process. Our services include:

  • Eligibility verification and subsidy planning.
  • Documentation and project report preparation.
  • Applying for PMFME or state subsidy schemes.
  • Liaison with government departments.
  • Post-sanction support and compliance.

We ensure you get maximum financial support under state or central schemes, helping you build your dream food business with minimum investment risk.

FAQs: Industrial Subsidy for Food Startups

Q1. What is the industrial subsidy for the food processing industry?
A: It is a financial assistance program where the government provides capital or interest subsidies to food startups for setting up processing units, cold chains, and export facilities.

Q2. How much subsidy can a food startup get?
A: Depending on the scheme, food startups can get 35% to 75% subsidy on plant, machinery, or infrastructure costs.

Q3. Is there any special subsidy for women entrepreneurs?
A: Yes, women-led food enterprises can receive 10–15% additional subsidy in most state and central schemes.

Q4. Which scheme offers subsidy for small food manufacturers?
A: The PM Formalisation of Micro Food Enterprises (PMFME) scheme offers 35% subsidy to small and home-based food startups.

Q5. How can StartupFlora help in getting a food processing subsidy?
A: StartupFlora assists in documentation, application filing, and connecting your startup to suitable subsidy programs to ensure a fast approval process.

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