As India aims to benefit from its demographic dividend and achieve long-term economic growth, the health of its population will become increasingly important. Therefore, addressing the growing consumption of ultra-processed foods is not only a public health priority but also a key development challenge for the coming decades. — Annu Kumari

Food processing has become an important part of India’s development strategy. To support agricultural modernisation, industrial growth and job creation, the policymakers have promoted the food processing sector. The sharp rise in foreign direct investment in food processing sector shows its growing importance. The more than five-fold increase in equity investments noted during 2024–25 in this sector. However, the expansion of food processing has also increased the production and sale of foods that are high in sugar, salt and unhealthy fats due to which economic benefits have grown alongside public health costs. Rising obesity, diabetes, cardiovascular diseases and healthcare spending reflect this trade-off.

The rapid growth of ultra-processed foods in India is closely linked to changes in the country’s food economy. Discussions on Non-Communicable Diseases (NCDs) every so often focus on consumer behaviour and lifestyle choices but, they pay less attention to the structural changes that have reshaped food production and distribution since economic liberalisation. The growth of food processing industries, higher public and private investments, organised retail and digital food delivery platforms has increased the availability, affordability as well as appeal of processed foods. As a result, the rise of Non-Communicable Diseases (NCDs) should be understood not only as a public health issue but also as an outcome of changes in India’s food system and patterns of capital investment.

Government of India policies have strongly supported the growth of the food processing sector. India allows 100% foreign direct investment (FDI) in food processing and in the retail trading of food products which includes through e-commerce, under the automatic and government routes. The food processing industry received FDI worth US$13.49 billion between April 2000 and June 2025. It also recorded about US$7.3 billion in FDI equity inflows between 2014–15 and 2024–25. Processed food accounted for 20% of India’s agri-food exports in 2024–25. Tax policies have also supported the sector as most food products fall under the 0% or 5% GST slabs. 

The food processing sector has attracted investment from both Indian and foreign companies. Major Indian investors include Amul, Cremica, ITC Limited, UFlex, Britannia Industries and Godrej Agrovet. While foreign investment has come from companies based in several countries. The United States has the largest presence, with Cargill, Del Monte, PepsiCo and Coca-Cola. Other major investors include Nestlé from Switzerland, McCain Foods from Canada, Danone from France, Ferrero from Italy, Agristo from Belgium, Unilever from the United Kingdom and Yakult from Japan. With these Indian and foreign companies, the food processing capacity expanded as well as production and distribution of processed food products increased across India.

Since the 1990s, food processing has become a key part of India’s development strategy. Basically, economic liberalisation and investment reforms have encouraged both domestic and foreign investment in food manufacturing as investments in this sector considered important for agricultural modernisation and economic growth. As a result, the food processing sector has grown rapidly and transformed India’s food environment. Today, the packaged food products have become more widely available in both urban and rural areas in India which implies that industrially processed foods more accessible and affordable across the country.

The commercial goals of the food processing industry do not always match public health goals. For producers and retailers, highly processed foods offer several advantages owing to their longer shelf life, lower transport costs, higher profit margins and standardised production. As a result of which the companies have strong incentives to expand the market for packaged snacks, sugar-sweetened beverages, confectionery products, instant foods and other ultra-processed foods. Also, the companies promote such products through aggressive marketing to target children, adolescents and young adults via television, digital media, sports sponsorships and celebrity endorsements.

The changes in food markets have also changed where processed foods are consumed. With better logistics and stronger distribution networks, food companies have expanded into small towns and rural areas which were once dominated by locally produced and minimally processed foods. Now, the branded packaged foods are widely available in rural India. At the same time, the gap in NCD mortality between rural and urban areas has narrowed. While rural populations still face problems such as undernutrition and limited access to healthcare. However, the rural population are now increasingly exposed to the same commercial food environment that has contributed to rising obesity, diabetes and cardiovascular diseases in urban areas.

The relationship between food processing and public health is complex. Food processing is not harmful in itself. It can reduce food losses, improve food safety, increase storage life and make nutritious foods more widely available. The main concern is the rapid growth of ultra-processed foods that contain high levels of sugar, salt and unhealthy fats. Therefore, public health policies should distinguish between food processing that improves nutrition and food processing that encourages the consumption of energy-dense and nutrient-poor foods.

India’s experience highlights a major policy contradiction. On one hand, the government promotes food processing to support industrial growth, agricultural modernisation and investment. On the other hand, the health system is facing a growing burden of diet-related chronic diseases. Non-communicable diseases now account for 60% of all deaths, and cardiovascular diseases are the leading cause of mortality. As a result, households, the healthcare system, and the wider economy bear the rising costs of unhealthy diets. Therefore, the economic benefits of investment in food processing are accompanied by significant public health costs.

This contradiction raises important questions about the future of India’s food system. If current investment trends continue to support the expansion of ultra-processed foods, the economic benefits of industry growth may be offset by rising healthcare costs and productivity losses caused by chronic diseases. The key challenge for policymakers is to ensure that regulations encourage investments that improve nutrition rather than harm it. Understanding this challenge also requires examining the growing financial burden that NCDs place on households and the healthcare system.

As India aims to benefit from its demographic dividend and achieve long-term economic growth, the health of its population will become increasingly important. Therefore, addressing the growing consumption of ultra-processed foods is not only a public health priority but also a key development challenge for the coming decades.              

Annu Kumari: Assistant Professor, Sri Aurobindo College (Evening), University of Delhi