Budget 2026: Modi government might allocate ₹28,000cr for food-processing schemes
17 Jan 2026
The Indian government is planning to significantly increase funding for its key food processing initiatives in the upcoming Union Budget.
The proposed allocation of around ₹28,000 crore over five years aims to boost value addition, cut post-harvest losses, and improve farmers' incomes through better market linkages.
The funding will be split between two schemes: Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) Scheme and Pradhan Mantri Kisan Sampada Yojana (PMKSY).
PMFME and PMKSY: Focus on infrastructure and support
Allocation
The PMFME scheme, launched in June 2020 with a ₹10,000 crore outlay for FY2020-25, is likely to get an additional ₹15,000 crore.
The funds would be used to expand credit-linked subsidies and provide technology upgradation as well as branding/marketing support for micro food processing units.
Meanwhile, the PMKSY scheme (formerly SAMPADA) will get around ₹13,000 crore to create modern infrastructure like cold chain networks and agro-processing clusters.
Enhanced allocation to accelerate project execution
Impact assessment
The proposed higher allocation for PMFME and PMKSY is expected to speed up project execution, attract private investment, and create rural jobs.
The move is in line with the government's larger plan to promote food processing as a growth engine in agriculture.
This will help increase farm income, create off-farm jobs, and also reduce post-harvest losses.
Agriculture and allied sectors contribute about 18% of India's GDP with nearly half of its workforce depending on agriculture.
A closer look at the schemes
Scheme specifics
The PMFME scheme offers financial, technical, and business support to entrepreneurs for starting new units or modernizing existing ones.
The expenditure under this scheme is shared between central and state governments in a 60:40 ratio.
As of December 31, 2025, more than 172,000 micro food processing units have been approved with a total project cost of ₹16,000 crore.
Meanwhile, under the PMKSY scheme, roughly 1,618 projects worth ₹21,917 crore have been approved since its launch.
