Agriculture & Food Processing: Sector Guide

Canada-India Agriculture: A Billion-Dollar Trade Relationship

India remains Canada's largest lentil customer and, as of 2024, re-emerged as Canada's largest market for peas. Since 2024, Canada has shipped over $1.3 billion worth of yellow peas and lentils to India. Canadian lentil exports to India were valued at US$543.9 million in 2023 (91.6% market share), representing a 53.9% growth from US$63.1 million in 2018.

This trade relationship extends far beyond commodity exchange. Canadian agri-tech and research collaborations are increasingly influencing how food is grown, processed, and stored in India, reflecting a shift in bilateral ties from commodity trade toward innovation-driven partnerships centred on research cooperation, agri-tech development, and value-chain integration.

For Canadian companies looking to invest in India's agriculture and food processing sector, the opportunity is substantial. India's food processing sector is projected to reach $535 billion by 2026-27, with 100% FDI permitted under the automatic route. From April 2000 to June 2025, the sector received INR 1,15,596 crore (US$13.4 billion) in cumulative FDI.

Trade Landscape: What Canada Exports to India

Pulses: The Anchor Commodity

Canada's pulse exports to India dominate the bilateral agriculture trade:

During August-October 2024 alone, 602,000 tonnes of Canadian peas were shipped to India. The Indian government extended the deadline for duty-free pea imports to February 28, 2025. However, in late October 2025, India imposed a 30% tariff on peas of all origins, creating new challenges for Canadian exporters.

Canola and Oilseeds

Canola is Canada's single largest agricultural export globally, with export value exceeding CAD $11 billion annually in 2025. While India is not the primary destination for Canadian canola, the Canada-India DTAA and ongoing CEPA negotiations could open new pathways for canola oil and meal exports.

Emerging Categories

Beyond traditional commodities, Canadian companies are exploring exports in functional foods and nutraceuticals, processed frozen foods (led by McCain Foods), organic and specialty grains, and plant-based protein products leveraging Canada's expertise in pulse processing.

FDI in India's Food Processing Sector

India permits 100% FDI under the automatic route in food processing, making it one of the most open sectors for foreign investment. No government approval is required for Canadian companies to set up food processing operations.

Government Incentive Schemes

PMKSY (Pradhan Mantri Kisan SAMPADA Yojana): This umbrella scheme has a total allocation of INR 6,520 crore (US$745 million) through March 2026. As of February 2025, MoFPI has sanctioned 1,608 projects including 41 Mega Food Parks, 394 Cold Chain projects, 75 Agro-Processing Clusters, 536 Food Processing Units, and 61 Backward and Forward Linkage projects. The Cabinet approved an additional INR 1,920 crore (US$219 million) in July 2025.

PLI Scheme for Food Processing (PLISFPI): Approved in March 2021 with a budget of INR 10,900 crore for 2021-27, this Production Linked Incentive scheme has attracted over INR 8,910 crore in investments across 213 locations and generated more than 2.89 lakh jobs since launch. The Indian government is preparing PLI 2.0 for food processing to expand manufacturing, drive innovation, attract FDI, and strengthen agri-value addition.

Mega Food Parks: These parks provide centralized processing infrastructure including cold storage, deep freeze, sorting, grading, and packaging facilities on a common campus. Canadian companies can set up individual processing units within these parks, reducing capital expenditure by 30-40% compared to standalone facilities.

Case Study: McCain Foods — Canada's Largest Food Processing Investment in India

McCain Foods Limited, the Canadian frozen food giant, provides the most compelling case study for Canada-India food processing investment. McCain Foods (India) is a wholly-owned subsidiary that has announced a landmark INR 4,000 crore (US$480 million) investment to establish Madhya Pradesh's largest food processing plant.

The project's scope illustrates the scale of opportunity:

• Direct employment for over 600 individuals in Phase 1
• Indirect employment for approximately 1,500 people
• Contract farming engagement with over 20,000 farmers across Madhya Pradesh
• Access to modern agricultural techniques, training, and stable income for farming communities
• Full backward integration with local potato supply chains

McCain's success demonstrates that a wholly-owned subsidiary structure works effectively for food processing, enabling full operational control while leveraging India's agricultural base and domestic consumption market. The company's model of contract farming with local farmers is replicable for Canadian companies in pulses, oilseeds, fruits, and vegetables.

Strategic Initiatives: Beyond Commodity Trade

Canada-India Pulse Protein Centre of Excellence

A proposed Centre of Excellence at India's National Institute of Food Technology Entrepreneurship and Management (NIFTEM) in Kundli aims to advance pulse protein processing, strengthen ties between academia and industry, and create commercial opportunities for plant-based protein products. This initiative bridges Canada's expertise in pulse processing with India's massive protein demand.

Agri-Tech Research Collaborations

Scientists at Agriculture and Agri-Food Canada are developing crop varieties capable of withstanding drought and heat stress, directly applicable to Indian agricultural conditions. Collaboration extends to food processing technologies, post-harvest storage systems, and digital agriculture solutions.

CEPA Trade Agreement Impact

The proposed Comprehensive Economic Partnership Agreement (CEPA) between Canada and India, with negotiations targeting completion by end-2026, could transform the agriculture trade. Potential impacts include reduced tariffs on processed food products, simplified phytosanitary certification processes, mutual recognition of food safety standards, and preferential treatment for agri-tech investments. Read our detailed analysis of the Canada-India tech corridor for the broader bilateral context.

Tariff Challenges and Risk Mitigation

Canadian agriculture exporters face an evolving tariff landscape in India. While lentil tariffs currently sit at 10%, India imposed a 30% tariff on peas of all origins effective November 1, 2025. This came after China imposed a 100% tariff on Canadian yellow peas in March 2025, devastating a $3.7 billion export market. The dual tariff shock makes India an even more critical market for Canadian pulse producers.

Managing Tariff Risk

Foreign companies can mitigate tariff exposure through several strategies:

• Value-added processing in India: Setting up processing facilities in India eliminates import tariffs on raw commodities. A Canadian company processing lentils into protein isolates, flour, or ready-to-eat products within India pays zero import duty on locally sourced pulses.
• Contract farming partnerships: Following the McCain model, Canadian companies can partner with Indian farmers to source raw materials domestically, eliminating import dependence entirely while supporting India's agricultural employment goals.
• Bonded warehouse strategy: Importing raw materials through bonded warehouses in SEZs or Free Trade Warehousing Zones can defer duty payments and provide flexibility on re-export vs domestic sale decisions.
• Monitoring CEPA progress: If the Canada-India CEPA is concluded by end-2026, preferential tariff rates for agricultural products could significantly reduce duty burdens.

India's Import Restrictions on Agriculture

India maintains phytosanitary requirements enforced by the Plant Quarantine Authority. Canadian exporters must obtain phytosanitary certificates from the Canadian Food Inspection Agency (CFIA) for each shipment. Fumigation certificates using approved methods are mandatory. Import of genetically modified organisms (GMOs) requires separate approval from the Genetic Engineering Appraisal Committee (GEAC), which is a lengthy process with uncertain outcomes. Canadian canola, being largely GM, faces this barrier for whole-seed imports, though refined canola oil imports are generally permitted.

World Food India 2025 and Investment Commitments

World Food India 2025 concluded with investment commitments worth INR 1.02 lakh crore ($12.2 billion) across the food processing sector. Major companies including Nestle India signed MoUs with the Ministry of Food Processing Industries. Nestle itself has committed INR 60-65 billion ($723-783 million) in India investment from 2020-2025, including a new food processing unit in Odisha.

The event highlighted India's growing position in global agri-food value chains. India's food exports crossed USD 49 billion in FY 2024-25, with processed food products showing the fastest growth. For Canadian companies, this signals that India is not just a consumption market but increasingly an export platform for processed food products destined for the Middle East, Southeast Asia, and Africa.

How to Structure a Food Processing Operation in India

Entity Structure

For Canadian food processing companies, a Private Limited Company (wholly-owned subsidiary) is the recommended structure. Register through the SPICe+ process on the MCA portal, which takes 10-15 working days. Key requirements:

• At least one resident director (182+ days in India)
• File FC-GPR within 30 days of share allotment
• GST registration for all food processing operations

FSSAI Registration: Mandatory for Food Business

The Food Safety and Standards Authority of India (FSSAI) regulates all food businesses in India. Registration requirements depend on turnover:

• Basic Registration: For businesses with annual turnover up to INR 12 lakh
• State License: Turnover between INR 12 lakh and INR 20 crore
• Central License: Turnover above INR 20 crore, or businesses involved in import/export

As of September 2024, FSSAI requires mandatory registration of foreign food manufacturing facilities for certain categories including milk and milk products, meat and meat products, egg powder, infant food, and nutraceuticals. Canadian facilities exporting these products to India must register through their country's competent authority within 30 days of notification.

Import Export Code (IEC)

An Import Export Code is mandatory for importing raw materials or exporting processed food products. The IEC is a lifetime registration obtained from the Directorate General of Foreign Trade (DGFT).

Tax Framework: Canada-India DTAA for Agriculture

The Canada-India DTAA, signed in 1989 and in force since May 1997, contains 30 articles governing cross-border taxation. Key rates for agriculture and food processing companies:

The 15% concessional rate under Section 115BAB was available only to new manufacturing companies that commenced production by 31 March 2024; that window has now closed. New entrants can avail the 22% rate under Section 115BAA (effective 25.17% with surcharge and cess). India remains one of the more tax-competitive destinations for food processing FDI in Asia. Filing Form 15CA/15CB is mandatory for cross-border remittances to claim treaty benefits.

For detailed transfer pricing structuring between the Canadian parent and Indian subsidiary, especially for intra-group purchases of raw materials and technology licensing fees, consult our transfer pricing advisory team.

Location Selection for Food Processing

The optimal location depends on your raw material source and target market:

• Madhya Pradesh: India's largest pulse-producing state, ideal for pulse processing (McCain's choice for potato processing)
• Punjab and Haryana: Wheat and rice processing, proximity to Canada-India trade corridors through Delhi
• Maharashtra (Pune/Nashik): Fruit and vegetable processing, proximity to Mumbai port for exports. See our Pune setup guide
• Gujarat: Oilseed processing, favourable industrial policy, proximity to Mundra and Kandla ports
• Andhra Pradesh/Telangana: Spice and rice processing, aggressive state incentives

Mega Food Parks offer ready infrastructure with reduced capital costs. Key parks relevant to Canadian companies include the Srini Food Park in Andhra Pradesh, Patanjali Food and Herbal Park in Haridwar, and the upcoming Indus Best Mega Food Park in Madhya Pradesh.

Cold Chain Infrastructure

India's cold chain infrastructure has expanded significantly under PMKSY, with 394 cold chain projects sanctioned as of February 2025. For Canadian companies processing perishable products such as frozen foods, dairy, or fresh produce, co-locating near existing cold chain hubs reduces capital expenditure and accelerates time-to-market. Key cold chain corridors include the Delhi-NCR to Punjab belt for dairy and grains, the Maharashtra coast for seafood and fruit processing, and the Gujarat ports corridor for export-oriented frozen food operations.

Canadian companies should also evaluate the FTWZ (Free Trade Warehousing Zone) model, which allows duty-free storage of imported raw materials for up to one year before domestic sale or re-export. This provides flexibility for managing tariff timing and seasonal demand fluctuations.

Register your company in the state closest to your raw material source for optimal logistics.

Key Takeaways

• Canada shipped over $1.3 billion in pulses to India since 2024, making India Canada's largest lentil and pea market
• India permits 100% FDI under the automatic route in food processing, with cumulative sector FDI of US$13.4 billion
• PMKSY (INR 6,520 crore) and PLI (INR 10,900 crore) provide substantial government incentives for food processing investments
• McCain Foods' INR 4,000 crore (US$480 million) investment demonstrates the viability of large-scale Canadian food processing in India
• The proposed Canada-India Pulse Protein Centre of Excellence signals a shift from commodity trade to innovation partnerships
• The Section 115BAB 15% concessional rate (effective 17.16%) closed to new entrants on 31 March 2024; new manufacturing subsidiaries now use Section 115BAA at 22% (effective 25.17% with surcharge and cess)
• FSSAI registration is mandatory, with foreign facility registration required for certain food categories since September 2024
• CEPA negotiations targeting end-2026 could further reduce trade barriers for processed food products