New Delhi: The government is drawing up a new incentive framework for India’s nearly $30 billion nutraceutical industry, looking to turn its rapid growth at home into a bigger manufacturing and export opportunity. The food processing ministry has started industry consultations and sought inputs from the health ministry and the Food Safety and Standards Authority of India (FSSAI), two officials familiar with the matter said.
Nutraceuticals, derived from food sources that bring health and medical benefits beyond basic nutrition, are broadly grouped into dietary supplements, functional foods, vitamins and minerals-enriched products and functional beverages. Unlike pharmaceuticals that focus on treating disease, nutraceuticals are for disease prevention and long-term wellness.
India’s nutraceuticals market is projected to expand from $37-38 billion in 2026 to $55-57 billion by 2030, CareEdge Ratings said in a June report.
“We are having consultations with the industry. We are reviewing lessons from the current PLI (production-linked incentive) programme in the food processing sector and engaging with industry stakeholders before finalizing the new framework,” said the first person familiar with the development.
The official said government may not necessarily introduce a separate PLI for the nutraceuticals industry but could consider a framework to boost it.
Implemented as a six-year scheme, the ₹10,900-crore PLI for the food processing sector is slated to end on 31 March 2027. It aims to promote value addition in food processing, expand capacity and create employment, particularly in rural and off-farm sectors. The scheme has made significant progress, attracting investments and boosting capacity. Companies have invested ₹9,207 crore across 22 states, exceeding their committed investment of ₹7,722 crore under the scheme.
Mint earlier reported that the government is tightening regulatory oversight for nutraceuticals to curb mislabelling and the unauthorized sale of drug-like formulations as supplements. The initiative aims to enforce stricter safety standards, mandate scientific validation, and clearly define which health supplements will fall under the jurisdiction of food regulator FSSAI and which under the drug watchdog, the Drugs Controller General of India (DCGI).
The nutraceuticals sector currently functions in an administrative grey area without a nodal ministry driving business development. Regulated by the FSSAI in the health ministry and overlapping with DCGI for high-potency/medical-grade formulations, the sector lacks a dedicated department for commercial and industrial promotion.
Industry view
The industry is pitching for government incentives, seeing growth from the move.
“A focused policy framework can accelerate domestic manufacturing, attract investments, promote R&D (research and development) and innovation, strengthen indigenous ingredients and formulations, and create greater opportunities for Indian brands in global markets,” said Sanjeev Asthana, chief executive of Patanjali Foods Ltd, a major nutraceuticals player. “The opportunity goes beyond manufacturing capacity. Support for R&D, clinical validation, quality infrastructure, technology adoption and global certifications will be critical to building consumer trust and globally competitive Indian brands.”
Ratnesh Lal, chairman of the Indian Direct Selling Association (IDSA) on nutraceuticals, sees such incentives as a catalyst for the sector that is seeing “explosive growth,” Yet, a PLI is not the only solution the industry needs, he said, pointing to its teething troubles.
“Financial incentives alone are not enough. Currently, the segment is caught between fragmented implementation, regulatory overlaps and varying interpretations, creating severe compliance confusion and operational hurdles for businesses. A regulator’s core mandate is enforcement, not commercial development. To build true scale, predictability and global competitiveness, nutraceuticals require dedicated institutional ownership under an industry-focused body like the ministry of food processing industries,” said Lal.
The demand is huge, but the industry has regulator gaps that need to be fixed with policy action, he said. “Within direct selling, nutraceuticals account for nearly 80% of our market basket, reflecting widespread public demand for accessible preventive wellness solutions. Establishing clear policy backing, streamlined formats, and cohesive inter-ministerial governance will eliminate regulatory bottlenecks, attract long-term investment, and unlock India’s potential to become a global hub for health and wellness manufacturing,” Lal added.
Queries sent to the health ministry and the ministry of food processing on 7 August remained unanswered.