India Spray Dried Food Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

India Spray Dried Food Market Trends and Insights

Rising Demand for Shelf-Stable Ingredients in Packaged Foods

India's packaged food sector is undergoing remarkable expansion, with the ready-to-eat segment drawing significant interest from private equity investors. The surge in funding and deal activity highlights growing confidence in the market’s potential and reflects a broader shift toward convenience-driven consumption. This surge reflects changing consumer preferences toward convenience foods, driving demand for spray dried food that extends shelf life while preserving nutritional value. Major food processors are responding with significant capacity expansions. The trend gains momentum from quick commerce platforms, creating demand for products with extended ambient storage capabilities. Regulatory support through Food Safety and Standards Authority of India's (FSSAI) streamlined licensing and ingredient-based approvals further accelerates the adoption of spray dried ingredients in packaged formulations.

Rapid Growth of Milk-Powder Use in India's Tea/Coffee Culture

India's tea consumption culture drives a distinct demand pattern for spray-dried milk powders, with the instant tea premix market witnessing notable growth in supplier presence and product variety. This reflects the sector’s responsiveness to evolving consumer preferences and convenience trends. The company's expansion includes automated stock retrieval systems and targets double-digit production growth despite the decline in India's overall tea production. Premium instant tea premixes command prices ranging from INR 150-900 per kg, with specialty variants like saffron kahwa and masala blends achieving higher margins. The segment benefits from vending machine proliferation in offices and institutions, where consistent quality and extended shelf life become critical factors. Additionally, export opportunities to diaspora markets in the Middle East and Africa are driving quality standardization requirements that favor spray-dried formulations over traditional loose-leaf preparations.

Advancements in Spray Drying Technology

Technological innovations are transforming spray drying capabilities, particularly for heat-sensitive ingredients that traditionally faced quality degradation challenges. Spraying Systems Co's PolarDry electrostatic spray drying technology enables processing at temperatures below 90°C compared to conventional 150-300°C ranges, using nitrogen atmosphere protection for oxygen-sensitive materials. This advancement addresses critical limitations in processing bioactive compounds, proteins, and volatile flavor components that constitute high-value market segments. Indian equipment manufacturers are incorporating these innovations: Kerone offers specialized systems for beta-cyclodextrin and maltodextrin processing, while ProenteQ's Pune facility provides custom-engineered commercial spray dryers with energy recovery and advanced control systems. The technology evolution supports microencapsulation applications, enabling better retention of vitamins A, D, E, and essential oils in powder form. Process automation adoption is accelerating, with companies like Inovance providing PLC, motion control, and HMI systems for synchronized dosing and real-time monitoring, reducing variability and contamination risks while improving energy efficiency.

Government CAPEX Incentives for Food-Processing Clusters

Government policy support provides substantial momentum through multiple schemes targeting food processing infrastructure development. The Production Linked Incentive (PLI) scheme for food processing allocated INR 10,900 crore for 2021-22 to 2026-27, with FY2026 budgetary allocation for food products increasing approximately 70% over FY2025, indicating accelerated implementation ^{[1]Source: Ministry of Food Processing Industries, "PRODUCTION LINKED INCENTIVE SCHEME FOR FOOD PROCESSING INDUSTRIES," pib.gov.in}. PMFME scheme operations through 2025-26 with INR 10,000 crore outlay offer 35% credit-linked grants up to INR 10 lakh for individual micro enterprises, directly supporting spray drying equipment acquisitions ^{[2]Source: Ministry of Food Processing Industries, "Atmanirbhar Bharat Abhiyaan- Vocal for Local in Food Processing Sector," pib.gov.in}. The Bank of India's Star Micro Food Processing Enterprises (SMFPE) scheme offers medium-to-long-term financing with a turnaround time of 7 business days for loans of up to INR 10 lakh, facilitating rapid capacity deployment. Regional cluster development gains traction through Operation Greens' expansion, covering 41 fruits and vegetables, with identified clusters providing 40 fruit clusters across 15 states and 97 vegetable clusters across 25 states. This infrastructure creates feedstock availability for spray drying operations while transport and storage subsidies reduce raw material procurement costs. JNPA's INR 284 crore integrated agro-processing facility, designed to handle 1.2 million tonnes annually, exemplifies port-linked infrastructure development supporting both domestic processing and export capabilities^{[3]Source: Ministry of Food Processing Industries, "AJNPA issues Letter of Award for Rs. 284 Crore Agro Processing Facility project," pib.gov.in}.

High Energy and Capital Cost of Spray-Drying Lines

Energy costs represent a significant operational challenge for spray drying operations, with Indian electricity prices remaining 40% above 2019 levels despite recent moderation. Industrial spray dryers typically require 15-50 kW power consumption for pilot units and up to 320 kW for large-scale operations, with equipment costs ranging from Rs 1.5 lakh for laboratory units to INR 2.8 crore for industrial-scale systems. Capital intensity becomes more pronounced when considering complete processing lines. Energy price volatility adds operational complexity, with Day-Ahead Market prices rising 68% year-on-year in October 2023 due to demand surges and trading activity increases. Smaller processors face disproportionate impact, as economies of scale in energy procurement and equipment utilization become critical for competitiveness.

Volatile Raw-Material Prices

Raw material price fluctuations create significant margin pressure for spray-dried food manufacturers, particularly in dairy-dependent segments. Indian processors face additional complexity from seasonal milk production patterns and procurement competition from liquid milk markets. Fruit and vegetable powder manufacturers encounter similar challenges, with post-harvest losses reaching 40% for perishables according to the United States Department of Agriculture (USDA) analysis, creating supply-demand imbalances that drive price volatility. Commodity price management becomes critical for maintaining competitiveness, particularly for export-oriented processors who face international price benchmarks. Companies are responding through vertical integration strategies.

Segment Analysis

By Product Type: Dairy Dominance Meets Protein Diversification

Dairy products command 68.11% market share in 2024, reflecting India's massive milk production base and established spray drying infrastructure across cooperative networks. However, the segment's growth trajectory faces moderation as traditional applications mature and competition intensifies from alternative protein sources. Meat, poultry, and seafood segment emerge as the fastest-growing segment at 8.26% CAGR (2025-2030), driven by export opportunities and domestic protein diversification trends.

Fruits and vegetables segments benefit from government cluster development initiatives, with Operation Greens identifying 137 production clusters across 25 states providing consistent feedstock availability. Advanced spray drying technologies enable better retention of volatile compounds in spice powders, addressing quality consistency challenges that previously limited export potential. FSSAI's modernized regulatory framework, including ingredient-based approvals and FoSCoS licensing, supports product innovation across all segments while maintaining food safety standards essential for both domestic and international market access.

Note: Segment shares of all individual segments available upon report purchase

By Application: Traditional Premixes Face Nutraceutical Disruption

Dairy and beverage premixes hold the largest market share at 33.65% in 2024, driven by India's high tea consumption and the increasing number of institutional vending machines. The widespread presence of tea in various locations with beverage vending facilities contributes significantly to this dominance. The nutraceuticals and supplements segment is projected to grow at an 8.38% CAGR (2025-2030), due to rising health awareness and increased focus on preventive healthcare following the pandemic. This growth is supported by the expanding middle class, growing disposable income, and increasing adoption of dietary supplements across urban and semi-urban regions.

In addition, infant nutrition applications demand the highest quality standards and command premium pricing, driving investment in specialized processing capabilities that preserve nutritional integrity. Savory and ready meals applications gain momentum from convenience food trends, while pet foods represent an emerging opportunity as pet ownership increases in urban India. The regulatory environment supports application diversification through FSSAI's risk-based sampling and improved lab capacity, enabling faster product approvals for innovative spray-dried formulations targeting specific nutritional and functional requirements.

Note: Segment shares of all individual segments available upon report purchase