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The Centre's recent Production Linked Incentive (PLI) scheme for the food processing sector is expected to benefit the Indian domestic dairy sector, ratings agency ICRA said on Thursday.

In particular, the scheme will boost the value-added products like mozzarella cheese and other ready-to-consume dairy products.

Launched in March 2021, the Centre's PLI scheme involves an estimated outlay of Rs 10,900 crore. The amount will be spent between FY22 and FY27.

The Centre, through the scheme, intends to offer incentives to the food processing sector based on its growth in sales and investment incurred by such companies.

PLIs are essentially incentives to companies to boost production or diversification of products and to remain competitive in their respective business.

The ratings agency expects the scheme to fuel incremental investments of approximately Rs 500-600 crore by organised players in the designated products.

"Companies with significant presence in product categories like mozzarella cheese and ready-to-consume milk-based processed beverages would benefit from PLI incentives. In the first phase, four large dairy players have been shortlisted in category I of the scheme," said Sheetal Sharad, Vice President and Sector Head at ICRA.

Looking at the trend in which the value-added products are growing, this PLI offer is expected to deepen the market.

"Healthy growth prospects post-Covid impact will enable them to help achieve incentive targets. The industry is expected to continue with moderate capex plans to aid the growth in organised dairy segments with portfolio expansion," Sharad added.