A MoU was signed between ITC and the Punjab government last year and the company was given 62 acres of land for the project on an Industrial Park in Kapurthala.
The company will create up to 2,000 jobs at the plant.
Chitranjan Dar, divisional CEO, ITC's foods business, said even though the firm is the biggest tobacco manufacture of India, it has decided not to produce any tobacco products at the plant to avoid controversy.
He added the company's move comes in the wake of strong opposition to the government's decision to decrease VAT on tobacco products.
“In the first phase, the integrated facility will consist of the investment by ITC in the manufacturing, and logistics will add value to locally grown agri-produce," he said.
“Up until now, we have only had one small plant in Punjab at Ludhiana.”
Sukhbir Badal, deputy chief minister, at the Punjab government, confirmed the provision of land had been made under an ongoing allotment scheme and as part of the agreement, the firm has to stay at the site for three years.
"The plant will manufacture all kinds of food products and it will give a big boost to farmers in the area as all raw food material to be used in the manufacturing will be obtained from local farmers only," said Badal.