The project will be developed over four phases, with the first expected to be completed by midway through 2015, and the final completion is scheduled by 2020, the company said in a statement.
The multi-category food campus will also be the largest Mondelez International manufacturing plant in the region, it added.
India a priority
Anand Kripalu, president of Cadbury parent Mondelez International’s India and South Asia division, said: "This investment will ensure long-term business sustainability,” adding that India is one of the company’s priority emerging markets.
This week, Cadbury India signed an agreement with Sri City to take on a lease of 134 acres of land for the proposed facility. The business township has special economic zones, domestic tariff zones and free trade and warehousing zones on the AP border, located close to Chennai. It now houses over 90 industrial units from 25 countries.
The new plant is expected to create close to 1,600 direct jobs by 2020. The manufacturer of Cadbury Dairy Milk, Bournvita and Oreo biscuits currently has production plants in Himachal Pradesh, Maharashtra, Karnataka, Madhya Pradesh and Andhra Pradesh.
Like other chocolate and confectionery manufacturers, Cadbury has been witnessing fast growth in consumption, particularly by Indian adults.
Last week, the chief executive of food retailer Spencer's, Mohit Kampani, said almost 20% of its chocolate sales had come from chocolates targeted towards adults - a steep increase over recent years.
"Adult chocolate consumption is getting a fillip from modern retail. A recent Nielsen report shows chocolate sold through modern retail has outpaced that of general trade," he said.
Moreover, Urban consumers now buy chocolates and confectionery for everyday consumption, whereas in the past they would buy them mostly during festivals. Also, increasing numbers of Indian consumers have been replacing traditional sweets with chocolates.
Indians now prefer chocolates over chaat and tikki in a substantial change in snack consumption pattern, according to a report last month by Mars that mapped snacking patterns among Indians.
"Over the years, changes in consumers' preferences, eating habits and their global exposure has given a boost to the chocolate industry," said MV Natarajan, managing director for chocolate at Mars India.
He added that the chocolate market has registered high growth mainly because of its availability, affordability and convenience.
"Chocolates are now considered a fun-to-eat snack rather than an occasional luxury, and an important item in consumers' grocery baskets."