The state government has given the green light for boutique micro-breweries and small-scale food manufacturers to set up in the centre of Orange and shopping areas including north Orange.

The businesses could make the produce provided they also either had a cafe or restaurant or had tours or tasting areas on site.

Mayor Reg Kidd said while there no current applications for such businesses before the Orange City Council it created future opportunities to help revive the CBD.

He said such businesses were popular in major cities and would enhance Orange.

"We're talking about craft beers and liqueurs, food and oils made by hand, by Orange's skilled craftspeople," he said.

"It's trendy in the inner-city metropolitan areas to set up boutique breweries where people can see the beer being made during a tour or workshop and then sit down and have a drink."

MAP: Where the industries could operate

Cr Kidd said it would expand Orange's tourism reputation as a food and wine hub.

"This is something we can promote about our CBD," he said.

Cr Kidd said there had been previous interest in such industries being set up but they were not valid under the previous planning restrictions.

"I've had a couple of people talk to me informally about it previously," he said.

Cr Kidd said such industries would have to meet planning regulations regarding noise, odours, parking and other factors.

"The issue is, these operations are a combination of industry and food retailing and by default have only been permitted in industrial zones," he said.

"With these changes, the potential to expand on food tourism is enormous."

Orange City Council's Employment and Economic Development Policy Committee Chair Tony Mileto said it would add to Orange's economic diversity.

"People are moving away from mass-manufactured food and drinks and they want an experience," he said.

"They want to see how what they are consuming is made. Customers are becoming more knowledgeable and passionate about what they buy and we need to keep up with industry changes."

He said it would support tourism and hospitality and create jobs.

"Think of more places like Factory Espresso in Kite Street where you can sit down and have a drink and a bite to eat with the sounds, smells and sights of coffee production in the background," he said.

Cr Mileto said each application would have options for community consultation.