diff --git a/common/component/kafka/consumer.go b/common/component/kafka/consumer.go
index 7cb923a455..b7ea51240c 100644
--- a/common/component/kafka/consumer.go
+++ b/common/component/kafka/consumer.go
@@ -14,6 +14,7 @@ limitations under the License.
 package kafka
 
 import (
+	"context"
 	"errors"
 	"fmt"
 	"net/url"
@@ -32,6 +33,29 @@ type consumer struct {
 	mutex sync.Mutex
 }
 
+func notifyRecover(consumer *consumer, message *sarama.ConsumerMessage, session sarama.ConsumerGroupSession, b backoff.BackOff) error {
+	for {
+		if err := retry.NotifyRecover(func() error {
+			return consumer.doCallback(session, message)
+		}, b, func(err error, d time.Duration) {
+			consumer.k.logger.Warnf("Error processing Kafka message: %s/%d/%d [key=%s]. Error: %v. Retrying...", message.Topic, message.Partition, message.Offset, asBase64String(message.Key), err)
+		}, func() {
+			consumer.k.logger.Infof("Successfully processed Kafka message after it previously failed: %s/%d/%d [key=%s]", message.Topic, message.Partition, message.Offset, asBase64String(message.Key))
+		}); err != nil {
+			// If the retry policy got interrupted, it could mean that either
+			// the policy has reached its maximum number of attempts or the context has been cancelled.
+			// There is a weird edge case where the error returned is a 'context canceled' error but the session.Context is not done.
+			// This is a workaround to handle that edge case and reprocess the current message.
+			if err == context.Canceled && session.Context().Err() == nil {
+				consumer.k.logger.Warnf("Error processing Kafka message: %s/%d/%d [key=%s]. The error returned is 'context canceled' but the session context is not done. Retrying...")
+				continue
+			}
+			return err
+		}
+		return nil
+	}
+}
+
 func (consumer *consumer) ConsumeClaim(session sarama.ConsumerGroupSession, claim sarama.ConsumerGroupClaim) error {
 	b := consumer.k.backOffConfig.NewBackOffWithContext(session.Context())
 	isBulkSubscribe := consumer.k.checkBulkSubscribe(claim.Topic())
@@ -83,13 +107,7 @@ func (consumer *consumer) ConsumeClaim(session sarama.ConsumerGroupSession, clai
 				}
 
 				if consumer.k.consumeRetryEnabled {
-					if err := retry.NotifyRecover(func() error {
-						return consumer.doCallback(session, message)
-					}, b, func(err error, d time.Duration) {
-						consumer.k.logger.Warnf("Error processing Kafka message: %s/%d/%d [key=%s]. Error: %v. Retrying...", message.Topic, message.Partition, message.Offset, asBase64String(message.Key), err)
-					}, func() {
-						consumer.k.logger.Infof("Successfully processed Kafka message after it previously failed: %s/%d/%d [key=%s]", message.Topic, message.Partition, message.Offset, asBase64String(message.Key))
-					}); err != nil {
+					if err := notifyRecover(consumer, message, session, b); err != nil {
 						consumer.k.logger.Errorf("Too many failed attempts at processing Kafka message: %s/%d/%d [key=%s]. Error: %v.", message.Topic, message.Partition, message.Offset, asBase64String(message.Key), err)
 					}
 				} else {
diff --git a/common/component/kafka/kafka.go b/common/component/kafka/kafka.go
index 97e714ef4d..c8a2d818ee 100644
--- a/common/component/kafka/kafka.go
+++ b/common/component/kafka/kafka.go
@@ -208,14 +208,17 @@ func (k *Kafka) Init(ctx context.Context, metadata map[string]string) error {
 	k.consumeRetryInterval = meta.ConsumeRetryInterval
 
 	if meta.SchemaRegistryURL != "" {
+		k.logger.Infof("Schema registry URL '%s' provided. Configuring the Schema Registry client.", meta.SchemaRegistryURL)
 		k.srClient = srclient.CreateSchemaRegistryClient(meta.SchemaRegistryURL)
 		// Empty password is a possibility
 		if meta.SchemaRegistryAPIKey != "" {
 			k.srClient.SetCredentials(meta.SchemaRegistryAPIKey, meta.SchemaRegistryAPISecret)
 		}
+		k.logger.Infof("Schema caching enabled: %v", meta.SchemaCachingEnabled)
 		k.srClient.CachingEnabled(meta.SchemaCachingEnabled)
 		if meta.SchemaCachingEnabled {
 			k.latestSchemaCache = make(map[string]SchemaCacheEntry)
+			k.logger.Debugf("Schema cache TTL: %v", meta.SchemaLatestVersionCacheTTL)
 			k.latestSchemaCacheTTL = meta.SchemaLatestVersionCacheTTL
 		}
 	}
@@ -323,6 +326,7 @@ func (k *Kafka) getLatestSchema(topic string) (*srclient.Schema, *goavro.Codec,
 		if ok && cacheEntry.expirationTime.After(time.Now()) {
 			return cacheEntry.schema, cacheEntry.codec, nil
 		}
+		k.logger.Debugf("Cache not found or expired for subject %s. Fetching from registry...", subject)
 		schema, errSchema := srClient.GetLatestSchema(subject)
 		if errSchema != nil {
 			return nil, nil, errSchema
diff --git a/common/component/kafka/kafka_test.go b/common/component/kafka/kafka_test.go
index 2e9ac3fbe7..385b12743b 100644
--- a/common/component/kafka/kafka_test.go
+++ b/common/component/kafka/kafka_test.go
@@ -13,6 +13,7 @@ import (
 	"github.com/stretchr/testify/require"
 
 	mock_srclient "github.com/dapr/components-contrib/common/component/kafka/mocks"
+	"github.com/dapr/kit/logger"
 )
 
 func TestGetValueSchemaType(t *testing.T) {
@@ -62,6 +63,7 @@ func TestDeserializeValue(t *testing.T) {
 	k := Kafka{
 		srClient:             registry,
 		schemaCachingEnabled: true,
+		logger:               logger.NewLogger("kafka_test"),
 	}
 
 	schemaIDBytes := make([]byte, 4)
@@ -175,6 +177,7 @@ func TestSerializeValueCachingDisabled(t *testing.T) {
 	k := Kafka{
 		srClient:             registry,
 		schemaCachingEnabled: false,
+		logger:               logger.NewLogger("kafka_test"),
 	}
 
 	t.Run("valueSchemaType not set, leave value as is", func(t *testing.T) {
@@ -250,6 +253,7 @@ func TestSerializeValueCachingEnabled(t *testing.T) {
 		schemaCachingEnabled: true,
 		latestSchemaCache:    make(map[string]SchemaCacheEntry),
 		latestSchemaCacheTTL: time.Minute * 5,
+		logger:               logger.NewLogger("kafka_test"),
 	}
 
 	t.Run("valueSchemaType not set, leave value as is", func(t *testing.T) {
@@ -280,6 +284,7 @@ func TestLatestSchemaCaching(t *testing.T) {
 			schemaCachingEnabled: true,
 			latestSchemaCache:    make(map[string]SchemaCacheEntry),
 			latestSchemaCacheTTL: time.Second * 10,
+			logger:               logger.NewLogger("kafka_test"),
 		}
 
 		m.EXPECT().GetLatestSchema(gomock.Eq("my-topic-value")).Return(schema, nil).Times(1)
@@ -302,6 +307,7 @@ func TestLatestSchemaCaching(t *testing.T) {
 			schemaCachingEnabled: true,
 			latestSchemaCache:    make(map[string]SchemaCacheEntry),
 			latestSchemaCacheTTL: time.Second * 1,
+			logger:               logger.NewLogger("kafka_test"),
 		}
 
 		m.EXPECT().GetLatestSchema(gomock.Eq("my-topic-value")).Return(schema, nil).Times(2)
@@ -326,6 +332,7 @@ func TestLatestSchemaCaching(t *testing.T) {
 			schemaCachingEnabled: false,
 			latestSchemaCache:    make(map[string]SchemaCacheEntry),
 			latestSchemaCacheTTL: 0,
+			logger:               logger.NewLogger("kafka_test"),
 		}
 
 		m.EXPECT().GetLatestSchema(gomock.Eq("my-topic-value")).Return(schema, nil).Times(2)
diff --git a/common/component/kafka/metadata.go b/common/component/kafka/metadata.go
index 020d61d52b..4108c881b2 100644
--- a/common/component/kafka/metadata.go
+++ b/common/component/kafka/metadata.go
@@ -163,6 +163,8 @@ func (k *Kafka) getKafkaMetadata(meta map[string]string) (*KafkaMetadata, error)
 		ClientConnectionKeepAliveInterval:            defaultClientConnectionKeepAliveInterval,
 		HeartbeatInterval:                            3 * time.Second,
 		SessionTimeout:                               10 * time.Second,
+		SchemaCachingEnabled:                         true,
+		SchemaLatestVersionCacheTTL:                  5 * time.Minute,
 		EscapeHeaders:                                false,
 	}