PM Formalization of Micro Food Processing Enterprises Scheme | 29 Mar 2023

Why in News?

The Ministry of Food Processing Industries (MoFPI) is implementing a centrally sponsored PM Formalisation of Micro Food Processing Enterprises Scheme (PMFME) Scheme for providing financial, technical, and business support to micro food processing enterprises in India.

• This scheme is a part of the Atmanirbhar Bharat Abhiyan - Vocal for Local Initiative in the food processing sector.

What are the Features of the PMFME Scheme?

• About:
  • The PMFME scheme aims to enhance the competitiveness of new and existing individual micro-enterprises in the unorganized segment of the food processing industry and promote formalization of the sector.
  • The PMFME scheme is operational for a period of five years from 2020-21 to 2024-25 with an outlay of Rs. 10,000 Crore.
• Focus Areas:
  • The scheme adopts the One District One Product (ODOP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products.
  • Other Focus areas include Waste to wealth products, minor forest products and Aspirational Districts.
• Assistance Available under PMFME Scheme:
  • Support to Individual/Group Category Micro Enterprises:
    • Credit-linked capital subsidy of 35% of the eligible project cost, with a maximum ceiling of Rs.10 lakh per unit.
  • Support to Self-Help Groups (SHGs) for Seed Capital:
    • Seed capital up to Rs. 40,000/- per member of SHG engaged in food processing for working capital and purchase of small tools, subject to a maximum of Rs. 4 lakh per SHG.
  • Support for Common Infrastructure:
    • Credit-linked capital subsidy of 35%, with a maximum of Rs. 3 crore, to support FPOs, SHGs, Cooperatives, and any Government agency for setting up of common infrastructure.
  • Capacity Building:
    • The scheme envisages training for Entrepreneurship Development Skilling (EDP+), a program modified to meet the requirements of the food processing industry and product specific skilling.
  • District Resource Persons (DRPs) have been appointed to provide handholding support to micro food processing enterprises for the compliance of FSSAI and other statutory requirements.

What is the Status of the Food Processing Industry in India?

• About:
  • Food processing is a type of manufacturing in which raw materials are processed into intermediate foods or edible items using scientific knowledge and technology. 
  • It improves the storability, portability, palatability, and convenience of the finished product.
• Significance:
  • During the last five years ending FY21, the food processing industries sector has been growing at an average annual growth rate of around 8.3%
  • As per the latest Annual Survey of Industries (ASI) 2019-20, 12.2% of persons in the registered manufacturing sector were employed in the food processing sector.
  • The value of agri-food exports, including processed food exports, was about 10.9 % of India's total exports during 2021-22
• Issues:
  • Lack of Infrastructure: The food processing industry in India faces challenges with infrastructure, including inadequate cold storage facilities, transport facilities, and processing plants.
  • Limited Access to Finance: Many small and medium-sized food processing businesses in India struggle to access finance to invest in their operations and improve their products.
    • This limits their ability to expand and compete with larger players in the industry.
  • Inadequate Quality Control: There are concerns about the quality of food processing in India, particularly in relation to food safety and hygiene standards.
    • This is a major challenge for the industry, as it affects consumer confidence and limits export opportunities.
• Government Initiatives:
  • 100% Foreign Direct Investment (FDI) approval under automatic route has been permitted for the food processing sector
  • A Special Food Processing Fund of Rs. 2000 crore was set up with National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit for investments in setting up Mega Food Parks (MFP) as well as processing units in the MFPs. 
    • In 2019, the coverage of the fund was extended to the setting up of Agro-Processing Clusters along with setting up of individual manufacturing units.

Source: PIB