Food Processing Units - Introduction

The food processing industry is one of the largest industries across the globe and is considered as “sunrise industry” and the needs of the consumers are also growing day by day. India has the capacity to develop the agricultural economy by the establishment of large-scale processed food and other related facilities result in the generation of employment opportunity and export earnings. The food industry can achieve its success by providing the best quality of food items. If the quality is not as per mark standards then food items are not to be consumed. India is a country that generates most of its revenue through its agrarian economy. India is the sixth-largest country in the food and grocery market and the fifth largest retail market at the global level. The food processing industry in itself is an emerging space and is seen as the potentially leading industry of the near future.

On April 17, 2021, Italy launched its first-ever mega food park project in India involving food processing facilities amid efforts from both sides to further ties between the two nations. This pilot project named “The Mega Food Park” was launched, with the signing of a letter of intent between the ICE office in Mumbai and Fanidhar mega Food Park, in Gujarat.

Concept of a Food Processing Unit

Food processing units include all the methods and techniques involved in converting a raw material or a combination of raw materials into a consumable product. Food processing units are an integral part of practices such as agriculture, horticulture, plantation, animal husbandry, and fisheries. It also includes other industries that use agricultural inputs for manufacturing edible products. This manufacturing industry has become a site of investment and profits.The net worth of the processed food industry is estimated to be around ₹1100 crore and it is fast accelerating at a rate of 10-15% per annum. The food processing units comprises nine categories based on the basic raw materials being used.

Importance of Food Processing Units

Food processing is an essential process that ensures we have food throughout the year irrespective of its seasonal nature or easily perishable variety. Mass production of these processed foods can be very profitable unlike those made by an individual.

Benefits of Investing in India

In India, this is a prospective industry due to the increased demand by the majority of the urban middle-class population

Availability of raw materials is abundant

Change in the consumption patterns

Comparatively low cost of production

Attractive fiscal incentives that make India the best option.

How to Start a Food Processing Business in India?

The Indian government has laid down many policies and schemes to help set up food processing units in India and to provide them with financial support to modernize the industry. In order to start any food-related business, an FSSAI license is mandatory. There are different types of FSSAI licenses available and it varies according to the business type.

The FSSAI license is divided into three categories:

If the annual turnover is up to 12 lakhs then Basic Registration required to be done;
If the Annual turnover is more than 12 lakhs but up to ₹20 crores then State license required to be obtained; to do business in the particular
For enterprises with the Annual turnover is more than ₹20 crores then Central license required to be obtained. To do business centrally.

However, there are certain procedures to be followed in order to legally safeguard the company, such as:

Business Research and Market Analysis

Understanding the market and choosing the product to be manufactured is the most crucial part of starting any business. While choosing the product, the investor must keep in mind the viability of the product in the market. It is also important to research the economic and industrial outcomes of the current food processing industries, which will be useful in determining the market size, competitors and their trends.
Once the basic market research is done, the business must be structured according to the needs to make it legally stable. There are options such as private limited company, public limited company, partnership firm, limited liability partnership, etc. with their own pros and cons. These choices can be made on the basis of the size of the manufacturing industry and the yearly turnover and other mandatory criteria. It is recommended to seek help from legal professionals who can advise on the types of companies.

Location of the Factory

Deciding upon the market size is necessary to find a suitable location for the factory. It is advisable to determine a location that has feasible and easily accessible resources such as manpower, raw materials, electricity sources, transportation facilities, etc. Another important factor to consider is the government provided subsidies and tax exemption in some states of India. An ideal location can be derived by analyzing these factors along with the availability of raw materials in a certain location. The perishable nature of food and duration must be taken into consideration in order to maintain good produce throughout the year.

Business Plan and Strategies

All the research and analysis made at the beginning must then be streamlined as per the requirements of the processing units. New policies and strategies must be formulated for the company to generate a blueprint of how the company should function and the future plans must be roughly decided. In the case of food processing units, one needs to bear in mind the future outcomes of the industry and the growing trends too.

Funding

Every business needs to be funded for bringing in the materials and maintaining the value chain once the industry grows. The funds also tend to vary according to the size and nature of the industry. So it is important to have shareholders and to find a constant source of funding for the company.

Legal Implications

Once a company is formed, it has to be registered with the relevant authorities before the business is set into motion. The Companies Act 2013 specifies that the companies must be registered by submitting certain documents and requisite forms in order to get themselves registered as a company in India. The company must also get registered for the various taxes such as PAN, Sales Tax, Excise & Customs Registration, Service Tax, etc. the trademark must also be protected from being claimed by others, so an IPR registration which includes patents, copyrights, etc. is mandatory. Other acts such as Food Safety and Standards Act, 2006 and the Standard and Weight Measure Act must be followed and various licenses for operating in India, such as trade license, food license, industrial license, etc. is necessary.

Implementation

With all the necessary steps to start a food processing unit ready, it is important to strategically implement all the mandatory requirements. Everything needs to be put into place. The human resources and infrastructure must be regulated and separate divisions of workers must be used to improve the sales and quality of the product.

Standards which are required to safeguard the Quality of the Food

For doing food processing business in India have to take certain licenses required by the Food Safety and Standards Authority in India (FSSAI). As India is formally declared as agriculture country, therefore, grains and other related food items are produced and packaging and labeling at the time of sale should be optimum.The quality of the food items and hygiene are the two signs of safe consumption. There are numerous laws and standards which certify by FSSAI which is mandatory to opt for the food processing industry.So, for operating the food processing industry there are most common and popular licenses have to be taken as listed below:

Prevention of Food Adulteration Act, 1954 (PFA):

Food is the basic need of people to survive and they are very conscious about their health. It should be pure, fresh and healthy for the people. The main object of this legislation to safeguard that the food is made with wholesome nutrition and has taken safety standards related to FSSAI.

Meat food Products order, 1973:

Poultry meat and red meat are very high in protein and is largely consumed by consumers as it is very perishable in nature and can transmit disease from animals to human being so for prevention of this, legislation was passed for assurance that the quality of the poultry meat is safe and optimum for consumption. The persons who are dealing in poultry meat and other related products have to obtain a license as per standards.

Agmark

In India on agricultural commodities certification mark is employed i.e. “AGMARK” to ensure that product is approved by Directorate of Marketing and Inspection an agency of the Government of India. Pulses, cereals, vegetable oils, essential oils, fruits, and vegetables are falls under this category.

Vegetable oil Product Order, 1947

Persons engaged in the business of manufacturing any vegetable oil product have to follow standards of quality and other as per specified in schedules respectively.

Food Products order, 1955

All manufacturers of fruits and vegetables include some non-fruit products such as non-fruit vinegar, syrup and sweetened aerated water are required to obtain licenses under this order. All vendors who are deals in the processing of fruits and vegetable products have to maintain the level of hygiene and sanitation and the premises must be clean from any germs. If premises are found to be unsafe for production and distribution then such items can be penalized.

Edible Oil Packaging (Regulation) Order, 1988

Edible oil must be packed in conformity with the standards of weights and measures to ensure the quality at a predetermined price to the consumer. The companies who are doing packaging business have to the required certificate under this order.

The Milk and Milk Products Order, 1992

Any person who deals in dairy products and producing 10,000 liters milk in a day or 500 MT of milk solids per annum needs to be registered with the registering authority regulated by Central Government. Dairy products must be processed and sold under sanitary conditions.

Food Safety and Standard Authority of India (FSSAI), 2006

Food license is regulated by Food Safety and Standards Authority of India (FSSAI) under Ministry of Family Health & Welfare, Government of India. The licenses provide for the safety and standardization of food products manufactured and sold in India. If any person or company wants to deal with the production, storage, distribution, sale, import or export of any food item required to get an FSSAI License. And it depends upon the size, location, and turnover of the company.

The Essential Commodities Act, 1955

This act was introduced to stop any unlawful production and distribution of the same product. The company has to sell the product in the market as per standard and at best price. Some companies tried to sell a product other than actual price to violate consumer rights and they are liable for punishment under this act.

Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)

[Central Sector Scheme]

Cabinet in its meeting approved the Central Sector Scheme – “Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)” to support creation of global food manufacturing champions commensurate with India’s natural resource endowment and support Indian brands of food products in the international markets with an outlay of ₹10900 crore.In order to boost domestic manufacturing and cut down on import bills, the central government in March 2020 introduced a “Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)" entailing an outlay of ₹ 10,900 crore that aims to give companies incentives on incremental sales from products manufactured in domestic units.Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units.PLI Scheme has also been approved for sectors such as automobiles, pharmaceuticals, IT hardware including laptops, mobile phones & telecom equipment, white goods, chemical cells and textiles, etc

Background

The food processing sector in India encompasses manufacturing enterprises in all the segments from micro to large industries.India is having competitive advantage in terms of resource endowment, large domestic market and scope for promoting value added products.Achieving full potential of this sector would require Indian companies to improve their competitive strength vis-à-vis their global counterpart in term of scale of output, productivity, value addition and their linkages with the global value chain.The Production Linked Incentive Scheme for Food Processing Industry has been formulated based on the Production Linked incentive scheme of NITI Aayog under “AatmaNirbhar Bharat Abhiyaan for Enhancing India's Manufacturing Capabilities and Enhancing Exports”

Objectives of the PLISFPI:

To support creation ofglobal food manufacturing champions.

Support Food manufacturing entities with stipulated minimum Sales and willing to make minimum stipulated investment for expansion of processing capacity and Branding abroad to incentivize emergence of strong Indian brands.

To strengthen select Indian brands of food products for global visibility and wider acceptance in the international markets.

To increase employment opportunities of off-farm jobs.

To ensure remunerative prices of farm produce and higher income to farmers

Features of PLISFPI

Central Sector Scheme with an outlay of ₹10900 crore

Scheme will be implemented over a six year period from 2021-22 to 2026-27

It will support food manufacturing entities with stipulated minimum Sales and willing to make minimum stipulated investment for expansion of processing capacity and Branding abroad.

The first component relates to incentivizing manufacturing of four major food product segments viz. Ready to Cook/ Ready to Eat (RTC/ RTE) foods, Processed Fruits & Vegetables, Marine Products, Mozzarella Cheese.

The second component relates to support for branding and marketing abroad to incentivize emergence of strong Indian brands.

It also covers Innovative/ organic products, free-range eggs, poultry meat and egg products.

Create employment for nearly 2.5 lakh persons by the year 2026-27.

For promotion of Indian Brand abroad, the scheme envisages grant to the applicant entities for in store Branding, shelf space renting and marketing.

The selected applicant will be required to undertake investment, as quoted in their Application (Subject to the prescribed minimum) in Plant & Machinery in the first two years i.e. in 2021-22 & 2022-23.

Investment made in 2020-21 also to be counted for meeting the mandated investment.

The conditions of stipulated Minimum Sales and mandated investment will not be applicable for entities selected for making innovative/ organic products.

The implementation of the scheme would facilitate expansion of processing capacity to generate processed food output of ₹ 33,494 crore

Other Scheme Related to Food Processing Industry:Pradhan Mantri Kisan Sampda Yojana (PMKSY)

Implementation strategy and targets

The scheme will be rolled out on All India basis.
The scheme shall be implemented through a Project Management Agency (PMA)
The PMA would, inter-alia, be responsible for appraisal of applications/ proposals, verification of eligibility for support, scrutiny of claims eligible for disbursement of incentive
The incentive under the scheme would be paid for six years ending 2026-27. The incentive payable for a particular year will be due for payment in the following year. The duration of the scheme will be six years i.e. 2021-22 to 2026-27.
The scheme is "fund-limited", i.e. cost shall be restricted to the approved amount. The maximum incentive payable to each beneficiary shall be fixed in advance at the time of approval of that beneficiary. Regardless of achievement/ performance, this maximum shall not be exceeded.
The implementation of the scheme would facilitate expansion of processing capacity to generate processed food output of ₹ 33,494 crore and create employment for nearly 2.5 lakh persons by the year 2026-27.

Administrative and Implementation Mechanisms

The Scheme would be monitored at Centre by the Empowered Group of Secretaries chaired by the Cabinet Secretary

Inter-Ministerial Approval Committee (IMAC) would approve selection of applicants for coverage under the scheme, sanction and release of funds as incentives.The Ministry will prepare Annual Action Plan covering various activities for implementation of the scheme.A third party evaluation and mid-term review mechanism would be built in the programme.

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Schemes would be monitered by Cabinet Secretary at Centre which functions directly under the Prime Minister and assists in decision making in Government by ensuring Inter-Ministerial co-ordination

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Group of Secretaries

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Inter-Ministerial Approval Committee (IMAC) would approve selection of applicants under the scheme, sanction and release of funds as incentives.

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The Ministry will prepare Annual Action Plan covering various activities for implementation of the scheme.

A third party evaluation and mid-term review mechanism would be built in the programme.

Pradhan Mantri Formalization of Micro Food Processing Enterprise Scheme

The Ministry of Food Processing Industries (MoFPI) has launched the PM Formalization of Micro Food Processing Scheme on 29th June 2020. The PM FME scheme intends to provide financial, technical and business support to upgrade existing micro food processing enterprises. It is a part of India’s self-reliant scheme called Atmanirbhar Bharat Abhiyan; and ‘Vocal for Local’ Campaign. Ministry of Food Processing Industries (MoFPI) launched a PAN India scheme called ‘Pradhan Mantri Formalization of Micro Food Processing Enterprises’, in partnership with the State/ UT Governments under Aatmanirbhar Bharat Abhiyan which aims to enhance the competitiveness of existing individual micro-enterprises in the unorganized segment of the food processing industry and promote formalization of the sector and support Farmer Producer Organizations (FPOs), Self Help Groups (SHGs) and Producers Cooperatives along their entire value chain.

Under the scheme, 2,00,000 micro food processing units will be directly assisted with credit linked subsidy. Adequate supportive common infrastructure and institutional architecture will be supported to accelerate the growth of the sector.A Centrally Sponsored Scheme - "Scheme for Formalization of Micro food processing Enterprises (FME)" is for the Unorganized Sector on All India basis with an outlay of ₹10,000 crore. The expenditure will be shared by GOI and the States/ UTS with the legislature in ratio of 60:40, 90:10 between central and North Eastern and Himalayan states and 100 % central assistance for UTs without legislatures. The central government will provide funds to the state based on the approved Project Implementation Plan (PIP).

The objectives of the scheme are to build the capability of microenterprises to enable:

The PM Formalization of Micro Food Processing Enterprises Scheme has the following objectives:

Capacity Building of Micro Food entrepreneurs
They will be provided with technical knowledge
Skill training is another component
Hand holding support services to be given
Technology up-gradation of the existing Micro Food Processing Enterprises by increasing access to credit to the entrepreneurs.

Enable microenterprises to avail common services through supporting Farmer Producer Organizations (FPOs), Self Help Groups (SHGs), Producers Cooperatives & Cooperative Societies along their entire value chain
A regulatory framework to encompass existing unorganized micro food processing enterprises to bring them into a formally compliant framework.
Branding and marketing to be strengthened in order to support the integration of existing enterprises with organized supply chains.
Increased access to credit by existing micro food processing entrepreneurs, FPOs, Self Help Groups, and Co-operatives;
Integration with an organized supply chain by strengthening branding & marketing;
Support for the transition of existing 2,00,000 enterprises into the formal framework;
Increased access to common services like common processing facility, laboratories, storage, packaging, marketing, and incubation services;
Strengthening of institutions, research, and training in the food processing sector;
Increased access for the enterprises, to professional and technical support;
Increase in revenues of target enterprises.
Enhanced compliance with food quality and safety standards.

Strengthening capacities of support systems.
Transition from the unorganized sector to the formal sector
Special focus on women entrepreneurs and Aspirational districts.
Focus on minor forest produce in Tribal Districts.

The scheme is a centrally sponsored scheme that is designed to address the challenges faced by the micro-enterprises and to tap the potential of groups and cooperatives in supporting the upgradation and formalization of these enterprises.

Eligibility

Scheme is for All India basis.
Support to Individual micro units:

Micro enterprises will get credit linked subsidy @ 35% of the eligible project cost with ceiling of ₹10 lakh.
Beneficiary contribution will be minimum 10% and balance from loan.
On-site skill training & Handholding for DPR and technical upgradation

Support to FPOs/SHGs/Cooperatives:

Seed capital will be given to SHGs (@ ₹4 lakh per SHG) for loan to members for working capital and small tools.

Grant for backward/ forward linkages, common infrastructure, packaging, marketing & branding.
Skill training & Handholding support.
Credit linked capital subsidy.

One-District One-Product Approach (ODOP) plan to be implemented to encompass input procurement, common services availability, and product marketing.

The Inter-Ministerial Empowered Committee (IMEC) is established at the national level. The structure of IMEC under PM FME is:

Chairman – Minister of Food Processing Industries
Vice-Chairman – Minister of State of Food Processing Industries
Member-Secretary
Members

Whom to contact

The state government nominated nodal department would implement at the state level. There would be a national portal for online registration.

Period of implementation

Scheme will be implemented over a 5 year period from 2020-21 to 2024-25. The central government will bear the expenditure for the first year irrespective of who incurs it; later will be adjusted in the ratio mentioned above; in the next four years. 2,00,000 micro-enterprises are to be assisted with credit linked subsidy.

For protecting the food in contradiction of impurities licensing has become more considerable in past periods. Hence for the maintenance of the quality of the foods and all safety measures are taken to consume the product safely. The government of India took a severe step and designed numerous licenses to protect consumer rights to quality food. Hence, it is important to obtain licenses through various authorities as prescribed by the Government of India who deals in food items.

Four Main Components of PM FME

To address the need of the micro food processing sector, the following four components have been encompassed in the scheme:

One-District One-Product (ODOP) Approach

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. ODOP for the scheme will provide the framework for value chain development and alignment of support infrastructure. There may be more than one cluster of ODOP products in one district. There may be a cluster of ODOP products consisting of more than one adjacent district in a State. It is inspired by Uttar Pradesh’s ODOP programme launched across its 75 districts to encourage indigenous and specialized products

The States would identify the food product for a district, keeping in perspective the focus of the scheme on perishables. A baseline study would be carried out by the State Government. The ODOP product could be a perishable Agri produce, cereal-based product, or a food product widely produced in a district and their allied sectors. An illustrative list of such products includes mango, potato, litchi, tomato, tapioca, kinnu, bhujia, petha, papad, pickle, millet-based products, fisheries, poultry, meat as well as animal feed among others. Besides, certain other traditional and innovative products including waste to wealth products could be supported under the Scheme. For example, honey, minor forest products in tribal areas, traditional Indian herbal edible items like turmeric, amla, haldi, etc.

Support for agricultural products would be for their processing along with efforts to reduce wastage, proper assaying, and storage and marketing.

For providing support existing individual micro-units for capital investment, preference would be given to those producing ODOP products. However, existing units producing other products would also be supported. In the case of capital investment by groups, predominately those involved in ODOP products would be supported.

Support to groups processing other products in such districts would only be for those already processing those products and with adequate technical, financial, and entrepreneurial strength. New units, whether for individuals or groups, would only be supported for ODOP products.Support for common infrastructure and marketing & branding would only be for ODOP products. In case of support for marketing & branding at the State or regional level, the same products of districts not having that product as ODOP could also be included.

The Department of Commerce is focusing on agriculture crops on a cluster approach for support for exports under the Agriculture Export Policy, and the Ministry of Agriculture is also focusing on a cluster approach for the development of specific agri-products in districts having a comparative advantage. The ODOP approach of the scheme would lead to easing in providing common facilities and other support services.

The following are considered as ODOP under PM FME:

Perishable agri-produce
Cereal based product
Food product widely produced in a district and allied sectors

It will provide a framework for value chain development and alignment of support infrastructure
Each state will identify one product per district which will be based on the raw materials’ availability and existing clusters.
One cluster can belong to one and more districts.
Those existing enterprises to produce products under the ODOP approach are to be given preference
Assistance for common infrastructure and marketing and branding will be only available for such foods that are available under the ODOP program. (Exception provided)
The ODOP approach complements the existing promotional efforts of the government:

Agriculture Export Policy
National R-urban Mission

Please click here for State wise List of One-District One-Product (ODOP)

Aspirational Districts’ Programme

Aspirational Districts are those districts in India that are affected by poor socio-economic indicators.
These are aspirational in the context that improvement in these districts can lead to the overall improvement in human development in India.
The 115 districts were identified from 28 states, at least one from each state.
At the Government of India level, the programme is anchored by NITI Aayog. In addition, individual Ministries have assumed responsibility to drive the progress of districts.
The objective of the program is to monitor the real-time progress of aspirational districts.
ADP is based on 49 indicators from the 5 identified thematic areas, which focuses closely on improving people’s Health & Nutrition, Education, Agriculture & Water Resources, Financial Inclusion & Skill Development, and Basic Infrastructure.
With States as the main drivers, ADP seeks to focus on the strength of each district, identify low-hanging fruits for immediate improvement, measure progress, and rank districts.

The broad contours of the programme are:
1. Convergence (of Central & State Schemes) which brings together the horizontal and vertical tiers of the government
2. Collaboration (of Central, State level ‘Prabhari’ Officers & District Collectors) which enables impactful partnerships between government, market and civil society
3. Competition among districts driven by a spirit of the mass movement, it fosters accountability on district governments.
The Aspirational Districts Programme (ADP) is one of the largest experiments on outcomes-focused governance in the world.

Impact of ADP

Decentralization of Development: ADP focuses on outcomes that enable local experimentation based on a firm appreciation of ground realities
Inclusive approach: The delta ranking of the Aspirational Districts combines the innovative use of data with pragmatic administration, keeping the district at the locus of inclusive development..
Improved Implementation: Spurred by competition based on outcomes, local governments target their efforts and improve programme implementation and design.

Need of FPU under PM – FME

The unorganized food processing sector comprising nearly 25 lakh units contributes to 74% of employment in the food processing sector.

The unorganized food processing sector faces a number of challenges that limit their performance and their growth. The challenges include lack of access to modern technology & equipment, training, access to institutional credit, lack of basic awareness on quality control of products; and lack of branding & marketing skills, etc.

Owing to these challenges; the unorganized food processing sector contributes much less in terms of value addition and output despite its huge potential.

Nearly 66% of these units are located in rural areas and about 80% of them are family-based enterprises supporting the livelihood of rural households and minimizing their migration to urban areas. These units largely fall within the category of micro-enterprises.

Benefits to Food Processing Units under PM-FME

Beneficiaries/Components under PM-FME	Benefits
Existing Unorganized Food Processing Units	A maximum grant of up to ₹ 10 lakhs
SHGs/FPOs/Cooperatives	Credit linked grant at 35 % of the project cost for capital expenditure with maximum limit as prescribed
Person engaged in Food Processing	₹ 40000 as seed capital provided as working capital
Common Infrastructure	Credit linked grant at 35 % of the project cost with a prescribed maximum limit
Marketing and Branding	Upto 50 % of expenditure with a prescribed maximum limit

Capacity Building and Research Component of PM FME

Under this scheme, Training support will be provided for units that are part of a support for Marketing and Branding or have the potential to join such a network. National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and Indian Institute of Food Processing Technology (IIFPT), two national-level food processing technology institutions under MOFPI are providing training to small entrepreneurs

At the national level, the National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and the Indian Institute of Food Processing Technology (IIFPT) will spearhead the capacity-building component of the scheme.
At the state level, NIFTEM and IIFPT will be supported by the state technology institutions present in the food processing technology sector.
Training and capacity building will encompass: Training to individual entrepreneur and group beneficiaries will focus on following
- Entrepreneurship development
- Essential functions of enterprise operations
- Bookkeeping and registration
- Registration
- FSSAI standards
- Udyog Aadhar
- GST Registration
- General hygiene
- Packaging, and
- Marketing

At the district level, Rural Self Employment Training Institutes (RSETI) along with other institutions will be used to impart training.

The PM Formalization of Micro-Food Processing Enterprises Scheme will be assisted by the following institutions:

Financial Assistance Details

The financial assistance under the Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme is as follows:

Upgradation of Individual Micro Food Processing Units

1.Support to Individual Micro Enterprises- Credit Linked Subsidy

As part of this scheme, Individual micro food processing units desirous of upgradation of their unit can avail credit-linked capital subsidy @35% of the eligible project cost with a maximum ceiling of ₹10 lakh per unit. The beneficiary contribution should be a minimum of 10% of the project cost with the balance being a loan from the prescribed Bank.

2. Capacity Building /Training support for the micro enterprise

Training support would be provided to individual units that are being provided support for capital investment. The training support would also be provided to other existing units in the districts that are processing ODOP products. The following are the focus areas for capacity building under the Scheme

Entrepreneurship development, essential functions of enterprise operations, marketing, bookkeeping, registration, FSSAI standards, Udyog Aadhar, GST Registration, general hygiene, etc
Specific training designed for ODOP product or the product produced by the unit including operations of necessary machines, hygiene issues, packaging, storage, procurement, new product development etc

Support to FPOs /SHGs/ Producer Cooperatives Units

The PM FME scheme will provide support to Farmer Producers’ Organizations (FPO), Self-help group (SHG), Producer Cooperatives for capital investment along the entire value chain with credit linked grant at the rate of 35%. The scheme would support clusters and groups such as FPOs/SHGs/ producer cooperatives along their entire value chain for sorting, grading, assaying, storage, common processing, packaging, marketing, processing of agri-produce, and testing laboratories.

1. FPOs and Producer Cooperatives would be provided the following support

Grant @35% with credit linkage
Training support
The maximum limit of grant in such cases would be as prescribed.

2. SHGs would be provided with the following support:

1)Seed Capital to Self-help group- As part of this scheme, the Government will provide seed capital at a rate of @ ₹ 40,000/- per member to Self-help group who engaged in the food processing. This assistance can be used for working capital or to purchase small tools.

Priority would be given for SHGs involved in ODOP produce in giving seed capital. Seed capital as a grant would be provided to the SHG federation which, in turn, would be extended to members as a loan through the SHGs. The SHG federation would provide this amount as a loan to the members of SHGs to be repaid to the SHG.

Eligibility Criteria for Seed Capital for SHGs:

Only SHG members that are presently engaged in food processing would be eligible
2.The SHG member has to commit to utilize this amount for working capital and purchase of small tools and give a commitment in this regard to the SHG and SHG federation.
Before providing the seed capital, SHG Federation should collect the following basic details for each of the members:

Details of the product being processed;
Other activities undertaken;
Annual turnover;
Source of raw materials and marketing of produce.

2) Support to individual SHG members as a single unit of food processing industry with credit linked grant @35% with the maximum amount being ₹ 10 lakh.

3)Support for capital investmentat the federation of SHG level, with credit linked grant @35%. The maximum limit of grant in such cases would be as prescribed.

4)Training & Handholding Support to SHGs:For support to SHGs, a large number of trained resource persons are available with State Rural Livelihood Missions (SRLMs). These local resource persons of SRLM having expertise in agro-produce would be utilized for training, upgradation of units, DPR (Detailed Project Report) preparation, handholding support, etc.

Common Infrastructure Development

PM FME scheme will provide a credit-linked grant at a rate of 35% to FPOs, SHGs, cooperatives, State-owned agencies, and private entrepreneurs for the development of common infrastructure. This amount can be used for the development of a common processing facility, lab, warehouse, cold storage, and packaging and incubation centre.

Common infrastructure support would be provided to FPOs, SHGs, cooperatives, any Government agency, or private enterprises. Common infrastructure created under the PM FME scheme should also be available for other units and the public to utilize on a hiring basis for a substantial part of the capacity. The eligibility of a project under this category would be decided based on the benefit to farmers and industry at large, viability gap, absence of private investment, criticality to value chain, etc. Credit linked grant would be available @ 35%. The maximum limit of the grant in such cases would be as prescribed

The following are the focus areas for capacity building under the scheme:

Premises for assaying of agriculture produce, sorting, grading, warehouse and cold storage at the farm-gate;
Common processing facility for processing of ODOP produce;
Incubation Centre should involve one or more product lines, which could be utilized by smaller units on a hire basis for the processing of their produce. The Incubation Centre may partly be used for training purposes. It should be run on a commercial basis.

FPOs/SHGs/Cooperatives seeking funding for the common infrastructure and capital investment under the Scheme should follow the following procedures:

A DPR for seeking assistance under the Scheme for capital investment and common infrastructure should be prepared, based on the format as prescribed.
The DPR should have the necessary details of the proposal, detailed project cost, proposed manpower, turnover, marketing channel, sources of raw material, estimated profit & loss account, cash flow statement, etc.
The DPR should be sent to the State Nodal Agency (SNA). After approval of the proposal by SLAC, SNA should recommend the proposal to MoFPI. Any proposal for assistance to a group for a grant above ₹10 lakh should be sent to the Ministry of Food Processing Industries (MoFPI) for approval.
After approval of the proposal by MoFPI, the proposal should be forwarded to the financial institution for sanction of loan.
The DPR may also contain a proposal for training support to the group members based on the training hours & modules, as prescribed and the cost norms of the Ministry of Skill Development and Entrepreneurship. Components of training and capacity building would be fully funded under the Scheme.
The assistance of ₹ 50,000/- per case would be provided to FPOs/SHGs/ Cooperatives for preparation of DPR.
Disbursement of the grant should take place in the bank account of the applicant organization after the sanction of the loan by the bank

Branding and Marketing Support

Marketing and branding support will be provided at the State or regional level to FPOs, SHGs, Cooperatives, or an SPV of micro food processing enterprises. Support for branding and marketing is limited to 50% of the total expenditure.

Marketing and branding support would be provided to groups of FPOs/SHGs/ Cooperatives or an SPV of micro food processing enterprises under the scheme. Following the ODOP approach, marketing & branding support would only be provided for such a product at the State or regional level.

Eligible items for support under the scheme:

Training relating to marketing to be fully funded under the scheme;
Developing a common brand and packaging including standardization to participate in common packaging;
Marketing tie-up with national and regional retail chains and state-level institutions;
Quality control to ensure product quality meets the required standards;

Support for marketing and branding requires developing a common brand, common packaging, and product standardization. The appropriate level for common branding and packaging would differ from place to place, case to case, and product to product. Whether it should be district, regional, or state level would be decided by the concerned SNA in each case. Therefore, the proposal for support to marketing and branding should be prepared by the SNA. Support for branding and marketing would be limited to 50% of the total expenditure. The maximum limit of grant in such cases would be as prescribed. No support would be provided for opening retail outlets under the scheme.

Vertical products at the national level could also be provided support for branding & marketing on the same lines as described above for ODOP focus. Such support for common branding/packaging and marketing would be provided at the national level. Proposal for that support should be sent to MoFPI by the states or national level institutions or organizations or partner institutions.

Eligibility criteria: The proposals should fulfill the following conditions: -

1)The proposal should relate to ODOP
2)The minimum turnover of product to be eligible for assistance should be ₹ 5 crore
The final product should be the one to be sold to the consumer in a retail pack
Applicant should be an FPO/SHG/cooperative/ regional - State levels SPV to bring a large number of producers together
Product and producers should be scalable to larger levels
Management and entrepreneurship capability of promoting entities should be established in the proposal.

Procedure for applying for assistance under Branding & Marketing: Detailed Project Report preparation:

A DPR should be prepared for the proposal, comprising essential details of the project, product, strategy, quality control, aggregation of produce, common packaging, and branding, pricing strategy, promotional details, warehousing and storage, marketing channel, plans for an increase in sales, etc
Support up to ₹5 lakh would be available from SNA for preparing DPR for proposals for marketing & branding.
The proposal should also contain a flow chart of activities from the procurement of raw material to marketing, critical control points, ensuring quality control, plans for five years in terms of promotional activities, increasing the number of participating producers, and turnover.

There should be an agreement with a business plan, executed between the cooperatives/SHG/FPO/SPV, the lead buyer(s) if any, and the SNA, which would describe the capital and services needs of the producers and proposed improvements that would allow them to upgrade their production capacities and skills to strengthen their linkage with the market, i.e. the lead buyer(s).

Capacity Building & Training

Under the scheme, it is envisaged to provide training to 9 lakhs individuals from micro-food processing enterprises, various groups, such as SHGs/FPOs/Cooperatives, workers of micro-food processing enterprises and other stakeholders connected with the implementation of the PMFME scheme such as government officials, project officials, etc.

The PMFME Scheme under the Capacity Building component could provide training for the following categories of persons:-

Individual micro-food processing enterprises with credit linked grant under the Scheme;
Individual existing micro-food processing enterprises that are not taking loan under the Scheme;
Workers of micro-food processing enterprises and groups, such as SHGs/FPOs/Cooperatives;
Members of SHGs/FPOs/Cooperatives that are engaged in food processing activities;
Government officials and other resources person engaged in the implementation of the PMFME Scheme- Training of Orientation of the Scheme.

The Framework of training would be as following:

Entrepreneurship Development Skilling (EDP+) program modified to meet the requirement of the food processing industry.
Product Specific Skilling.

Three-level of training would be conducted under the Scheme:

Master Trainers- EDP & product specific trainers would be nominated by SNA and the Training would be conducted at IIFPT & NIFTEM;
District Level Trainers- Each district to have a minimum of two trainers, one for EDP+ and one for ODOP/ product specific training;
Beneficiaries- Individuals entrepreneurs and Groups of existing and new entrepreneurs who are involved in food processing at micro level. Leading to their formalization, up-gradation & scaling. In addition to this Workers’ Training for Skilling, Safety and Hygiene, plant safety, etc. will also be imparted.

Capacity Building & Training

Note on One District One Product (ODOP)

The PM FME scheme adopts the One District One Product (ODOP) approach for providing additional benefits to an entrepreneur in terms of the following:

Procurement of inputs
Availing common services
Marketing of products

As part of this, the States will identify food products for a district considering the existing clusters and availability of raw material. The ODOP includes perishable agri-produce, cereal-based product, or a food product widely produced in a district and their allied sectors. The PM FME scheme will give preference to an entrepreneur who are producing product under the ODOP approach

Expenditure under the PM FME scheme

The PM FME scheme will provide an outlay of ₹ 10,000 crore and the expenditure under the scheme will be shared in the following manner:

S.No	Expenditure under the PM FME scheme
1	Central and State Governments	60:40 Ratio
2	North Eastern and the Himalayan States	90:10 ratio
3	Union Territory with the legislature	60:40 Ratio
4	Center for other Union Territory	100%

Eligibility criteria for PM FME Scheme

The eligibility criteria for the Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme are as follows:

Eligibility criteria for Individual micro food processing units

Individual / Partnership Firm with ownership right of the enterprise can apply for the scheme
The assistance under the scheme is provided only to the existing micro food processing units which are verified by the Resource Person
To avail the benefit, the entrepreneur should be above 18 years of age
The entrepreneur should possess at least 8th standard pass educational qualification
Only one person from one family is eligible for obtaining financial assistance under the scheme.

Eligibility criteria FPOs/ SHGs/ Producer Cooperatives

To avail the financial assistance, the entity should be engaged in processing of ODOP produce for at least three years
In the case of FPOs or cooperatives, they should have a minimum turnover of ₹ 1 crore and the cost of the project proposed should not be larger than the present turnover;
The SHG, cooperative, FPO should have sufficient internal resources to meet 10% of the project cost and margin money for working capital.

Eligibility of SHG to Obtain Seed Capital

For obtaining Seed Capital under the PM FME scheme, only SHG members who are presently engaged in food processing need to apply. The SHG member has to commit to utilizing this amount for working capital as well as the purchase of small tools and need to commit in this regard to the SHG and SHG federation.

PM FME Scheme Application

Existing food processing units desirous of seeking assistance under this scheme need to apply online through the official website of the FME portal. The Resource Persons (RPs) engaged for field-level support will provide handholding support for the following:

Preparation of Detailed Project Report(DPR)
Availing bank loan
Obtaining necessary registration and licenses including food standards of FSSAI, Udyog Aadhaar, and GST

Applications for support for FPOs, SHGs, cooperatives, common infrastructure and marketing, and branding need to be submitted to the State Nodal Agency (SNA) along with a Detailed Project Report. The State Nodal Agency will appraise the project and recommend it for a bank loan.

The bank sanctioning the loan would open a mirror account in the name of the beneficiary. Grant by the Government would be deposited in this account of beneficiary in the lending bank branch by the Government. If after three years from the disbursement

Note: If after three years from the disbursement of the last tranche of the loan, the beneficiary account is still standing and the Unit is operational, this amount would be adjusted in the bank account of the beneficiary.

Scheme for Creation or Expansion of Food Processing Units

The Ministry of Food Processing Industries (MOFP) has launched the Scheme for Creation or Expansion of Food Processing Units (CEFPU) under the guidance of Pradhana Mantri Kisan Sampada Yojana. This scheme aims to provide financial assistance in the form of loan for setting up of new units and for expansion of existing food processing units. In this article, we look at the Scheme for Creation/Expansion of Food Processing Units in detail.

To apply for FSSAI license in India,click here

Objectives of the Scheme

To create new processing units and expansion of existing food processing units, this will help in increasing the level of processing, value addition, reducing wastage and increase in farmer’s income.

Eligible sectors

The following food processing sectors are qualified to get financial assistance under the Scheme:

Fruits and vegetable processing units.
Milk Processing units.
Meat, poultry, fish processing units.
Food Products, Snacks, bakery, breakfast cereals, and other food products, including nutritional health foods.

Grains or pulses, oilseed milling and processing units based on the latest technology.
Modern Rice milling placed in Eastern (Odisha, West Bengal, Bihar and Jharkhand) and the North Eastern States.
Other agri-horti products including spices, coconut, soybean, mushroom processing, honey processing etc.
Fruits or Honey based wines.
Natural Food flavors, food additives, food extracts and colors, oleoresins, guar gum, cocoa products etc.
Natural Food flavors, food additives, food extracts and colors, oleoresins, guar gum, cocoa products etc.

Note: The activities related to the manufacture of aerated water, packaged drinking water and carbonated drinks will not be qualified for financial assistance under the Scheme.Also, the Sugar Mills and farming activities such as dairy farming, poultry farming, mushroom farming, hatcheries, etc., are not eligible under the scheme. However, the units proposing for manufacturing value-added products from jaggery (as raw material) will be eligible under the scheme.

List of Eligible Processing Activities

The list of processing activities which are covered under the scheme is given below:

Sorting, grading, washing, peeling, cutting, sizing.
Blanching, crushing, extraction, pulping.
Drying, de-husking, splitting, depoding, de-hulling, deseeding, color sorting, pulverization, extrusion, freeze drying or dehydration, frying, etc.
Pasteurization, homogenization, evaporation, concentration, etc.
Packaging equipment like canning, aseptic packaging, vacuum packaging, bottling, edible packaging, labeling, any other specialized packaging etc.
Preservation activities such as pickling, chemical preservation, fermentation or any other specialized facility required for
Individual Quick Freezing (IQF), plate freezing, blast freezing, quick spiral freezing etc.
Controlled temperature transport like coolers, refrigerated, insulated and ventilated transport.
All other processing, preservation, storage, transport facilities etc. to increase food products and value addition would be eligible.

Note: Standalone activities like temperature controlled transportation or storage facilities etc. will not be allowed under this scheme.

Eligible Organizations

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Public and Private Companies

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Limited liability Partnerships

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Corporate entity

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Proprietorship firms

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Corporate entity

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Partnership firms

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Joint Ventures

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Central and State Public Sector Undertakings

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Farmer Producer Organizations (FPOs)

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Non Governmental Organizations (NGOs)

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Cooperatives

Self-Help Groups (SHGs)

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Self-Help Groups (SHGs)

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Cooperatives

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Non Governmental Organizations (NGOs

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Farmer Producer Organizations (FPOs)

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Central and State Public Sector Undertakings

Joint Ventures

Scale of Assistance

The assistance of 35% of the eligible project cost not exceeding ₹ 5 crores will be provided to the general areas. The assistance of 50% of the eligible project cost not exceeding ₹ 5 crores will be provided to the North Eastern States including Sikkim and Difficult areas including Himalayan States (Himachal Pradesh, Jammu & Kashmir and Uttarakhand), State Notified ITDP areas and Islands

Documents required at the time of applying

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Application in the prescribed format (Appendix-A).

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Detailed Project Report (DPR).

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Bank appraisal indicating techno-economic viability parameters of the project.

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Sanction letter of term loan from the bank or financial institutions.

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Certificate of incorporation/registration of the organization, Memorandum and Articles of Association and Bye-laws of the society/partnership deed etc.

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In the case of expansion/modernization of existing processing units, the latest annual report and audited statement of accounts have to be enclosed.

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Item wise and cost wise details of Technical civil works duly certified by authorised Civil Engineer have to be enclosed.

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Item wise and cost wise details of Plant and Machinery duly certified by authorized Mechanical Engineer have to be enclosed.

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An undertaking by the applicant as per Appendix-F(x) has to be furnished.

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Copy of Registered land allotment/ownership document in the name of the applicant firm.

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In case of lease deed of the land, the registered lease deed for at least 15 years in the name of the applicant firm is required to be submitted.

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IEM registration, Entrepreneur’s Memorandum, Udyog Aadhar registration etc.

In case of SC/ST promoters, caste certificate issued by the authorized officer.

Online Application Procedure

To apply for Creation/Expansion of Food Processing Units, follow the steps which are mentioned below:

Step 1: Please, visit the official portal of Ministry of Food Processing Industries (MOFPI).

Step 2: Now, select the name of the scheme from the list in Scheme Management System as Food Processing Units

Step 3: Enter the user name and password to access the particular application form.

Step 4: Fill the application form with the necessary details and submit the form online along with the required documents.

Step 5: On successful submission of the completed application on the Ministry’s portal, an acknowledgement number of the application will be sent on registered email IDs to the applicant for future reference.

Note: Subsequently, hard copy has to be sent by the applicant directly to MOFPI within 10 working days after successful uploading of the online application.

Approval for Financial Assistance The application submitted will be evaluated by the Project Management Agency (PMA) based on the assessment criteria. The proposals evaluated by the PMA will be examined by the Technical committee for recommending merit based on marks and preference. The proposals recommended by the Technical Committee will be placed before the Inter-Ministerial Approval Committee (IMAC). As per the decision of the IMAC, the approval/rejection/modification of application will be communicated to the applicant with suitable instructions.

Disbursement of GrantThe grant will be disbursed through the bank in two installments as the term loan sanctioned for the project.All the existing food processing units desirous of seeking assistance can apply online for FME portal. The District Resource Persons (RPs) engaged for field level support, would provide handholding support for preparation of DPR, availing bank loan, obtaining necessary registration and licenses including food standards of FSSAI, Udyog Aadhar and GST.Applications for Support for FPOs / SHGs / cooperatives, common infrastructure and marketing & branding could be submitted to the State Nodal Agency (SNA) along with a DPR. The SNR would appraise the project for grant and recommend for bank loan.Grant by the govt. would be deposited in the account of the beneficiary in the lending bank. If after period of 3 years from disbursement of last tranche of loan, beneficiary account is still standard and the unit is operational, this amount would be adjusted in the bank account of the beneficiary. No interest would be charged by the bank for the grant amount in loan. The official PM FME Scheme notification could be accessed using the link – https://mofpi.nic.in/fme/

All the processes of the PM FME Scheme would take place on an MIS including applications by entrepreneurs, their processing, approval of various projects by the States and MoFPI, release of grant and other funds and monitoring of the project. Individual entrepreneurs and other stake holders desirous of availing assistance under the scheme may contact the State Nodal Agencies of their respective states/ UTs regarding the roll out of scheme and contact points at the district level.

Mega Food Parks - 22 Major Food Parks

The Scheme of Mega Food Park aims at providing a mechanism to link agricultural production to the market by bringing together farmers, processors and retailers so as to ensure maximizing value addition, minimizing wastage, increasing farmers’ income and creating employment opportunities, particularly in the rural sector. Mega Food Parks Scheme launched by the government in 2008 provides financial assistance up to ₹50 crores to set up modern infrastructure facilities for food processing called Mega Food Parks. It establishes a mechanism to bring together farmers, processors and retailers and link agriculture production to the market to ensure maximization of value addition, minimization of wastage and improving farmers’ income. This article briefly covers the objectives, the way it functions by establishing infrastructures like CPC, PCC, CC; and the locations of 22 Mega Food Parks in India.

Latest Context on Mega Food Parks –

In a major step towards industrialization in Bihar, the Centre has approved a mega food park at Motipur block of Muzaffarpur district. This would be the first mega food park to be developed by Bihar Industrial Area Development Authority (BIADA). This food park will definitely generate employment opportunities and will help farmers and unemployed youths
The State has operationalized the first Mega food park in Mizoram – Zoram Mega Food Park. The food park will benefit 25,000 farmers and create 5,000 jobs. It will boost the North-East Region’s potential to become the organic destination of the world due to its rich agricultural and horticultural produce.
Zoram Mega Food Park is located in Khamrang village in Kolasib District; spread over 55 acres of land to benefit not only Mizoram but the adjoining districts in Assam (which already has one Mega Food Park).

Mega Food Parks – Objectives & Infrastructure

The primary objective of the Scheme is to provide modern infrastructure facilities for the food processing along the value chain from the farm to the market with a cluster-based approach based on a hub and spokes model. It includes the creation of infrastructure for primary processing and storage near the farm in the form of Primary Processing Centres (PPCs) and Collection Centres (CCs) and common facilities and enabling infrastructure like roads, electricity, water, ETP facilities etc. at Central Processing Centre (CPC). These PPCs and CCs act as aggregation and storage points to feed raw material to the food processing units located in the CPC.

Mega Food Parks – 22

The List of 22 Mega Food Parks locations that are currently operational are given below. 5 states have established 2 Mega Food Parks. As of July 2021, there are 22 Mega Food Parks in the country, spread across seventeen states.

Mega Food Parks - 22 Major Food Parks

Andhra Pradesh – 2 Mega Food Parks

Srini Mega Food Park, Chittoor
Godavari Mega Aqua Park, West Godavari

Madhya Pradesh – 2 Mega Food Parks

Indus Mega Food Park, Khargoan
Avantee Mega Food Park, Dewas

Uttarakhand – 2 Mega Food Parks

Patanjali Food and Herbal Park, Haridwar
Himalayan Mega Food Park, Udham Singh Nagar

Punjab – 2 Mega Food Parks

International Mega Food Park, Fazilka
Sukhjit Mega Food Park, Kapurthala

12 States with 1 Mega Food Park

North East Mega Food Park, Nalbari, Assam
Indus Best Mega Food Park, Raipur, Chhattisgarh
Gujarat Agro Mega Food Park, Surat, Gujarat
Cremica mega Food park, Una, Himachal Pradesh
Integrated Mega Food Park, Tumkur, Karnataka
Kerala Industrial Infrastructure Development Corporation (KINFRA) Mega Food Park, Palakkad, Kerala
Zoram Mega Food Park, Kolasib, Mizoram
MITS Mega Food Park, Rayagada, Odisha
Greentech Mega Food Park, Ajmer, Rajasthan
Smart Agro Mega Food Park, Nizamabad, Telangana
Tripura Mega Food Park, West Tripura, Tripura
Jangipur Bengal Mega Food Park, Murshidabad, West Bengal

Central Processing Centre (CPC)

CPC is an industrial park in a large area and houses a number of processing units owned by different business houses.
The park shall provide common facilities such as electricity, water and effluent treatment besides specialized services such as warehousing, cold storage, logistics and backward integration through the network of Primary Processing Centres (PPC) and Collection Centres (CC).

Primary Collection Centres (PCC)

The PCCs work as primary handling centres which use the raw materials to be processed further in the CPC.
A PCC serves a number of CCs in the proximity.
They provide primary processing facilities such as weighing, sorting, grading, washing, crating and storage of the produce.

Collection Centres (CC)

The CCs work as a point of aggregation of the produce from individual farmers, farmer groups and Self Help Groups (SHGs).
They feed the raw materials to PCCs.
They are mostly managed by local entrepreneurs. They serve as farm-level aggregation points for adjoining areas.

Conclusion

The unorganized food processing sector faces a number of challenges which limit their performance and growth. These challenges are given below:-

Lack of access to modern technology & equipment.
Lack of Training
Difficulty in access to institutional credit.
Lack of basic awareness on quality control of products
Lack of branding & marketing skills.

With these major challenges, the unorganized food processing sector contributes much less in terms of value addition and output despite its huge potential. The unorganized food processing sector comprises of around 25 lakh units which contributes to 74% employment in food processing sector. Nearly 66% of these units are located in rural areas and about 80% of them are family-based enterprises supporting livelihood rural household and minimizing their migration to urban areas. These units largely fall within the category of micro enterprises. PM Formalization of Micro Food Enterprises Scheme places special focus on capacity building and research. NIFTEM and IIFPT academic and research institutions under MOFPI along with State Level Technical Institutions selected by the States would be provided support. This support is for training of units, product development, appropriate packaging and machinery for micro units. All the processes of the PM FME Scheme would take place on an MIS including applications by entrepreneurs, their processing, and approval of various projects by the States and MoFPI, release of grant and other funds and monitoring of the project. Individual entrepreneurs and other stakeholders desirous of availing assistance under the scheme may contact the State Nodal Agencies of their respective states/ UTs regarding the roll out of scheme and contact points at the district level.

Frequently Asked Questions

1. Who can be an Applicant under PLI scheme for Food Processing Industry?
Applicant for the purpose of the Scheme shall be
- Proprietary Firm or Partnership Firm or Limited Liability Partnership (LLP) or a Company registered in India
- Co-operatives; and
- SME and making an Application for seeking approval for coverage under the Scheme
Applicant may include a company applying on its own behalf and its subsidiary/ies provided the Applicant Company holds more than 50% of the stock of its subsidiary/ies and that none of such subsidiary company/ies is included in any other Applicant company under the Scheme. Marketing Federation or Apex level co-operatives can also apply on behalf of Member Unions or Member co-operatives in the case of co-operatives
2. What are different Categories of Applicants?
The three categories of Applicants are as under:
- Category I: Entities who apply for incentives based on Sales and Investment Criteria. Applicants under this category could undertake Branding & Marketing activities abroad also and apply for Incentives under the scheme.
- Category II: SMEs applicants manufacturing innovative/ organic products.
- Category III: Applicants applying solely for incentives for undertaking Branding & Marketing activities abroad
3. What are the different segments of Food Products covered under the scheme?
Under Category-I, the following four Segments of food products are covered:
- Ready to Eat/ Ready to Cook (RTE/RTC) including products containing Millet;
- Fruits and Vegetable Products
- Marine Products;
- Mozzarella Cheese.
Product Groups and food Products covered under above four Segments is indicated in Appendix-B of the Guidelines.
4. How food products are classified in terms of product segment, product groups and products as indicated in Appendix-B?
Product Segment: All food products covered under PLIS-FPI and eligible for incentives are classified under four broad Segments. There four segments are Ready to Cook/ Ready to Eat (RTC/ RTE) foods including Millet products, Processed Fruits & Vegetables, Marine Products and Mozzarella Cheese. An Applicant under Category-I will be required to choose any of the Product Segments. Product Groups: Each of the Product Segment is further classified in to a number of Products Groups. Product Groups under each Product Segments are listed in Col. 2 of Appendix B of these Guidelines. Some of the Products Groups are covered in more than one Product Segments are classified as common Products. Products- Products are those which are listed under each Group and covered under the scheme. These Products are listed in Column 3 of Appendix B.
5. How Common Products under different product segments are placed under the scheme ?
Some of the products covered under Fruit & Vegetable and Marine Product Segments are also covered under RTC/ RTE Segments as well. Such products are - RTC Potato Products- fries, tikki etc.(HSN 2004 & 2005) except potato chips (20052000); Packaged Sauces- Table sauces, pasta sauces, cooking sauces, dry sauces, ketchup, mustard, oyster sauces, salad dressings, dips, and other sauces (HSN 2002, 2103); All fruit based Jam/Jellies(HSN 2007); Packaged Mixed Spices/ Dry Sauces (Dry/ Dehydrated Sauces, Dry Recipe Powder mixes, dry powder marinades) (HSN 2103); Marine Segment: Canned, Battered & breaded, Pickles, Sausages (HSN 1604 & 1605). A selected applicant for RTE/RTC segment would also be eligible to receive incentive for above-mentioned RTE/RTC products from F&V and Marine segments
6. What are the different food segments an Applicant can apply for? Can an Entity submit Multiple Applications as Applicant under different Categories?
Under Category-I, an Applicant may apply for one or more segments. For example, an entity can be an Applicant for RTC/ RTE Segment and also for F&V Segment under Category-I. Under Category-II, SME Applicant can apply for different innovative and Organic food product including Free Range - Eggs, Poultry Meat, and Egg Products. Products applied for coverage by Category-II Applicant will be categorized under different segments for admissibility of incentive.

Applicant under Category-I could also be a Category-III Applicant for incentive on Branding & Marketing activities abroad. If such an Applicant is selected in Category-I, the application in Category- III would become infructuous. If that applicant is not selected in Category-I, the application under Category-III would be considered

In all cases of Applications across multiple Segments and Categories, Applicants will be required to meet the minimum Sales and investment criteria, as applicable, and will be required to make separate Applications for each of the product Segments/ Categories.
7. Can a 100% foreign-owned company be eligible under PLI Scheme?
- Any Company registered in India is eligible under the scheme to apply on its own behalf or with its subsidiary/ies (clause 3.5).
8. Can two eligible entities apply through a Common Application?
No two Proprietary Firm or Partnership Firm or Limited Liability Partnership (LLP) or Company can apply through a common Application.
9. Can Group Companies apply through a common Application?
- Group companies are not permitted to apply together through a common Application but they are permitted to apply as individual Applicants.
10. What is the eligibility Criteria under PLI Scheme?
Documents Required From Parent Company
- Eligibility criteria, in terms Minimum Sales of all food products and Investment for Category-I Applicants, are given in the Appendix-A. For eligibility, Minimum Sales relates to sale of all food products by the Applicant in 2019-20. Minimum Investment means investment in Plant & Machinery, Technical Civil work and associated infrastructure during 2020-21, 2021-22 and 2022-23
11. What is the difference between Minimum Investment and Committed Investment?
- The minimum amount of fresh investment in Plant & machinery, Technical civil works and Associated infrastructure which the Applicant shall be required to make under the scheme provision to become eligible to Apply (Appendix-A). Committed Investment would include minimum investment, investment over and above Minimum Investment (if any) and investment in Branding & marketing abroad (for the first two years of the scheme i.e. 2021-22 & 2022-23). Committed Investment is a criterion for selection of the Applicant under the scheme.
12. How sales and investment by Contract Manufacturers and Subsidiaries are treated under PLIS?
- Sales include Sales of the Applicant, manufactured directly or through its Contract Manufacturers, and its subsidiaries. Investment includes investment by the Applicant, its Contract Manufacturers (provided 100% of the manufactured output of Contract manufacturer is supplied to the Applicant) and its subsidiaries.

13. What are the different selection Criteria for Category-I Applicant?
The three criteria for evaluation of Applications are as under:
- Sales (Domestic & Exports) in 2019-20 of food products listed in the Application for coverage under the scheme
- Export Sales of items covered at (i) above
- Committed Investment
Each of these criteria has equal weightage. Selection of Applicants is based on the combined score of the Applicants.
14. What is the consequence of furnishing incorrect data, which has a bearing on their being selected/ approved, by the Applicants in the online Application?
The Applicants are required to fill up correct information as it would impact their selection vis-à-vis other Applicants. Applications will be liable for rejection at any stage, if it is found that incorrect information having a bearing on the selection of the Applicant were furnished in the Application
15. What are incremental sales? How will the rate of incentives apply to incremental sales?
Incremental Sales for a particular Year means Sales in that Year less the Sales in the relevant Base year. The incentive claimed & payable is calculated on the Incremental Sales. Relevant rate of incentive for different segments is given in the Appendix-C of the Guidelines
16. What is the period for which incentive will be payable?
The tenure of the Scheme is six years from Financial Year 2021-22 to Financial Year 2026-27. The Incentive will be payable on Incremental sales beginning from 2021-22. Incentive for a particular year will be due for payment in the following year. The Incentive payable for 2026-27 will be due for payment in 2027-28.
17. What are the criteria for eligibility of incentive?
The two criteria for claim of incentive by the selected Applicants are as follows:
- Sales (Domestic & Exports) in 2019-20 of food products listed in the Application for coverage under the scheme
- Achieve minimum CAGR in Sales over the base year, as given in Appendix-D.
- Achieve the Committed Investment, year-wise, as proposed in the Application
18.What is the consequence on non-achievement of minimum CAGR in Sales?
The Applicant is expected to achieve minimum CAGR in Sales over the base year, as given in Appendix-D. If the Applicant is not able to achieve the prescribed minimum CAGR in Sales for a particular year, no incentive will be payable for that year. If the industry in any segment faces lower growth due to Force Majeure or for any other reasons, the EGoS may review the prescribed minimum CAGR for the segment
19. What are the consequences on non-achievement of Committed Investment?
On the event of not meeting committed investment, 10% of the Incentive due for Year 1 and Year 2 will be deducted. However, if at the end of Year 2, the Committed Investment is completed, then the amount deducted for Year 1 would be paid to the company. By the end of Year 3, if the Committed Investment is not completed, the selected Applicant will be taken out from PLIS for Sales-based Incentive by MoFPI. The bank guarantee shall be invoked in such case following which the offer letter issued would stand cancelled.
20. How can the incentives for Branding & Marketing be availed?
Applicant willing to avail grants for Branding & Marketing abroad has two options. The applicant could apply for Branding & Marketing under both the Categories I & III. If such an Applicant is selected in Category-I, the application in Category- III would become infructuous. If that applicant is not selected in Category-I, the application under Category-III would be considered. If the Applicant under Category II, intends to apply for branding & marketing abroad, then separate application need to be submitted by such applicants under Category III.

Under all the categories, the Applicant shall submit a five-year proposal for Branding & Marketing abroad i.e. for the period 2021-22 to 2025-26
21. What is the scale of grant for Branding & Marketing activities?
Applicants will be extended financial incentives @ 50% of expenditure on Branding & Marketing abroad subject to a maximum grant of 3% of Sales of food products or ₹ 50 crore per year, whichever is less. A sale of food products implies 3% of sales of all food products of the Applicant. The minimum expenditure on Branding & Marketing abroad for Incentive shall be ₹5 crore over a period of five years. In such case, an admissible grant would be ₹ 2.5 crore. GOI’s share in Branding Expenditure, of an Applicant, for a particular year is payable in the following year.
22. Maximum Grant of 3% sales of food products is on overall sales or exports turnover?
3% sales of food products are on the sales of all food products of the Applicant.
23. What are the items of expenditure included as a Branding & Marketing activity?
An indicative list of activities covered under Branding & Marketing are In-store Branding, Shelf Space Renting, Listing Fee, Electronic/ Social Media and Print Media, outdoor publicity, billboard, commercial advertisement on channels etc. The Expenditure will not cover trade discounts, expenditure incurred on distribution, expenditure connected with participation of trade fairs and overseas logistics expenditure
24. Can selected Applicants change the committed/ projected annual expenditure on Branding and Marketing and its different items of expenditure?
Category-I Applicant: Projected expenditure on B&M for 2021-22 and 2022-23 form a component of Committed Expenditure and is an evaluation criterion for selection of the Applicant. Therefore, investment is required to be made to the extent committed. Within Committed investment, flexibility is permitted between Capital investment (P&M, Technical Civil Work and Associated Infrastructure) and expenditure in Branding & Marketing components subject to approval of MoFPI.

Category-III Applicant: The Applicant is expected to give annual projection of expenditure, item-wise, on B&M for FY 2021-22 to 2025-26.

Both under Category-I &III, flexibility is permitted among different items of expenditure on eligible activities viz. In-store Branding, Shelf Space Renting etc., for different years, after notifying MoFPI.

Frequently Asked Questions

25. What will happen if the projected expenditure on Branding & Marketing activities is not achieved due to any unforeseen condition?
Delay or non-achievement of the expenditure on Branding and Marketing if included in the committed expenditure for selection would be subject to a reduction in incentive as applicable to Committed Investment for payment of sales-based Incentive. Ineligibility for sales-based Incentive due to lower than minimum growth rate in sales, however, would not make the Applicant ineligible for a grant on incentive for branding abroad.
26. Are taxes and duties included in the expenditure that is considered towards Investment in the Scheme?
All non-creditable taxes and duties would be included in such expenditure.
27. Can new products be added to the original application over the course of time?
The Applicant may also include those products which the Applicant is not manufacturing currently but intends to manufacture during the project period. If a selected entity starts manufacturing a new product, covered in the Segment approved for the Applicant, the same could be added later after notifying the same to MoFPI/ PMA.
28. Can an Applicant avail incentive under PLI-FPI be eligible under other schemes of the Government?
Eligibility under the PLI Scheme shall not affect eligibility under any other scheme and vice versa.
29. Can the quantum of investment and branding expenditure in committed investment originally proposed in the Application be interchanged at a later stage?
Yes, an applicant can change their plans after taking prior approval from Ministry.
30. What types of industries/units are permitted in Mega Food Park?
Only food processing industries/units that make food products fit for human and animal consumption are permitted to be set up in the Mega Food Parks. Packaging facilities of food products as ancillary to the food processing industries will also be eligible for setting up in the Mega Food Parks. However, setting up of alcoholic beverage unit as an anchor unit will not be allowed.
31. For Mega Food Park, does the land need to be changed from Agricultural to Industrial?
Yes, it is mandatory to have Change of Land Use (CLU). CLU is not required in case the land is already in a designated industrial area
32. What is minimum land requirement for setting-up Mega Food Park?
The minimum land required for setting-up a Mega Food Park is 50 acres of contiguous land and free from any kind of encumbrance. The selection of land needs to be justified in terms of connectivity and availability of basic infrastructure such as approach road, power, water etc. as also in terms of availability of raw materials/market.
33. Where can I find labeling requirements for food retail in India?
Depending upon the food category there are additional disclosures required to be made as per FSSAI regulations. Also, the packing material would need to comply with relevant packaged commodity regulations (Legal Metrology Act and rules issued there under). Food Safety and Standards Authority of India (FSSAI) has published regulations that prescribe packaging and labeling requirements.
34. How much Foreign Direct Investment is allowed in food processing sector?
100% FDI is permitted under the Automatic route in food processing industries
100% FDI is allowed through Government Approval route for trading, including through e-commerce in respect of food products manufactured or produced in India.
35. Which are major fruits and vegetables that are covered under Operations Green Scheme?
Fruits: Mango, Banana, Guava, Kiwi, Lichi, Papaya, Mousambi, Orange, Kinnow, Lime, Lemon, Pineapple, Pomegranate, Jackfruit, Apple, Almond, Aonla, Passion Fruit and Pear; Vegetables: French beans, Bitter Gourd, Brinjal, Capsicum, Carrot, Cauliflower, Chillies (Green), Okra, Cucumber, Peas, Garlic, Onion, Potato and Tomato