India is recognized as the world’s largest and most diversified food production base as it is the largest producer and exporter of spices, the largest producer of milk, and the second-largest producer of food grains, vegetables & fruits. Initiatives like Make in India and Aatmanirbhar Bharat Abhiyan have given the micro food processing units a significant boost. On June 29, 2020, the Honourable Prime Minister of India Shri Narendra Modi launched the PMFME scheme (Pradhan Mantri Formalisation of Micro food Processing Enterprises Scheme) to provide financial assistance to food processing industries in India. It is an all-India centrally sponsored scheme to provide assistance to 200,000 micro food processing units.
The PMFME Scheme is a one-stop solution directed to enhance the competitiveness of micro food processing units in the unorganized sector, and formalize the food sector. The scheme is implemented over a 5-year period from 2020-21 to 2024-25 with a total expenditure of INR 10,000 crore. The scheme focuses on supporting groups like Farmer Producer Organizations (FPOs), Self Help Groups (SHGs) and Producer’s Cooperatives.
The centrally-sponsored scheme takes a holistic approach to address challenges faced by these units, and tap their hidden potential to enhance production and profitability.
All the FPOs, SHGs, producer cooperatives and similar subsidiaries will receive the utmost support for the creation of common infrastructure. This also includes common processing facilities with incubation centres, warehouses, cold storage, and others. The eligibility of a project under this category is based on the benefits available, the feasibility gap, private investments, criticality to the value chain, and more. A credit-linked grant is offered at 35% which comes with a maximum limit.
PMFME scheme is a revolutionary move that emphasizes on providing marketing and branding to all these food processing units. The move takes the cluster approach to develop common packaging & branding with quality control, standardization, and adherence to food safety protocols. Minimum volume should be generated through the active involvement of these units that help bring numerous producers together.
These enterprises will receive support based on their DPR presented by including essential details of the project. The support will be up to INR five lakhs from the State Nodal Agency for preparing the same. The support will also be limited to 50% of the total expenditure which includes the maximum limit. State & national-level organizations or partner institutions will receive branding & marketing support for vertical products at the national level. Support is not available for establishing a retail outlet under this scheme.
Individual micro food processing units looking to upgrade can receive a credit-linked capital subsidy @35% of the project cost with a maximum cap of INR 10 lakh per unit. The beneficiary contribution should be a minimum of 10% and the remaining should be a bank loan.
As per PM FME scheme details, training support will be provided to these individual units that receive support with capital investment. The training support is extended to other existing units in the district processing ODOP products.
Even clusters and groups like FPOs, SHGs, producer cooperatives and their entire value chain stand to receive the support of the PMFME Scheme. This typically includes sorting, grading, assaying, storage, processing, marketing, processing Agri produce, and testing laboratories. Groups and clusters get a grant of 35% with credit linkage, including training support.
To enhance the PMFME scheme benefits, the Uttar Pradesh Government introduced the popular ODOP model in 2018. Its aim is to reap optimum benefits across all aspects of sales, including procurement of inputs, marketing, and acquiring common services. This scheme has the unique capacity to build existing micro-entrepreneurs. It encourages various states to identify one product per district following existing clusters and the availability of raw materials.
Common infrastructure facilities and branding & marketing support will be given to units following the ODOP model. However, adequate support is also offered to other existing units not following the ODOP approach.
The eligibility criteria for PMFME Scheme vary depending on the unit type, including their goals and objectives.
Only SHG members currently engaged in food processing are eligible, and they should use the amount for working capital and for purchasing small tools. They should give a commitment for the same to the SHG and SHG federation.
Existing food processing units looking to scale their operations and sales by seeking assistance under the Pradhan Mantri Formalization of Micro Food Processing Enterprises should apply through the official online portal. It typically involves the following three components:
FPOs, SHGs, and cooperatives should submit their applications to the State Nodal Agency along with their project report. The agency will then evaluate the project to recommend a bank loan.
The bank sanctioning the loan will open a mirror account in the beneficiary’s name. Grant by the Government will be deposited in this account opened in the lending bank’s branch.
India’s food market is currently ranked 6th in the world and it ranks 5th in production, consumption, and export. The Indian food industry is growing at a CAGR of 12% and is estimated to reach INR 53,400 Bn by 2024. Currently, India exports 13% of its overall manufacturing output and will expand exponentially with the increasing demand from the urban population.
Connect with SolutionBuggy and get complete guidance from our subsidy experts. We assess your requirement, prepare a detailed project report and provide support to get government subsidies and loans. The project report is mandatory to apply for any type of loan and subsidies and also it provides detailed roadmap to set up the food industry as it contains important details on the financial, economic, technical, social and implementation aspects of the project. SolutionBuggy handholds you in every step to start and scale up your food processing industry.
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