PM Formalization of Micro Food Processing Enterprises Scheme

• 30 Jun 2020

Why in News

Recently, the Ministry of Food Processing Industries (MoFPI) has launched the PM Formalization of Micro Food Processing Enterprises (PM FME) scheme as a part of ‘Atmanirbhar Bharat Abhiyan’.

• The Scheme is expected to generate a total investment of Rs. 35,000 crore and 9 lakh skilled and semi-skilled employment.

Key Points

• Features:
  
  • One District One Product (ODOP) Approach:
    
    • The States would identify food products for districts keeping in view the existing clusters and availability of raw material.
    • The ODOP could be a perishable produce based or cereal based or a food item widely produced in an area. E.g. mango, potato, pickle, millet based products, fisheries, poultry, etc.
  • Other Focus Areas:
    
    • Waste to wealth products, minor forest products and Aspirational Districts.
    • Capacity building and research: Academic and research institutions under MoFPI along with State Level Technical Institutions would be provided support for training of units, product development, appropriate packaging and machinery for micro units.
  • Financial Support:
    
    • Existing individual micro food processing units desirous of upgrading their units can avail credit-linked capital subsidy at 35% of the eligible project cost with a maximum ceiling of Rs.10 lakh per unit.
    • Support would be provided through credit linked grants at 35% for development of common infrastructure including common processing facility, lab, warehouse, etc. through FPOs/SHGs/cooperatives or state owned agencies or private enterprise.
    • A seed capital (initial funding) of Rs. 40,000- per Self Help Group (SHG) member would be provided for working capital and purchase of small tools.
• Duration: It will be implemented over a period of five years from 2020-21 to 2024-25.
• Funding Details:
  
  • It is a centrally sponsored scheme with an outlay of Rs. 10,000 crore.
  • The expenditure under the scheme would be shared in 60:40 ratio between Central and State Governments, in 90:10 ratio with North Eastern and Himalayan States, 60:40 ratio with UTs with legislature and 100% by Centre for other UTs.
• Need:
  
  • The unorganized food processing sector comprising nearly 25 lakh units contributes to 74% of employment in the food processing sector.
  • Nearly 66% of these units are located in rural areas and about 80% of them are family-based enterprises supporting livelihood of rural households and minimizing their migration to urban areas. These units largely fall within the category of micro enterprises.
  • The unorganised food processing sector faces a number of challenges which limit their performance and their growth. The challenges include lack of access to modern technology & equipment, training, access institutional credit, lack of basic awareness on quality control of products; and lack of branding & marketing skills etc.

Source: PIB