Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme | 18 Oct 2025

Source: ET

Why in News? 

The Union Finance Minister of India announced the release of ₹3,791.1 crore to States and Union Territories under the Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PM-FME) Scheme. 

What is the PM-FME Scheme? 

  • About: PM-FME aims to strengthen micro food enterprises, promote ‘Vocal for Local’ products, and integrate rural entrepreneurs into the formal economy. 
    • Launched on 29 June 2020, the PM-FME Scheme is a Centrally Sponsored Scheme under the Atmanirbhar Bharat Abhiyan. 
    • It was launched for a duration of 2020–21 to 2025–26 with a total outlay  of ₹10,000 crore. 
  • Salient Features of the Scheme:  
    • Common Infrastructure: FPOs, Cooperatives, SHGs, and Government agencies setting up food processing units with shared facilities are eligible for a 35% credit-linked subsidy, up to ₹3 crore. 
    • Credit-Linked Subsidy: Individuals, FPOs, NGOs, Cooperatives, SHGs, and Pvt. Ltd. firms can avail a 35% subsidy, up to ₹10 lakh per unit, for upgrading or setting up new units. 
    • One District One Product (ODOP): Implements an ODOP approach to promote scale, value chain development, and marketing support- covering 713 districts in 35 States/UTs with 137 unique products. 
    • Seed Capital for Self Help Groups: Provides ₹40,000 per member, up to ₹4 lakh per SHG, as seed capital for working capital and small tools, disbursed through SHG federations. 
    • Marketing & Branding: Offers a 50% grant for branding and marketing initiatives by FPOs, SHGs, Cooperatives, or SPVs to promote processed food products. 
    • Capacity Building: Provides training under the Food Processing Entrepreneurship Development Programme to enhance technical and business skills of beneficiaries. 
  • Cost Sharing Pattern: 60:40 between Centre and States, 90:10 for North Eastern and Himalayan States, 60:40 for UTs with legislature, and 100% Central funding for other UTs. 

What are the Other Key Government Initiatives Related to the Food Processing Sector? 

  • Pradhan Mantri Kisan Sampada Yojana 
  • Production Linked Incentive (PLI) Scheme for the food processing industry. 
  • Priority Sector Lending (PSL): Food and agro-processing units, along with cold chain infrastructure, are now recognized as priority sectors. 
  • 100% FDI under Automatic Route: The food processing sector can receive full foreign direct investment through the automatic approval route. 
  • Special Food Processing Fund: Establishment of a ₹2,000 crore fund with the National Bank for Agriculture and Rural Development (NABARD). 
  • The Mega Food Park Scheme provides integrated infrastructure for food processing, offering up to Rs 50 crore per project. 

Frequently Asked Questions

1. What is the PM-FME Scheme?
A scheme launched in 2020 to formalize micro food enterprises, promote local products, enhance rural income, and integrate entrepreneurs into the formal economy.

2. What support does PM-FME provide?
Provides capital subsidies, grants, seed funding, training, branding, marketing, common infrastructure, and R&D support to individual units, FPOs, cooperatives, and SHGs.

3. What is the ODOP approach?
Each district focuses on one key product, promoting cluster-based processing, storage, branding, market linkages, and aligning with India’s Agriculture Export Policy.

4. What challenges does the sector face?
Infrastructure gaps, limited finance access, and weak quality standards hinder growth, export potential, and competitiveness of India’s food processing industry. 

UPSC Civil Services Examination Previous Year Question (PYQ) 

Prelims 

Q. With what purpose is the Government of India promoting the concept of “Mega Food Parks”? (2011)

  1. To provide good infrastructure facilities for the food processing industry. 
  2. To increase the processing of perishable items and reduce wastage. 
  3. To provide emerging and eco-friendly food processing technologies to entrepreneurs. 

Select the correct answer using the codes given below: 

(a) 1 only 

(b) 1 and 2 only 

(c) 2 and 3 only 

(d) 1, 2 and 3 

Ans: (b)