PM Formalization of Micro Food Processing Enterprises (PMFME) Scheme -- a push for "Vocal for Local" in Food Processing Sector

Food processing sector will get a major boost with PM Formalization of Micro Food Processing Enterprises (PMFME) Scheme. With an aim to bring 25-lakh unregistered micro food processing enterprises under formalized structure, there is a huge potential to make "Vocal for Local" a success in food processing sector.

PM Formalization of Micro Food Processing Enterprises (PMFME) Scheme -- a push for "Vocal for Local" in Food Processing Sector

The Ministry of Food Processing Industries (MoFPI) is implementing a centrally sponsored "PM Formalization of Micro Food Processing Enterprises (PMFME) Scheme" as part of Atmanirbhar Bharat Abhiyan - Vocal for Local Initiative in the food processing sector to provide financial, technical, and business support for setting up or upgrading micro food processing enterprises in the nation.

With a budget of Rs. 10,000 crore, the programme will be in operation from 2020–21 to 2024–25. In order to benefit from scale in terms of input procurement, leveraging shared services, and product marketing, the scheme will predominantly use the One District One Product (ODOP) model. It also offers the structure for establishing a value chain and coordinating the supporting infrastructure.

According to the National Sample Survey Organization's (NSSO) 73rd Round Survey and the Annual Survey of Industries, 2015–16, the number of unregistered/unincorporated food processing businesses in the nation is around 25 lakh. Uttar Pradesh with 3,50,883 and West Bengal with 3,22,590 such Micro Food Processing Enterprises has the highest share.

This huge mass of untapped potential needs to be nurtured by increasing the competitiveness of current and emerging individual micro-enterprises in the unorganised sector of the food processing industry. Formalisation of the industry is required, so the PM Formalization of Micro Food Processing Enterprises (PMFME) programme is intended to solve the difficulties faced by these micro firms and support them for the modernization and upgradation of their businesses.

PM Formalization of Micro Food Processing Enterprises (PMFME) Scheme will provide the following assistances to Micro Food Processing Enterprises:

1. Support for Individual or Group Micro Enterprises: Maximum credit-linked capital subsidy of Rs. 10 lakh per unit, at 35% of the approved project cost. This will help the enterprises to get the required capital, without being overburdened by the interest rates.

2. Seed capital support for SHGs: Rs. 40,000/- per member of a SHG involved in food processing for their working capital and for purchasing small tools (subject to a maximum of Rs. 4 lakh per SHG Federation), will be provided. This will give the initial boost needed to setup or scale up the business.

3. Support for Common Infrastructure: A credit-linked capital subsidy of up to 3 crore rupees at a maximum of 35% will be provided to cooperatives, SHGs, and other government organisations in order to help them establish common infrastructure. Other units and the general public will also be able to hire out a significant portion of the shared infrastructure, and thus will create favourable growth environment for several enterprises.

4. Help in Branding and Marketing: In order to survive in the market and increase the sales of the products, proper branding and marketing techniques is essential. These micro food processing centres cannot afford to spend their limited capital in marketing. As a solution, grants for groups of FPOs, SHGs, cooperatives, or an SPV of micro food processing firms are available to help with their branding and marketing, to the amount of up to 50%.

5. Building capacity: A crucial part of the plan for the technical advancement and formalisation of micro food processing firms is capacity building and training. The Food Safety and Standards Authority of India (FSSAI) standards, general cleanliness, and other statutory compliances are the areas of capacity building that will be prioritised, so their products can compete in the market. Therefore the plan also includes Entrepreneurship Development Skill Training (EDP+), which has been tailored to fit not only the needs of the food processing industry but also product-specific skilling.

6. Handholding Support: District Resource Persons (DRPs) for Micro Food Processing Enterprises, have been assigned to assist small food processing businesses in adhering to FSSAI and other legislative standards, so that if these businesses face any problem in compliance issues, the DRPs can help them solve it promptly.

PM Formalization of Micro Food Processing Enterprises (PMFME) Scheme has targeted the key areas to remove the hurdles for Micro Food Processing Enterprises, so that now they can also compete with the existing big brands in the domestic market and maybe in future scale up to have a significant share in the global market as well.

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