Food Processing Industry: Issues and Developments

PM Formalization of Micro Food Processing Enterprises (PM FME) Scheme

Note4Students

From UPSC perspective, the following things are important :

Prelims level : PM-FME scheme

Mains level : Food processing industry and the required reforms

The Ministry for Food Processing Industries (MoFPI) has launched the PM Formalization of Micro Food Processing Enterprises (PM FME) as a part of “Atmanirbhar Bharat Abhiyan”.

Practice question for mains:

Q.What is the PM FME Scheme? Discuss its potential to neutralize various challenges faced by India’s unorganized food industries.

PM FME Scheme

  • It aims to provide financial, technical and business support for upgradation of existing micro food processing enterprises.
  • It is a centrally sponsored scheme to be implemented over a period of five years from 2020-21 to 2024-25 with an outlay of Rs 10,000 crore.
  • The expenditure under the scheme would to be shared in 60:40 ratios between Central and State Governments, in 90:10 ratios with NE and the Himalayan States, 60:40 ratio with UTs with the legislature and 100% by Centre for other UTs.

Features of the scheme

  • The Scheme adopts One District One Product (ODODP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products.
  • The States would identify food product for a district keeping in view the existing clusters and availability of raw material.
  • The ODOP product could be a perishable produce based product or cereal-based products 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.
  • The Scheme also place focus on waste to wealth products, minor forest products and Aspirational Districts.

Credit facility provided

  • Existing 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 Rs.10 lakh per unit.
  • Seed capital @ Rs. 40,000/- per SHG member would be provided for working capital and purchase of small tools.
  • FPOs/ SHGs/ producer cooperatives would be provided a credit-linked grant of 35% for capital investment along the value chain.
  • Support for marketing & branding would be provided to develop brands for micro-units and groups with 50% grant at State or regional level which could benefit a large number of micro-units in clusters.

Why need such a scheme?

  • The unorganized food processing sector comprising nearly 25 lakh units contribute 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 rural household and minimizing their migration to urban areas.

Challenges faced

  • The unorganised food processing sector faces a number of challenges which limit their performance and their growth.
  • These 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.
  • Owing to these challenges; the unorganised food processing sector contributes much less in terms of value addition and output despite its huge potential.
Subscribe
Notify of
1 Comment
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Yogeshwar Misal
Yogeshwar Misal
1 year ago

Thank you