1

MINISTRY OF FOOD PROCESSING INDUSTRIES

GOVERNMENT OF INDIA

A landmark initiative under Aatmanirbhar Bharat Abhiyan offering golden opportunity

for micro food entrepreneurs, FPOs/ SHGs/ Co-operatives to benefit from the `10000
crore Scheme for Formalization of 2 lakh Micro Food Processing Enterprises

A combined resolve of 130 crore citizens is to make India self-reliant. The way
ahead lies in LOCAL- Local Manufacturing, Local Markets, Local Supply Chain.
Local is not merely a need but a responsibility.
Narendra Modi, Prime Minister

Harsimrat Kaur Badal Rameswar Teli

Minister of Food Processing Industries Minister of State, Food Processing Industries

2
1. Background
1.1 The unorganized food processing sector
comprising nearly 25 lakh units contributes
to 74% of employment in food processing
sector. Nearly 66% of these units are located in
rural areas and about 80% of them are family-
based enterprises supporting livelihood in rural
household and minimizing their migration to
urban areas. These units largely fall with in the
category of micro enterprises.

1.2 These units face a number of challenges which

limit their performance and growth. These 25 Lakh 74%
challenges include lack of access to modern unorganised of
food employment
technology & equipment, training, access to
processing in food
institutional credit, lack of basic awareness on units processing
quality control of products, and lack of branding contribute to sector
& marketing skills, etc. Therefore, the unorganised
food processing sector contributes much less in (iv) Support for transition of existing enterprises
terms of value addition and output despite its into formal framework for registration under
huge potential. regulatory framework and compliance;
2. Objectives (v) Integration with organized supply chain by
2.1 Taking cognizance of the contribution of strengthening branding & marketing;
the unorganized micro food processing 3. Coverage of States/ UTs and Funding
enterprises and the challenges that impede Pattern
their performance, Ministry of Food
3.1 It is an All India Centrally Sponsored Scheme
Processing Industries (MoFPI) has launched
with an outlay of Rs. 10,000 crore for coverage
“PM Formalisation of Micro Food Processing
of 2,00,000 enterprises over 5 years from 2020-21
Enterprises Scheme (PM FME Scheme)” through
to 2024-25. The expenditure under the scheme
a package support and services. The objectives
would be shared in 60:40 ratio between Central
under the scheme, inter alia, include:
and State Governments, in 90:10 ratio with North
(i) Capacity building of entrepreneurs through Eastern and Himalayan States, 60:40 ratio with
technical knowledge, skill training and hand UTs with legislature and 100% by Center for other
holding support services; UTs.
(ii) Increased access to credit to existing 3.2 Expenditure in the first year 2020-21, whether
micro food processing entrepreneurs for incurred by the Centre or the States would be
technology upgradation; borne 100% by the Central Government. The
(iii) Support to Farmer Producer Organizations expenditure made for the first year would be
(FPOs), Self Help Groups (SHGs), Producers adjusted in ratio given above in the funds being
Cooperatives & Cooperative Societies transferred to the States equally in the next four
along their entire value chain to enable years.
microenterprises to avail common services.

3
 MINISTRY OF FOOD PROCESSING INDUSTRIES
GOVERNMENT OF INDIA

Fund Sharing Pattern Between Center & State and their allied sectors. Illustrative list of such
products includes mango, potato, litchi, tomato,
State 10 State
tapioca, kinnu, bhujia, petha, papad, pickle,
40 millet based products, fisheries, poultry, meat as
well as animal feed among others. With respect

90 Center
100 Center to support to existing individual micro units,
preference would be given to those producing
60 Center
under ODOP approach. However, units producing
other products would also be supported. In
case of groups, predominately, those involved
States & Himalayan & UTs without in products under ODOP approach would be
UTs with North Eastern legislature
legislature States supported. Support to groups processing other
products in such districts would only be for those
already processing those products and with
3.3 Funds under the Scheme would be provided
adequate technical, financial and entrepreneurial
to the States based on the approved Project
strength. Support for common infrastructure and
Implementation Plan (PIP).
marketing & branding would only be for products
4. One District-One Product Approach under ODOP approach. In case of support for
4.1 The Scheme will adopt a One District One Product marketing & branding at State or regional level,
(ODOP) approach to reap benefit of scale in terms same product of districts not having that product
of procurement of inputs, availing common as ODOP could also be included.
services and marketing of products. One District
One Product approach would provide framework
for value chain development and alignment
of support infrastructure. There may be more
than one cluster for one product in one district.
A cluster may also extend beyond one district.
The States would identify food product for a
district, keeping in perspective the focus of the
scheme on perishables. The ODOP could be a
perishable agri-produce, cereal based product 4.2 The scheme would also support strengthening
or a food product widely produced in a district of backward and forward linkages, provision of
common facilities, incubation centres, training,
R&D, marketing & branding, provision of which
would primarily be for ODOP products. Further,
this approach would also complement and
benefit from the existing promotional efforts
of the Government such as development of
Agriculture Crop Clusters under the Agriculture
Export Policy, the cluster approaches of the
Ministry of Agriculture and the Ministry of Rural
Development through the National Rurban
Mission.

4
 5. Support to Food Processing Units 6.1.1 Eligibility criteria:

Support to food processing units would be provided (i) Individual / Partnership Firm with ownership
for the following: right of the enterprise;

(i) Credit linked grant at 35% of the project cost (ii) Existing micro food processing units in the
with maximum grant up to Rs 10.0 lakh to survey or verified by the Resource Person;
existing unorganised food processing units for (iii) The applicant should be above 18 years of
upgradation; age and should possess at least VIII standard
(ii) Credit linked grant at 35% of the project cost to pass educational qualification;
SHGs/FPOs/cooperatives for capital expenditure
(iv) Only one person from one family is eligible
with maximum limit as prescribed;
for obtaining financial assistance. The
(iii) Seed capital @ Rs. 40,000/- per member “family” for this purpose would include self,
to those engaged in food processing as a spouse and children.
working capital;
6.1.2 Procedure for applying for upgradation:
(iv) Credit linked grant at 35% of the project cost for
common infrastructure with maximum limit as 6.1.2.1 Applications would be invited at the district
prescribed; level on an ongoing basis for units interested
in availing the benefits under the Scheme.
(v) Support for marketing & branding up to 50%
Existing food processing units desiring to
of the expenditure with maximum limit as
seek assistance under the scheme should
prescribed.
apply on the FME portal. Loan proposals
would be recommended to the Banks after
scrutiny. States would decide the appropriate
level for short listing of the applications to be
recommended to the Banks.
6.1.3 Procedure with Banks for Grant:
6.1.3.1 At the national level, a Nodal bank would
be appointed for disbursement of subsidy
to the banks and liaison with the banks
6. Upgradation of Processing Units
extending loan to the beneficiaries. The bank
6.1 Individual Category: Individual micro food sanctioning the loan would open a mirror
processing units would be extended credit-linked account in the name of the beneficiary. Grant
capital subsidy @35% of the eligible project cost by the Central and State Government in 60:40
for expansion/ technology upgradation with ratio would be deposited in this account of
a maximum ceiling of Rs.10 lakh per unit. The beneficiary in the lending bank branch by
beneficiary contribution should be minimum the State and Central Government. If after a
10% and the balance should be loan from a Bank. period of three years from the disbursement

Approval from
Units Assistance District Level
Sending Recommendation
interested in from District Committee to
the
availing the Resource or
Application State Nodal the banks
benefits Persons
Agency

5
 MINISTRY OF FOOD PROCESSING INDUSTRIES
GOVERNMENT OF INDIA

of last tranche of the loan, the beneficiary 6.3. Seed Capital to SHG:
account is still standard and the unit is
The scheme envisages provision of Seed
operational, this amount would be adjusted
Capital @ Rs. 40,000/- per member of SHG
in the bank account of beneficiary. Release of
engaged in food processing for working capital
grant for groups and common infrastructure
and purchase of small tools. Seed capital as
would also be done in their bank account
grant would be provided at the federation
following the same principle.
level of SHGs which, in turn, will be extended
6.2 Group Category: The Scheme would provide to members as loan through SHG.
support in clusters to groups such as FPOs/
6.3.2 Eligibility criteria:
SHGs/ producer cooperatives along their entire
value chain. SHGs / FPOs / Producer Cooperatives 6.3.2.1 For Seed Capital, only SHG members who are
would be provided the following support:- presently engaged in food processing would
(i) Grant @35% with credit linkage for be eligible. The SHG member has to commit
capital investment with maximum limit as to utilize this amount for working capital
prescribed; as well as purchase of small tools and give a
commitment in this regard to the SHG and
(ii) Training support;
SHG federation.
(iii) Support for marketing and branding for
7. Creation of Common Infrastructure
products under ODOP for developing
common brand. 7.1 FPOs/ SHGs/ Producer Cooperatives /State
6.2.1 Eligibility Criteria: agencies or private enterprises would be
supported for creation of common infrastructure
(i) It should be engaged in processing of ODOP including for common processing facility,
produce for at least three years;
incubation center, laboratory, warehouse, cold
(ii) In case of FPOs / cooperatives, they should storage, etc. Eligibility of a project under this
have minimum turnover of Rs.1 crore and category would be decided based on benefit
the cost of the project proposed should not to farmers and industry at large, viability gap,
be larger than the present turnover; absence of private investment, criticality to value
(iii) The SHG / cooperative / FPO should have chain, etc. Credit linked grant would be available
sufficient internal resources to meet 10% @ 35% with maximum limit as prescribed.
of the project cost and margin money for
working capital.

6
8. Branding and Marketing Support Committee (SLAC) seek approval from MOFPI.
Thereafter, the proposal would be recommended
8.1 Marketing and branding support will be provided
to a Bank for sanction of loan. Same procedure
to FPOs/SHGs/Cooperatives or an SPV of micro
should be followed for applying for support for
food processing enterprises under the scheme
creation of common infrastructure as well.
following the cluster approach for developing
common packaging & branding with provision 9. Capacity Building & Research
for quality control, standardization and adhering 9.1 Training is a critical component in technical
to food safety parameters for consumer retail upgradation and formalization of micro food
sale. processing enterprises. All individuals &
institutions members receiving grant would
undergo training for upgradation of their skills.
In addition, training support would also be
provided to other existing individual units and
groups producing ODOP product in the district,
even if they are not being supported through

8.2 Support for Marketing and Branding requires NIFTEM and

a minimum volume which can be generated IIFPT at
National Level
through active involvement of FPO/ SHG/
Cooperatives to bring large number of Training to
Trainers
producers together. These organisations would
be supported based on DPR prepared by them
indicating essential details of the project. Support
up to Rs.5 lakh would be available from State
Nodal Agency for preparing DPR for proposals for
branding & marketing.
State Level
8.3 Support for branding and marketing would be Technological
limited to 50% of the total expenditure with institutions
maximum limit as prescribed. Proposal from states Training to
or national level institutions or organizations or RPs
partner institutions for branding & marketing will
be supported for vertical products at the national
level. No support would be provided for opening
retail outlets under the scheme.
8.4 Procedure for Applying for Support: Cluster Level
8.4.1 In case of SHGs/FPOs/cooperatives or SPV Training Training
interested in applying for support for branding to to Groups
and marketing under the Scheme, DPR should be Enterprise
prepared and submitted to State Nodal Agency
(SNA). SNA would appraise the proposal and with
recommendation from the State Level Approval

7
 MINISTRY OF FOOD PROCESSING INDUSTRIES
GOVERNMENT OF INDIA

credit linked grant. Training support would also Training Institutes (RSETI) and other institutions
be provided for units that are part of support for at the district level will be utilized for imparting
Marketing & Branding or have potential to join training.
such network.
10. Partner Institutions
9.2 National Institute for Food Technology
10.1 The scheme lays special focus on SCs/STs,
Entrepreneurship and Management (NIFTEM) and
women and aspirational districts and FPOs, SHGs
Indian Institute of Food Processing Technology
and producer cooperatives. TRIFED, National SC
(IIFPT), two national level food processing
Development Finance Corporation, NCDC, Small
technology institutions under MOFPI are given
Farmer Agri-Business Consortium (SFAC) and
responsibility to spearhead capacity building and
National Rural Livelihood Mission under Ministry
research. At the State level, they would partner
of Rural Development have been working in
with a State Level Technology Institution in food
these areas. The above institutions may converge
processing technology selected by the State
their activities by facilitating identification of
Government for conducting capacity building
units / clusters of STs, SCs, cooperatives, FPOs and
and training.
SHGs respectively and feed this into state PIPs.
9.3 Training to individual and group beneficiaries
will focus on entrepreneurship development,
essential functions of enterprise operations,
book keeping, registration, FSSAI standards,
Udyog Aadhar, GST Registration, general
hygiene, packaging, marketing etc. Specific
training designed on the model of ODOP and
the vertical focus products will be undertaken
nearer to the work place of the entrepreneurs.
Existing infrastructure of Rural Self Employment

11. Implementation & Monitoring Mechanism

11.1 The Scheme will have the following management structure at the Central, State and District level for effective
implementation and monitoring of the scheme:

8
11.2 Inter-Ministerial Empowered Committee (IMEC):
IMEC at the Central level, will be chaired by
Minister for Food Processing Industries (MoFPI)
for general superintendence, guidance and
overall direction for implementation of the
scheme, monitoring of progress and reviewing
its performance. IMEC will approve scheme
guidelines, Project Implementation Plan (PIP)
of the State/ UTs under the scheme and various
projects of capital investment by SHGs/FPOs/ 12. Studies & Reports
cooperatives, common infrastructure facilities
12.1 State Governments should undertake the
and proposals of marketing & branding for
following studies:
project size above Rs 10 lakh. A Project Executive
Committee (PEC) will be constituted in MoFPI (i) Base-Line Assessments: A baseline study
for undertaking administrative function and should be undertaken to identifying ODOP.
regular monitoring of the scheme at operational This study should get concluded by 31 July,
level. A National Programme Management Unit 2020 in each State. For this study, Rs. 2.5 –
(NPMU) will be set up to assist MoFPI to provide 10.0 lakh would be provided to the States.
secretarial, managerial and implementation
(ii) State Level Upgradation Plan(SLUP):
support.
Once decision is taken on the ODOP, detailed
11.3 State Level: State Governments would appoint studies should be carried out in the States
a Nodal Department and a State Nodal officer detailing the number of units undertaking
to oversee the implementation of the Scheme. processing of that product in the district,
The Scheme will be implemented by a State farm level of operations, total volume and
Nodal Agency (SNA) assisted by the State PMU. value of produce, technology, farm gate
A State Level Approval Committee chaired by the level processing, storage, warehousing,
Chief Secretary will oversee the implementation etc. This study should be concluded by 31
of the Scheme. The Committee will sanction December, 2020. The amount provided for
expenditure up to Rs 10 lakh on various activities the above study would be Rs. 25.0 – 75.0
related to the implementation of the scheme. lakh to States.
A District Level Committee (DLC) would be
13. Detailed Guidelines
constituted under the Chairmanship of District
Collector. Detailed guidelines of the scheme may be view at
Ministry’s website mofpi.nic.in
11.5 District Resources Persons (DRPs) would be
appointed by SNA for providing handholding
support to the beneficiaries. Handholding
support would be for preparation of DPR, taking
bank loan, support for obtaining necessary
registration and licences including food
standards of FSSAI, Udyog Aadhar, GST etc.

9
MINISTRY OF FOOD PROCESSING INDUSTRIES
GOVERNMENT OF INDIA