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(The Gist of Kurukshetra) Making Local Brand Go Global Formalisation of Micro Food Processing Enterprises

(The Gist of Kurukshetra) Making Local Brand Go Global Formalisation of Micro Food Processing Enterprises
[August-2020]

Making Local Brand Go Global Formalisation of Micro Food Processing Enterprises

Context:

In alignment with Prime Minister’s clarion call to be ‘vocal for local’, Ministry of Food Processing Industries has recently launched a scheme for formalisation of micro food processing enterprises. With an outlay of Rs. 10,000 crore, the scheme aims coverage of two lakh enterprises over five years from 2020-21 to 2024- 2025.
During first year of implementation, the total expenditure will be borne by Central government, but in successive years centre and states will share the expenditure in 60:40 ratio.

Key highlights about the scheme:

Under the scheme, capacity building of entrepreneurs will be undertaken through technical knowledge, skill training and hand holding support services. Credit flow to micro food processing industries will be strengthened along with support for their integration with organised supply chain by providing brand and marketing facilitation. Apart from individual entrepreneurs, support will also be extended to FPOs, SHGs, producers co-operatives and co-operative societies engaged in food processing activities.
Micro food processing industries represent the unorganised food processing sector comprising nearly 25 lakh units. Nearly 74 percent of the total employment in the food processing sector comes from these units. Micro food processing enterprises are a major contributor to the rural economy as nearly 66 percent of these units are located in rural areas and about 85 percent of them are family based enterprises supporting the livelihood of households.
These units play a significant role in checking rural-urban migration. But, these units face a number of challenges that limit their performance and development. Lack of access to modern technology, training, easy credits etc. increase the cost of production and limit their profits. The scheme of formalisation addresses these challenges in an effective way to make them more productive, profitable and sustainable.
As per guidelines, the scheme will adopt a cluster approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products. ‘One district, one product’ approach initiated in some states will be a guiding force for value chain development and alignment of support infrastructure. Perishable produce-based product, cereal based product or a food product widely produced in a district will be identified for support and other benefits.
The scheme provides for credit linked grants to enterprises with provision of seed capital to SHGs for meeting working expenses and purchase of small tools. The scheme is set to transform the unorganised micro food processing enterprises for the larger benefit of rural people and rural economy.