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(The Gist of PIB) Pradhan Mantri Formalisation of Micro food processing Enterprises Scheme

(THE GIST OF PIB) Pradhan Mantri Formalisation of Micro food processing Enterprises Scheme

[July-2021]

Pradhan Mantri Formalisation of Micro food processing Enterprises Scheme

Pradhan Mantri Formalisation of Micro food processing Enterprises (PMFME) Scheme marks the completion of its one year implementation.

Background:

The unorganized food processing sector in the country comprises nearly 25 lakh food processing enterprises which are unorganized and unregistered.
With only 7% of investment in plant & machinery and 3% of outstanding credit, the unorganized enterprises contribute to 74% of employment (a third of which are women), 12% of output and 27% of the value addition in the food processing sector.
The sector faces a number of challenges including the inability of the entrepreneurs to access credit, high cost of institutional credit, lack of access to modern technology and inability to integrate with the food supply chain and compliance with the health and safety standards.
To address these problems, the Government of India approved an all India Centrally Sponsored Scheme “PM Scheme for Formalisation of Micro food processing Enterprises (PM FME)” in 2020.

About the scheme:

The PM Formalisation of Micro Food Processing Enterprises scheme aims to

1. Modernize and enhance the competitiveness of the existing individual micro enterprises and ensure their transition to formal sector
2. To support FPOs/ SHGs/ Cooperatives for delivery of package of services, creation of common infrastructure along the value chain, ensure backward & forward linkages, branding & marketing, etc.

Strengthening this segment will lead to reduction in wastage, creation of off-farm job opportunities and aid in achieving
the overarching Government objective of doubling farmers’ income.
The expenditure under the scheme would be shared in a 60:40 ratio between the Central and State governments and in 90:10 ratio with North Eastern and Himalayan States.

Objectives of the scheme:

Increase in access to finance by micro food processing units.
Increase in revenues of target enterprises.
Enhanced compliance with food quality and safety standards.
Strengthening capacities of support systems.
Transition from the unorganized sector to the formal sector.
Special focus on women entrepreneurs and Aspirational districts.
Encourage Waste to Wealth activities.
Focus on minor forest produce in Tribal Districts.

Salient features:

2,00,000 micro-enterprises are to be assisted with credit linked subsidies.
Scheme will be implemented over a 5 year period from 2020-21 to 2024-25.
Micro food enterprises will be supported with credit linked subsidy @ 35% of the eligible project cost with a ceiling of Rs.10 lakh.
Beneficiary contribution will be minimum 10% and balance through loan.
The scheme also supports SHGs/ FPOs/ Co-operatives in brand building and marketing for the micro-enterprises.
It also envisages linkage of clusters with lead buyers.
The Scheme would be monitored at the Centre by an Inter-Ministerial Empowered Committee (IMEC) under the Chairmanship of Minister, Food Processing Industries.
A third party evaluation and mid-term review mechanism would be built in the programme.

Benefits of the scheme:

Nearly eight lakh micro- enterprises will benefit through access to information, better exposure and formalization.
Credit linked subsidy support and hand-holding will be extended to 2,00,000 micro enterprises for expansion and upgradation.
It will enable them to formalize, grow and become competitive.
The project is likely to generate nine lakh skilled and semi-skilled jobs.
Scheme envisages increased access to credit by existing micro food processing entrepreneurs, women entrepreneurs and entrepreneurs in the Aspirational Districts.
Better integration with organized markets.
Increased access to common services like sorting, grading, processing, packaging, storage etc.