Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme ( PMFME )
The Ministry of Food Processing Industries (MoFPI) has launched the PM Formalization of Micro Food Processing Scheme on 29th June 2020.
The PM FME scheme intends to provide financial, technical and business support to upgrade existing micro food processing enterprises.
The PMFME Scheme is currently being implemented in 35 States and Union Territories (UTs).
Overview of PMFME Scheme
The idea behind PM FME scheme is to bring unorganized micro food enterprises into an organized framework given:
- It is a part of India’s self-reliant scheme called Atmanirbhar Bharat Abhiyan.
- It is a centrally sponsored scheme. The share of expenditure under the PM FME scheme is as follows:
- 60:40 between the central government and state governments and UTS with the legislature
- 90:10 between central and North Eastern and Himalayan states
- 100 percent central assistance for UTs without legislatures.
- The central government will provide funds to the state based on the approved Project Implementation Plan (PIP).
- One-District One-Product Approach (ODOP) plan to be implemented to encompass input procurement, common services availability, and product marketing.
- The Inter-Ministerial Empowered Committee (IMEC) is established at the national level. The structure of IMEC under PM FME is:
- Chairman – Minister of Food Processing Industries
- Vice-Chairman – Minister of State of Food Processing Industries
Objectives of PMFME Scheme
The PM Formalization of Micro Food Processing Enterprises Scheme has the following objectives:
- Capacity Building of Micro Food entrepreneurs
- They will be provided with technical knowledge
- Skill training is another component
- Hand holding support services to be given
Four Main Components of PMFME
To address the need of the micro food processing sector, the following four components have been encompassed in the scheme:
- Support to individual and groups of micro-enterprises
- Branding and Marketing support
- Support for strengthening of institutions
- Setting up a robust project management framework
Benefits to Food Processing Units under PMFME
Beneficiaries/Components under PM-FME
Existing Unorganized Food Processing Units
A maximum grant of up to Rs.10 lakhs
Credit linked grant at 35 percent of the project cost for capital expenditure with maximum limit as prescribed
Person engaged in Food Processing
Rs.40000 as seed capital provided as working capital
Credit linked grant at 35 percent of the project cost with a prescribed maximum limit
Marketing and Branding
Upto 50 percent of expenditure with a prescribed maximum limit
Capacity Building and Research Component of PMFME
- At the national level, the National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and the Indian Institute of Food Processing Technology (IIFPT) will spearhead the capacity-building component of the scheme.
- At the state level, NIFTEM and IIFPT will be supported by the state technology institutions present in the food processing technology sector.
- Training and capacity building will encompass:
- Entrepreneurship development
- Essential functions of enterprise operations
- FSSAI standards
- Udyog Aadhar
- GST Registration
- General hygiene
- Packaging, and
The scheme aims to support
- Farmer Producer Organization(FPO)
- Self Help Groups
- Existing Micro Food Processing Entrepreneurs
- New Units, whether for individuals or groups would only be supported for One District One Product (ODOP)
What is One-District One-Product (ODOP) Approach?
Under the ODOP approach, product-specific traditional industrial hubs to be established under the PMFME Scheme. It is inspired by Uttar Pradesh’s ODOP programme launched across its 75 districts to encourage indigenous and specialized products.
The following are considered as ODOP under PMFME
- Perishable agri-produce
- Cereal based product
- Food product widely produced in a district and allied sectors
Partner Institutions of PMFME
The PM Formalization of Micro-Food Processing Enterprises Scheme will be assisted by the following institutions:
- National Scheduled Caste Development Finance Corporation
- National Cooperative Development Corporation (NCDC)
- Small Farmers Agri-Business Consortium
- National Rural Livelihood Mission (Read about NRLM in the linked article)
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- Eligibility criteria for individual micro enterprises under the scheme:
- Existing micro food processing units in operations, with investment not exceeding Rs.1 crore and turnover not exceeding Rs.5 crore.
- The applicant should be above 18 years of age and should possess at least VIII standard pass educational qualification.
- Only one person from one family would be eligible for obtaining financial assistance. The "family" for this purpose would include self, spouse and children
- Eligibility Criteria for Co-operatives/FPOs :
- Eligibility Criteria for Co-operatives/FPOs :
- It should preferably be engaged in processing of ODOP produce.
- It should have a minimum turnover of Rs. 1 crore.
- The cost of the project proposed should not be larger than the present turnover.
- The members should have sufficient knowledge and experience in dealing with the product for a minimum period of 3 years.
- The cooperative/FPO should have sufficient internal resources or sanction from the State Government to meet 10% of the project cost and margin money for working capital.
- Eligibility Criteria for Credit Linked Grant for Capital Investment for SHGs :
- The SHGs should have sufficient funds for meeting 10% of the project cost and 20% margin money for working capital or sanction of the same as grant from the State Government.
- The SHGs members should have a minimum period of 3 years experience in processing of the ODOP product.
- Support for Common Infrastructure, Marketing and Branding:
- Eligibility of a project under this category would be decided based on benefit to farmers and industry at large, viability gap, absence of private investment, critically to value chain, etc. Preference would be given for ODOP products.
Status of Indian Food Industry
- The Indian food and grocery market is the world’s sixth largest, with retail contributing 70% of the sales.
- The Indian food processing industry accounts for 32% of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.
- It contributes around 8.80 and 8.39% of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13% of India’s exports and 6% of total industrial investment.
Status of the food processing sector in Bihar
- The food processing sector has long been seen as a promising route to economic transformation in Bihar. Though the sector has been the target of successive industrial policies from the state government.
- Bihar with a population of 83 million and a population growth of about 2.43 per cent per annum, is a large and growing market for food products. Food is the single largest component of private consumer expenditure, accounting for as much as 59 to 65 percent of the total.
- Food processing industry has enormous potential to boost the rural economy in India through optimizing the utilization of a plethora of local resources available such as perishable agricultural produce and surplus labor to generate employment and income and to reduce wastage of raw food items.
- There are several factors that favor the agriculture sector in Bihar. The state is now uniquely positioned to utilize its rich untapped natural resources such as fertile soils and abundant water.