Central government has launched Pradhan Mantri Formalisation of Micro Food Enterprises (PM FME) Scheme on 29 June 2020. It is a Rs. 10,000 crore scheme and is launched as a part of the Atmanirbhar Bharat Abhiyan. The new PM FME scheme will be implemented for five years until 2024-25. The new PM Formalisation of Micro Food Enterprises Scheme will generate investment of Rs. 35,000 core. Additionally, around 9 lakh skilled and semi skilled jobs would be generated. Around 8 lakh units would be benefited through access to information, training, better exposure and formalization. The guidelines of the Scheme were released on the occasion.
This PM FME scheme aims to bring in new technology apart from providing affordable credit to help small entrepreneurs penetrate new markets. Under the PM FME scheme, micro enterprises will get 35% subsidy on project cost, with a ceiling of Rs 10 lakh. The beneficiaries will have to contribute at least 10% of the project cost while the balance will come from loans. Nearly 200,000 micro enterprises will get credit-linked subsidy support.
The role of local food processing units is important as the food products manufactured by the rural entrepreneurs in the villages have a long tradition of supplying Indian food products to the local population. The Union govt. is focusing on reducing food wastage, increase farmers income, push for investments in the food processing sector and create employment opportunities.
PM Formalisation of Micro Food Enterprises (PM FME) Scheme
To provide financial, technical and business support for upgradation of existing micro food processing enterprises, central govt. has launched PM FME Scheme.
Basic PM FME Details
Ministry of Food Processing Industries (MoFPI) has launched an all India “Centrally Sponsored PM Formalisation of Micro food processing Enterprises (PM FME) scheme” to be implemented over a period of 5 years from 2020-21 to 2024-25 with an outlay of Rs 10,000 crore. The expenditure under PM FME Scheme would be shared in 60:40 ratio between central and state governments, 90:10 ratio with North Eastern and Himalayan States, 60:40 ratio with UTs with legislature and 100% by Centre for other UTs.
One District One Product (ODOP) Approach
The new PM FME Scheme adopts One District One Product (ODOP) approach to avail benefits of scale in terms of procurement of inputs, availing common services and marketing of products. The state govt’s will 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. 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 central govt. will provide preference to those districts producing products under ODOP Scheme. However, units producing other products would also be supported. Support for common infrastructure and branding & marketing would be for ODOP products. The Scheme also place focus on waste to wealth products, minor forest products and Aspirational Districts.
Credit Linked Capital Subsidy – Upgradation of Individual MFP Units
All the existing Individual micro food processing units who wants to upgrade their unit can avail credit-linked capital subsidy. This subsidy comes at 35% of the eligible project cost with a maximum ceiling of Rs. 10 lakh per unit.
Support to FPOs / SHGs / Cooperatives
FPOs / SHGs / Producer cooperatives would be provided credit linked grant of 35% for capital investment along the value chain.
Seed Capital to SHG
The Seed capital at Rs. 40,000 per SHG member would be provided for working capital and purchase of small tools.
Common Infrastructure Development
The central govt. will also provide support through credit linked grant @ 35% for development of common infrastructure. It includes common processing facility, lab, warehouse, cold storage, packaging and incubation center through FPOs/SHGs/cooperatives or state owned agencies or private enterprise to use by micro units in the cluster.
Support for Marketing and Branding
The govt. will also provide support for marketing & branding to develop brands for micro units and groups with 50% grant at State or regional level which could benefit large number of micro units in clusters.
Special Focus on Capacity Building and Research
PM Formalisation of Micro Food Enterprises Scheme places special focus on capacity building and research. NIFTEM and IIFPT academic and research institutions under MOFPI along with State Level Technical Institutions selected by the States would be provided support. This support is for training of units, product development, appropriate packaging and machinery for micro units.
All the processes of the PM FME Scheme would take place on an MIS including applications by entrepreneurs, their processing, approval of various projects by the States and MoFPI, release of grant and other funds and monitoring of the project. Individual entrepreneurs and other stake holders desirous of availing assistance under the scheme may contact the State Nodal Agencies of their respective states/ UTs regarding the roll out of scheme and contact points at the district level.
Procedure to Apply Online for PM FME Scheme
All the existing food processing units desirous of seeking assistance can apply online for FME portal. The District Resource Persons (RPs) engaged for field level support, would provide handholding support for preparation of DPR, availing bank loan, obtaining necessary registration and licences including food standards of FSSAI, Udyog Aadhar and GST.
Applications for Support for FPOs / SHGs / cooperatives, common infrastructure and marketing & branding could be submitted to the State Nodal Agency (SNA) along with a DPR. The SNR would appraise the project for grant and recommend for bank loan.
Grant by the govt. would be deposited in the account of the beneficiary in the lending bank. If after period of 3 years from disbursement of last tranche of loan, beneficiary account is still standard and the unit is operational, this amount would be adjusted in the bank account of the beneficiary. No interest would be charged by the bank for the grant amount in loan. The official PM FME Scheme notification could be accessed using the link – https://mofpi.nic.in/fme/
Need for PM FME Scheme
The unorganised food processing sector faces a number of challenges which limit their performance and growth. These challenges are given below:-
- Lack of access to modern technology & equipment.
- Lack of Training.
- Difficulty in access to institutional credit.
- Lack of basic awareness on quality control of products.
- Lack of branding & marketing skills.
With these major challenges, the unorganised food processing sector contributes much less in terms of value addition and output despite its huge potential.
The unorganized food processing sector comprises of around 25 lakh units which contributes to 74% 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 rural household and minimizing their migration to urban areas. These units largely fall within the category of micro enterprises.
For more details, visit the official website at https://mofpi.nic.in/