The Central Government has started the Prime Minister formalization of the Micro Food Enterprise (Prime Minister FME) scheme on 29 June 2020. It is a Rs. 10,000 crore plan and has been started as a part of Atmanabir Bharat Abhiyan. The new PM FME scheme will be implemented for five years by 2023-25. The new PM formalization of the Micro Food Enterprises Scheme will generate an investment of Rs. 35,000 cores. Additionally, about 9 lakh skilled and semi skilled jobs will be generated. About 8 lakh units will benefit through access to information, training, better performance and formalization. Guidelines of the scheme were issued on this occasion.
The objective of this PM FME scheme is to bring new technology in addition to providing affordable loans to help new entrepreneurs to enter new markets. Under the PM FME scheme, micro enterprises will get 35% subsidy on the project cost, with a ceiling of Rs 10 lakh. The beneficiaries will have to contribute at least 10% of the project cost, while the rest will come from the loan. About 200,000 micro-enterprises will be supported by credit-linked subsidies.
PM formalization of Micro Food Enterprises (PM FME) scheme
Providing financial, technical and commercial support for the upgrading of existing micro food processing enterprises, Central Government. Has launched PM FME scheme.
The Ministry of Food Processing Industries (MoFPI) has initiated an all India “Centrally Sponsored Formalization of Micro Food Processing Enterprises (PM FME) Scheme”, which will be implemented over a period of 5 years from 2020-21 to 2023-25. 10,000 crores Rs. The expenditure under the PM FME scheme is shared between the Central and State Governments in the ratio of 60:40, with the North Eastern and Himalayan states in the ratio of 90:10, with the legislature in the ratio of 60:40 and other Union Territories. 100% will be shared by the center.
Credit Linked Capital Subsidy – Upgradation of Individual MFP Units
All existing individual micro food processing units that wish to upgrade their unit can avail credit-linked capital subsidy. This subsidy comes to 35% of the eligible project cost with a maximum limit of Rs. 10 lakhs per unit.
Assistance to FPOs / SHGs / Cooperatives
FPO / SHG / Producer Co-operative Societies will be provided with a credit linked grant of 35% for capital investment along the value chain.
SHG to seed capital
The seed capital is Rs. 40,000 will be provided per SHG member for the purchase of working capital and small equipment.
General infrastructure development
Central government. Will also provide assistance for development of common infrastructure through credit linked grant @ 35%. This includes the use of common processing facility, laboratory, warehouse, cold storage, packaging and incubation center by micro units in clusters through FPO / SHG / Co-operative Societies or state-owned agencies or private enterprise.
One District One Product (ODOP) approach
The new PM FME scheme adopts the One District One Product (ODOP) approach to leverage scale in terms of procurement of inputs, availing common services and marketing of products. The state government will identify the food product for the district keeping in view the existing groups and availability of raw materials. The ODOP product can be a product and grain-based product or a widely produced food product in a district and their associated areas. Examples of such products include mango, potato, litchi, tomato, tapioca, kinnu, bhujia, petha, papad, pickle, millet based products, fisheries, poultry, meat as well as animal feed.
Central government. The ODOP will give priority to districts producing products under the scheme. However, units producing other products will also be supported. There will be general infrastructure for ODOP products and support for branding and marketing. The plan focuses on waste products, small forest products and aspirational districts.
Support for marketing and branding
Government. Will also provide support for marketing and branding to develop brands for micro units and clusters with a 50% grant at the state or regional level, which can benefit a large number of micro units in the cluster.
Special focus on capacity building and research
The PM formalization of the Micro Food Enterprises scheme focuses on capacity building and research. Under NIFTEM and IIFPT, MOFPI will be supported by educational and research institutes as well as state level technical institutes selected by the states. This support is for training units, product development, suitable packaging and machinery for micro units.
All the procedures of the PM FME scheme will be on MIS including application by entrepreneurs, their processing, acceptance of various projects by states and MOFPI, grant release and other funds and project monitoring. Individual entrepreneurs and other stakeholders seeking assistance under this scheme can approach the nodal agencies of their respective states / union territories.
How to apply online for PM FME scheme
All existing food processing units wishing to receive assistance can apply online for the FME portal. District Resource Persons (RPs) engaged for field level support, will provide handholding assistance for preparation of DPR, obtain necessary registration and licenses including FSSAI, industry base and food standards of GST.
Applications for assistance for FPR / SHG / Co-operative Societies, General Infrastructure and Marketing and Branding can be submitted to the State Nodal Agency (SNA) along with a DPR. The SNR will recommend the project for grants and for bank loans.
Government grant. The borrower will be credited to the beneficiary’s account in the bank. If after a period of 3 years from the disbursement of the last installment of the loan, the beneficiary account is still standard and the unit is operational, this amount will be adjusted in the bank account of the beneficiary. No interest will be charged by the bank for the grant amount in the loan. Official PM FME scheme notification can be used on the link – https://mofpi.nic.in/fme/
Eligibility for PM FME scheme
The unorganized food processing sector faces several challenges that limit their performance and growth. These challenges are given below: –
- Lack of access to modern technology and equipment.
- lack of training.
- Difficulty in accessing institutional credit.
- Lack of basic awareness on quality control of products.
- Lack of branding and marketing skills.
With these major challenges, the unorganized food processing sector, despite its huge potential, contributes very little in terms of value addition and production.
The unorganized food processing sector comprises around 25 lakh units contributing 74% employment in the food processing sector. About 66% of these units are located in rural areas and about 80% of those families are enterprise based supporting rural livelihoods and minimizing their migration to urban areas. These units broadly fall under the category of micro enterprises.