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PM Formalization of Micro Food Processing Enterprises (PM FME) scheme

PM Formalization of Micro Food Processing Enterprises (PM FME) scheme

Context:

Ministry for Food Processing Industries has launched the PM Formalization of Micro Food Processing Enterprises (PM FME) scheme on 29th June 2020 as a part of “Atmanirbhar Bharat Abhiyan”.

  • There are about 25 lakh (98% ) unregistered food processing enterprises. Nearly 66 % of these enterprises are located in rural areas.

About the Scheme:

Objectives: The main objective is the transition of theses units from the unorganized sector to the formal sector. The scheme also aims to increase access to finance and revenue for food processing enterprises.

Salient features:

  • Centrally Sponsored Scheme: The expenditure would be shared in 
    • 60:40 ratio between central and state.
    • 90:10 ratio with North Eastern and the Himalayan States 
    • 60:40 ratio with UTs with the legislature
    • 100% by Centre for other UTs.
  • Duration: The scheme will be implemented over a period of five years from 2020-21 to 2024-25 with an outlay of Rs 10,000 crore.  2,00,000 micro-enterprises are to be assisted with credit-linked subsidies.
  •  Support for Individual micro-units: Micro units will get credit-linked subsidy @ 35% of the eligible project cost with a ceiling of Rs.10 lakh.
    • The beneficiary contribution will be a minimum of 10% and a balance from the loan.    
  • Support to FPOs/SHGs/Cooperatives: Seed capital to SHGs (@Rs. 4 lakh per SHG) for the loan to members for working capital and small tools.
    • Grant will be provided to FPOs for backward/ forward linkages, common infrastructure, packaging, marketing & branding.
  • Monitoring: The Scheme would be monitored by an Inter-Ministerial Empowered Committee under the Chairmanship of Minister.
    • A State/ UT Level Committee (SLC) chaired by the Chief Secretary will also monitor the scheme at the state level. 
  • Implementation: The States/ UTs will prepare Annual Action Plans covering many activities for implementation of the scheme, which will be approved by the Government.
  •  State/ UT Nodal Department & Agency: The State/ UT Government will notify a Nodal Department and Agency for the implementation of the Scheme.
    • State/ UT Nodal Agency would be responsible for the implementation of the scheme at the State/ UT level.
    • The agency will also take care of the preparation and validation of State/ UT Level Upgradation Plan, Cluster Development Plan, engaging and monitoring the work of resource groups at the district/ regional level, etc.
  • National Portal: A National level portal would be set-up wherein the applicants/ individual enterprise could apply to participate in the Scheme. All the scheme activities would be undertaken on the National portal.

Benefits: 

  • Better integration with organized markets. Increased access to common services like sorting, grading, processing, packaging, storage, etc.
  • The Scheme has the capacity to generate a total investment of Rs 35,000 crore and provide employment to 9 lakh skilled and semi-skilled workers.
  • The scheme also benefits 8 lakh units through access to information, training, better exposure, and formalization. 
  • The scheme also gives increased access to credit by existing micro food processing units, women entrepreneurs, and entrepreneurs in the Aspirational Districts.
  • Credit linked subsidy support and hand-holding will be extended to 2,00,000 micro-enterprises for expansion and upgradation.

Way forward: 
The food processing sector faces different kinds of challenges like the inability to access credit, high cost of institutional credit, lack of advanced technology, inability to integrate with the food supply chain, and compliance with the health & safety standards. Strengthening this sector will lead to a reduction in unemployment, wastage, poverty, etc. The scheme will also aid in achieving the overarching objective of doubling farmers' income.

Source: PIB