Swayamsiddha Foundation

Mr. Narendra Modi, launched a Pradhan Mantri Formalisation of Micro food Processing Enterprises (PMFME) Scheme, under the ‘Aatmanirbhar Bharat Abhiyan’ and ‘Vocal for Local’ campaigns, to provide technical, financial and business support to micro food processing units in the country.

Objectives of the PMFME Scheme

The scheme provides:

• Credit access to existing micro food processing businesses, Farmer Producer Organisations (FPOs), co-operatives, and Self-Help Groups (SHGs), for technology upgradation
• Assistance to 200,000 existing micro food processing units to transform them into organised units, by strengthening their marketing & branding, and integrating the supply chain with formal units
• Increased access to shared services, such as storage, incubation facilities, and packaging
• Professional and technical support for food processing entrepreneurs
• Proper training and research to individual or group owned food processing enterprises

One District-One Product (ODOP) Approach
The PMFME Scheme has adopted the ODOP approach from the ODOP programme launched by the Uttar Pradesh (UP) government in 2018. Under this approach, the state identifies and selects a food product for the district, that could be a perishable agricultural crop, such as cereals, or a food product that is largely produced in the district. Tomato, mango, potato, litchi, millet-based goods, fishery, poultry, meat, and animal feeds are some of the food products covered by the ODOP. Traditional and innovative products like honey, minor forest products in tribal areas, and herbal items like turmeric are also supported by the scheme.

Under the PMFME scheme, assistance in the form of new micro food processing units and marketing & branding support, is solely given to micro food processing enterprises (owned individually or collectively) following ODOP approach. As of June 2021, there were over 707 districts in 35 states and union territories that had selected ODOP, comprising 137 unique products.

Components of the PMFME Scheme
The scheme primarily has four components to address the needs of Indian food processing sector:

Support for food processing units
Under the scheme, unorganised micro food processing units are eligible for a credit-linked capital grant worth 35% of the project cost, with a maximum ceiling of Rs. 10 lakhs (US$ 13,500) per unit, for upgradation. In addition, members engaged in micro food processing are eligible to receive a seed funding of Rs. 40,000 (US$ 540) for working capital and purchase of small tools. As of June 2021, the State Nodal Agency has approved seed capital for 8,040 members and disbursed funds amounting to Rs. 25.25 crore (US$ 340 million) to State Rural Livelihood Mission (SRLM).

Marketing and branding support
Marketing & branding support is provided to FPOs, co-operatives, SHGs and regional or state-level Special Purpose Vehicles (SPVs) of micro food processing enterprises. The scheme helps in areas such as packaging & branding, quality control, standardisation, and food safety adherence for consumer retail sales.

FPOs, co-operatives and SHGs are entitled to receive support up to Rs. 5 lakhs (US$ 6,750) from the State Nodal Agency for preparing a Detailed Project Report (DPR) for marketing and branding proposals. The scheme only covers 50% of overall marketing & branding expense; however, it does not cover the costs of opening retail outlets.

National Agriculture Co-operatives Marketing Federation of India (NAFED) and the Tribal Co-operative marketing Federation of India (TRIFED) are the two organisations assigned to take up marketing & branding support.

Support for common infrastructure development
Under the scheme, enterprises such as FPOs, co-operations, Self Help Groups, state agencies, and private enterprises receive support to build common infrastructure, including incubation centres, common processing facilities, warehouses, laboratories, and cold storages. Variables, such as the lack of private investment, viability gap, criticality of the value chain, and the overall benefit to the sector, are considered while determining the project’s financial eligibility. Credit-linked grants of up to 35% of the total project cost are available.

Capacity building and research
Training is a key component in the process of transforming unorganised micro food processing units into organised units. Individuals and institutions receiving grants are required to attend training to improve their skills. In addition, other ODOP producers and units that are part of support for marketing & branding in the districts also receive training, even if they are not being supported through the credit-linked grant.

Two national-level food processing technology organisations under MOFPI, the National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and the Indian Institute of Food Processing Technology (IIFPT), oversee capacity building and training. These two organisations’ partner with a state-level technology institution in food processing technology, selected by the state government to conduct capacity building and training.

Official Portal

The Emergency Credit Line Guarantee Scheme (ECLGS) that helped micro, small and medium enterprises get access to additional credit during the outbreak of the COVID-19 pandemic has been extended till March 2023 and its guarantee cover expanded by Rs 50,000 crore to Rs 5 lakh crore, the government said in a press release today. Finance Minister Nirmala Sitharaman while presenting the Union Budget for 2022-23 had announced the extension of the ECLGS till March 2023 and had also said that the additional amount will be exclusively earmarked for the hospitality and related segments to help them recover from the aftermath of the COVID-19 pandemic. As part of the new operational guidelines for ECLGS 3.0, new borrowers from the hospitality, travel, tourism, and civil aviation sectors who have borrowed after March 31, 2021, and up to January 31, 2022, will also now be eligible to avail of emergency credit facilities under ECLGS 3.0. The National Credit Guarantee Trustee Co has also increased the limit for borrowing under the third iteration of the ECLGS. The government has set January 31, 2022, as the reference date for companies to avail of credit as part of the extended ECLGS scheme.

Details of ECLGS Scheme

Source

The government launched a Rs 20,000-crore credit guarantee scheme to support distressed small businesses. Under the Credit Guarantee Scheme for Subordinate Debt (CGSSD), the government will provide a subordinate debt facility to the promoters of micro, small and medium enterprises that are either distressed or classified under non-performing assets. In case of default, creditors giving subordinate debt are paid after primary debt is settled in full. The scheme will provide a guarantee cover worth Rs 20,000 crore to more than two lakh MSMEs, the Ministry of Micro, Small & Medium Enterprises said in an official release. The government said the scheme will help in reviving the economic activity in the country, and in protecting the livelihoods of millions of people.

The scheme will be operationalised through the Credit Guarantee Fund Trust for MSEs (CGTMSE).

This subordinate debt scheme seeks to extend support to the promoters of operational MSMEs that are stressed and have become non-performing assets (NPAs), as on April 30.

The promoters will be provided credit equal to 15 per cent of their stake (equity plus debt) or Rs 75 lakh, whichever is lower.