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.
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