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Pradhan Mantri Formalisation of Micro Food Enterprises (PM FME)

Ministry of Food Processing Industries (MoFPI), in partnership with the States, has launched an all India centrally sponsored "PM Formalisation of Micro Food Processing Enterprises Scheme (PM FME Scheme)" for providing financial, technical and business support for upgradation of existing micro-food processing enterprises with an outlay of Rs. 10,000 crore.

The scheme aims to bring in new technology, apart from affordable credit to help small entrepreneurs penetrate new markets.

The scheme will offers 50% subsidy for storage and transportation to prevent distress sale by farmers.
Centrally Sponsored Scheme. Expenditure to be shared by Government of India and States at 60:40.
Scheme will be implemented over a 5 year period from 2020-21 to 2024-25.
The objectives of the scheme are: ( Support for capital investment for upgradation and formalization with registration for Goods and Services Tax (GST), Food Safety and Standards Authority of India (FSSAI) hygiene standards and Udyog Aadhar; ( Capacity building through skill training, imparting technical knowledge on food safety, standards & hygiene and quality improvement; ( Hand holding support for preparation of detailed project report (DPR), availing bank loan and upgradation; ( Support to Farmer Producer Organizations (FPOs), Self Help Groups (SHGs), producers cooperatives for capital investment, common infrastructure and support branding and marketing.

The Scheme adopts One District One Product (ODOP) approach to reap benefit of scale in terms of procurement of inputs, availing common services and marketing of products. The States would identify food product for a district keeping in view the existing clusters and availability of raw material.
The ODOP could be a perishable agri-produce, cereal based product or a food product widely produced in a district and their allied sectors.
Preference would be given to those producing under ODOP approach. However, units producing other products would also be supported.
Support for common infrastructure and branding & marketing would only be given for products under ODOP approach.

Back ended credit linked subsidy will be provided to 2,00,000 units.
Seed capital will be given to SHGs (@Rs. 4 lakh per SHG) for loan to members for working capital and small tools.
Grant will be provided to FPOs/SHGs for backward/ forward linkages, common infrastructure, packaging, marketing & branding.
Micro enterprises will get credit linked subsidy @ 35% of the eligible project cost with ceiling of Rs.10 lakh. ( Beneficiary contribution will be minimum 10% and balance from loan.

Nearly eight lakh micro- enterprises will benefit through access to information, better exposure and formalization.
Credit linked subsidy support and hand-holding to covered micro enterprises will enable them to formalize, grow and become competitive.
The project is likely to generate nine lakh skilled and semi-skilled jobs.
Scheme envisages increased access to credit by existing micro food processing entrepreneurs, women entrepreneurs and entrepreneurs in the Aspirational Districts.
Increased access to common services like sorting, grading, processing, packaging, storage etc.

There are about 25 lakh unregistered food processing enterprises which constitute 98% of the sector and are unorganized and informal. ( Nearly 66 % of these units are located in rural areas and about 80% of them are family-based enterprises.
This sector faces a number of challenges including the inability to access credit, high cost of institutional credit, lack of access to modern technology, inability to integrate with the food supply chain and compliance with the health &safety standards.
Strengthening this segment will lead to reduction in wastage, creation of off-farm job opportunities and aid in achieving the overarching Government objective of doubling farmers' income.