Government launches ‘PM Formalization of Micro Food Processing Enterprises’ scheme

Scheme to generate a total investment of Rs 35,000 crore

PM FME scheme to benefit 8 lakh units through access to information, training, better exposure and formalization

Minister for Food Processing Industries Harsimrat Kaur Badal launched the ‘PM Formalization of Micro Food Processing Enterprises (PM FME)’ scheme on 29 June 2020 as a part of “Atmanirbhar Bharat Abhiyan.” Union Minister said that the scheme would generate a total investment of Rs 35,000 crore and generate 9 lakh skilled and semi-skilled employment and benefit 8 lakh units through access to information, training, better exposure, and formalization. The guidelines of the scheme were released on occasion.

Highlighting the role of local food processing units, union minister said that food products manufactured by the rural entrepreneurs in the villages have a long tradition of supplying Indian food products to the local population. The prime minister has amply emphasized the importance of local units and their role in his address to the nation on 12 May 2020.

She says, “In times of crisis, this local has fulfilled our demand, this local has saved us. Local is not just the need. It is our responsibility also. Time has taught us that we must make the local as a mantra of our life. The global brands you feel today were sometimes also very local like this. But when people started using them, started promoting them, branding them, proud of them, they became global from local products. Therefore, from today every Indian has to become vocal for their local, not only to buy local products but also to promote them proudly.”

Speaking about the challenges faced by the food processing sector, Badal said that the unorganized food processing sector faces several challenges that limit their performance and growth. She added that these challenges include lack of access to modern technology and equipment, training, access institutional credit, lack of basic awareness on quality control of products, and lack of branding and marketing skills. She shared that owing to these challenges, the unorganized food processing sector contributes much less in terms of value addition and output despite its huge potential.

According to her, the unorganized food processing sector comprising nearly 25 lakh units contributes to 74% of employment in the food processing sector. Nearly 66% of these units are located in rural areas, and about 80% of them are family-based enterprises supporting livelihood rural households and minimizing their migration to urban areas. These units largely fall within the category of micro-enterprises.

PM Formalization of Micro food processing Enterprises (PM FME) scheme

To provide financial, technical and business support for upgrading existing micro food processing enterprises centrally sponsored PM Formalization of Micro food processing Enterprises (PM FME) scheme will be implemented over five years from 2020-21 to 2024-25 with an outlay of Rs 10,000 crore. The expenditure under the scheme would be shared in 60:40 ratio between central and state governments, in a 90:10 ratio with North Eastern and the Himalayan States, 60:40 ratio with UTs with the legislature, and 100% by center for other UTs.

  • The scheme adopts one district one product (ODODP) approach to reap the benefit of scale in terms of procurement of inputs, availing basic services, and marketing of products. The ODOP product could be a perishable produce-based product or cereal-based product or a food product widely produced in a district and its allied sectors. An illustrative list of such products includes mango, potato, litchi, tomato, tapioca, kinnu, bhujia, petha, papad, pickle, millet-based products, fisheries, poultry, meat as well as animal feed among others.
  • Existing Individual micro food processing units desirous of upgrading their unit can avail credit-linked capital subsidy @35% of the eligible project cost with a maximum ceiling of Rs 10 lakh per unit.
  • The scheme places a special focus on capacity building and research. NIFTEM and IIFPT, two academic and research institutions under MOFPI and state-level technical institutions selected by the states, would be provided support for training units, product development, appropriate packaging, and machinery for micro-units.

All the scheme’s processes would take place on an MIS, including applications by entrepreneurs, their processing, approval of various projects by the States and MoFPI, the release of grant and other funds, and monitoring of the project. Individual entrepreneurs and other stakeholders desirous of assistance under the scheme may contact the State Nodal Agencies of their respective states or UTs regarding the rollout of scheme and contact points at the district level.

Free online skilling program for food processors

Badal informed that MoFPI is planning to start free online skilling classes for SC and ST entrepreneurs, in collaboration with NIFTEM and FICSI, for providing eLearning. MoFPI has identified 41 courses and job roles like on baking, making jam, pickles, and others for which access to digital content would be made available. Once certified, these entrepreneurs would have better employment potential, or they can start their venture. She further informed that the participant handbooks and the facilitator’s guide created by the Ministry, through NIFTEM, will be converted into eLearning format with suitable digital content and online assessment service. These will be made available in English, Hindi and other regional languages by FICSI on web and android based app on mobiles.


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