About the Scheme

• In 2020, the Ministry of Food Processing Industries launched the 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, it was launched as a centrally sponsored scheme aimed at covering two lakh enterprises over five years from 2020-21 to 2024-2025.  
• During the first year of implementation, the total expenditure will be borne by the Central government, but in successive years centre and states will share the expenditure in a 60:40 ratio.

About the scheme

• Under the scheme, capacity building of entrepreneurs will be undertaken through technical knowledge, skill training and hand holding support services. Credit flow to micro food processing industries will be strengthened along with support for their integration with organised supply chains by providing brand and marketing facilitation. 
• Apart from individual entrepreneurs, support will also be extended to Farmer Producer Organizations (FPOs), SHGs, producers co-operatives and co-operative societies engaged in food processing activities.

Potential of the scheme

• The focus will be on women and SC/ST owned units and those in Aspirational districts and a cluster-based approach (e.g. Mango in UP, Tomato in Karnataka, Chilli in Andhra Pradesh, Orange in Maharashtra etc.) will be followed to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products.   
• The scheme provides credit linked grants to enterprises with provision of seed capital to SHGs for meeting working expenses and purchase of small tools. 
• The scheme is set to transform the unorganised micro food processing enterprises for the larger benefit of rural people and rural economy.

Role of Micro food processing industries 

• Micro food processing industries represent the unorganised food processing sector comprising nearly 25 lakh units. Nearly 74 percent of the total employment in the food processing sector comes from these units.  
• Micro food processing enterprises are a major contributor to the rural economy as nearly 66 percent of these units are located in rural areas and about 85 percent of them are  family based enterprises supporting the livelihood of households. 
• These units play a significant role in checking rural-urban migration. 

Why in News?

• The Ministry of Food Processing Industries in association with the Ministry of Housing and Urban Affairs launched a seed capital portal under the PM FME Scheme for seed capital assistance to members of urban Self Help Groups working in the food processing sector in India.
• Urban SHG members which are engaged in Food Processing activities would be sensitized and motivated about the PMFME scheme to avail the benefits of seed capital for purchasing small tools and working capital.
• The scheme aims to empower the self-help groups by:
  • Seed capital support of Rs.40,000 per SHG member;
  • Credit linked subsidy for capital investment up to 35% with a ceiling of Rs. 10 lakh;
  • Credit linked grant support up to 35% for establishing common infrastructure;
  • Capacity building and training support.

Reference:

https://pib.gov.in/PressReleasePage.aspx?PRID=1758658