Government Schemes For Food Processing in India: Of all food markets in the world, India is one of the fastest growing. Its population growth translates into a solid consumer base. India’s abundant and relatively well-populated hinterland provides rainfall, several raw materials, a variety of climate zones, and a growing economy.
The food industry grew an average of 7.3% between 2015 and 2022. This growth is impressive. India is the world’s 5th largest food producer and one of five biggest consumers and exporters in the business.
Oupossesses a competitive advantage due to continuous dominance in spice, poultry, milk, vegetable, and fruit production. The country produced and 11.80 million tonnes of spices and 25% of the world’s milk in FY24.
Key Government Schemes for Entrepreneurs in Food Processing
The Government of India through the Ministry of Food Processing Industries has announced several schemes to assist the entrepreneurs and the startups in the food sector. These schemes aim at enhancing infrastructure, minimizing the wastage, and competing globally in food products. You are a micro entrepreneur, small food business or a mega company, there is a scheme for every one of you.
Pradhan Mantri Kisan SAMPADA Yojana (PMKSY)
PMKSY is concerned with the development of modern food processing and the creation of infrastructure development and robust supply chains from the farm to retail. This scheme helps to reduce the loss of harvest, increases farmers’ income, and encourages entrepreneurs to build competitive food businesses.
Among the most important initiatives is the Mega Food Parks program. So far, 41 parks have been approved, of which 24 are operational. Processing blocks are equipped with integrated processing, cold chain storage, packing, and warehousing. Entrepreneurs are free to set up business units in the park and use the available facilities.
Another segment of the initiative is the Cold Chain Projects, of which 399 are operational. These provide large storage and processing centers for cold and for milk and milk products, along with refrigerated transport. They support startups working with perishable products such as dairy, seafood, frozen foods, and fruits.
The scheme also finances Agro-Processing Clusters which include at least five units each. These clusters create value by bringing together small and medium scale processors, and provide collective facilities at more economical service charges.
Furthermore, 588 food processing units have been given direct assistance for the establishment and operational expansion of business activities.
In order to strengthen the relationship between the producers and the market, PMKSY has approved 61 projects for backward and forward linkages. This scheme is ideal for medium and large scale entrepreneurs, as well as new companies wishing to take on cluster oriented projects with significant infrastructure needs.
Read More: Small and Medium Scale Food Processing Project Report
Production Linked Incentive Scheme for the Food Processing Industry
PLISFPI supports innovation and large scale food manufacturing. Celebrated with an initial outlay of Rs. 10,900 crores, the scheme continues to provide performance linked assistance. It was first introduced in 2021 with a total funding of Rs 10,900 crores and sustains it’s assistance to the food manufacturing industry to this day.
The scheme’s focus is the sales based incentive. Businesses and companies are provided with a 4%-10% incentive on increased sales. If a business is able to go from Rs 100 Crore to Rs 150 Crore, the incentive is provided Rs. 50 crores is earned, the incentive is not provided as a sales incentive.
Additional assistance is provided to SMEs as well as to those companies promoting organic products. For example, organic millet based snack and vegan food makers, as well as other startups, may earn up to an additional 6% incentive.
The scheme is reimbursement of 50% of the total expenses incurred for overseas promotion and marketing for Indian food businesses who seek to expand and grow their business internationally.
PLISMBP focuses on innovation and organic Millet based products under the PLI scheme for Millet based Products which is allocated Rs 800 crores for Millet based biscuits, flour, cereals and ready to eat millet products.
For these products, we expect robust global demand and high interest from innovative Startups. We find this scheme to be tailored and optimal for innovative organic food brands, Export ready Startups and businesses of medium and large scale.
Government Schemes For Food Processing: PM Formalisation of Micro Food Processing Enterprises (PMFME)
The PMFME focuses on the numerous micro-level food processing businesses in India which are, more often than not, neglected and disorganized. The PMFME scheme has set aside Rs 2000 crore and offers direct financial support, training, and seed capital assistance.
A standout feature of the program is the One District One Product (ODOP) program, which aims to identify ‘ODOP’ products in the One Product One District framework for all 713 districts across 35 states and Union Territories.
For instance, ‘odop’ mango products in Uttar Pradesh, ‘odop’ litchis in Bihar, and ‘odop’ spices in Kerala. This enables these entrepreneurs to culturally innovate and develop businesses on these traditional skills and enjoy the benefits of large-scale production (Government Schemes For Food Processing).
Under the scheme, financial grant assistance up to Rs 10 lakh is allocated to each individual micro unit. The scheme also supports the financing of Farmers Production Organizations (FPOs), Self Help Groups (SHGs), and other cooperatives in the form of grant support up to Rs 3 crore for common facility centers, Rs 40 lakh for machinery and other equipment.
In support of women’s empowerment, the program also supports each Self Help Group with Rs 40,000 seed capital. Alongside the available financing, the program offers training on food safety, hygiene, marketing, and online advertising. This program is tailored for women entrepreneurs, farmer associations, and small family-owned food businesses.
Operation Greens
Operation Greens started with the aim of ensuring the stability in the pricing of the perishable crops of Tomato, Onion and Potato (TOP crops). These crops face a lot of price volatility, which can get extreme, and later on, the program was adjusted to include other crops that also face perishability issues.
The scheme commences when the market crashes and both the farmers and consumers needs protection with the use of a trigger price mechanism. It also sponsors the construction of cold storage facilities and the processing and logistics infrastructures for the perishable produce.
The scheme provides transit and storage subsidies for the excess production of food items during the brief periods. The scheme helps the farmers in avoiding distress sales and the consumers enjoy affordable prices throughout the year.
In this context, the scheme highly benefits the new ventures in cold storage, logistics and perishable food processing.
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Government Schemes For Food Processing: Business Opportunities for Startups in Food Processing Industry in India
India’s food processing industry is developing at a fast rate and provides plenty of opportunities for startups. High demand areas can be targeted due to changes in consumer preferences and urbanization, incentives offered by the government, and opportunities for exports. Some of the most critical areas are:
Millet Processing
Millets are termed as superfoods due to their several health benefits, some of which include high fiber content, low glycemic index, and they are gluten free. With the Government of India actively promoting millets through dedicated schemes and the global market showing a demand for it, millet-processing industry has great potential (Government Schemes For Food Processing).
Startups can make certain products such as millet health bars and cookies, breakfast cereals, instant mixes, and ready-to-eat meals, and millet flour. Many countries which promote health-conscious and vegan diets, also offer a great market for millets snacks and for exports.
Government Schemes For Food Processing: Cold Chain & Logistics
Due to inadequate storage and transport facilities, India loses considerable food every year. Refrigerated warehouses, reefer vans, and temperature-controlled supply chains are cold storage facilities and transport which are In high demand by the cold supply chains from dairy, meat, seafood, and produce companies (Government Schemes For Food Processing).
Entrepreneurs can minimize losses after harvest and provide sufficient supply to the market by refrigeration chain systems.
Processing Organic Food
Both in India and abroad, there is a shift towards consumption of chemicals-free and organic foods. Organic produce like fruits, vegetables, dairy, spices, and snacks pay premium prices. Organic juice brands, organic snack lines, and organic spice packaging units are some of the opportunities available to the startups.
In North America, Europe, and the Middle East, the demand for export is high due to the demand for organically certified food. Entrepreneurs also enjoy government-granted certifications and subsidies, due to schemes like PMFME.
Government Schemes For Food Processing: RTE (Ready to Eat) Foods.
The growth of ready-to-eat and convenience foods, such as frozen parathas, samosas, curries, noodles, ready-to-eat mixes, and packaged meal kits, are a direct result of busy urban lifestyles and dual-income families (Government Schemes For Food Processing).
Startups, in particular, have a large target population in the Indian diaspora abroad, as the demand for Indian meals is a lot more convenient than proper home-cooked meals. Technologies such as vacuum packaging, freezing, and shelf-stable processing will make this segment convenient for scaling.
Export-Add Processing
The Indian advantages in spices, ethnic foods, and functional ingredients such as turmeric, ginger and ashwagandha provides an array of entrepreneurial opportunities. Startups are able to set up units for manufacturing and focus on exports for products such as pickles, chutneys, spice blends, ready-to-cook curries, and Ayurvedic health foods.
There is a a significant demand for Indian ethnic and functional foods in countries like the USA, UK, and the Gulf countries. Startups are able to create international brands to promote Indian food culture with the help of branding and marketing support from PLISFPI.
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Food Safety and Testing Laboratories
Increased exportation of food coupled with increased consumer understanding has led to a increased demand to ensure food safety. Startups can set up labs and certify HACCP, ISO, organic and residue testing certifications.
These labs will cater to food exporters and export bound food processors and retailers who need to follow Indian and International food safety laws. The business may be niche, but it is certainly profitable (Government Schemes For Food Processing).
Food Processing Equipment
India has a high level of dependence on imports with regards to food processing machines, packaging systems and cold chain equipment. Startups can manufacture food mixers, dryers, packs, benders, and refrigeration equipment.
There is a high scope to manufacture food processing machines and equipment guided by Make in India, and bolstered by the need for economical equipment. There is also great scope in the development of coupled advanced food machines for Indian firms with technology partners.
Digital Platforms for Food Processing
Startups utilize the technology they have on hand to construct platforms that optimize elements of a supply chain. Digital solutions that provide advanced market analytics, traceability for agricultural products, processing, and logistics, and even automated ecommerce on processed food products, have a huge market demand (Government Schemes For Food Processing).
The supply side of food processing for small and medium enterprises is very poorly served. The gaps in this market are very relevant for the agritech and foodtech domain. This enables opportunities for IT and food processing integrations.
Government Schemes For Food Processing: How NPCS Can Help You
To set up and expand a food processing unit, NPCS helps entrepreneurs every step of the way. Detailed Project Reports (DPRs) which include the stepwise manufacturing processes, finances, machinery required, sourcing of the raw materials, and analyzing the market.
We expertly guide start-ups in applying for Government Schemes for Food Processing, obtaining funding, and project implementation. NPCS has the resources needed to support you in planting the fully grown, profitable food business you have always envisioned.
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Government Schemes For Food Processing: Conclusion
The food processing industry in India has been a source of limitless potential and possibilities for new businesses and entrepreneurs. Government Schemes For Food Processing and the favorable market for these raw materials make this a good sector. Entrepreneurs can use schemes like PMKSY, PLISFPI, PMFME, and Operation Greens to lower their risk and market themselves globally. Now, truly build a business that is sustainable and has growth potential.
Government Schemes For Food Processing: Frequently Asked Questions
Q1. Who provides the MoFPI in food processing, and what is their role?
They define the schemes which provide support on technologies, infrastructure and business growth in the sector of food (Government Schemes For Food Processing).
Q2. Which scheme is suitable for small entrepreneurs?
In our opinion, the PMFME scheme is the best option for small and micro food businesses (Government Schemes For Food Processing).
Q3: In what ways can PLISFPI assist startups?
Additional financial and marketing assistance is available for startups working on innovative and organic products (Government Schemes For Food Processing).
Q4: What is the advantage of setting up Mega Food Parks?
It provides entrepreneurs with pre-established frameworks and integrates cold chain logistics (Government Schemes For Food Processing).
Q5: Which websites are the recipients of the applications for such schemes?
Applications can be submitted on the official websites such as www.mofpi.gov.in, PMFME Portal, and PLISFPI Portal (Government Schemes For Food Processing).
