Union Cabinet approves scheme worth Rs 10,000 crore for formalisation of Micro Food Processing Enterprises

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The Union Cabinet on Wednesday approved a new scheme for Formalisation of Micro food processing Enterprises (FME) for the unorganized sector with an outlay of Rs.10,000 crore.

The FME scheme will be implemented over a period of five years (2020-21 to 2024-25). Its expenditure will be shared by the central government and the states in 60:40 ratio.

Under this scheme, micro-enterprises will get credit-linked subsidy at 35 per cent of the eligible project cost with a ceiling of Rs.10 lakh, while seed capital will be given to SHGs (at Rs. 4 lakh per SHG) for loan to members for working capital and small tools.

A portal would also be set up wherein the applicants could apply to participate in the scheme.

It is worth noting that there are around 25 lakh unregistered FPEs (Food Processing Enterprises) in India and approximately 66 per cent of them are situated in rural areas.

This sector faces a plethora of challenges including exorbitant cost of institutional credit, lack of access to advanced technology, and inability to integrate with the food supply chain. Strengthening this segment would lead to a reduction in wastage, creation of employment opportunities and achievement of the goal of doubling farmers’ income.