The Union Cabinet on Wednesday approved a Rs 10,900-crore production-linked incentive (PLI) scheme to create “global food manufacturing champions” by boosting Indian brands of food products in international markets. The scheme, which covers ready-to-cook and eat foods, processed fruits and vegetables, marine products and mozzarella cheese, targets Rs 33,494 crore worth of processed food output and with employment to nearly 2.5 lakh persons by 2026-27.
“Innovative” and organic products of small and medium enterprises (SMEs), including free-range eggs, poultry meat and egg products will also be eligible for the scheme. The decision is a “fitting tribute” to farmers who helped grow agricultural output by 3-3.5 per cent in FY21 despite the pandemic, Minister for Consumer Affairs, Food and Public Distribution Piyush Goyal told reporters after the Cabinet meeting.
According to him, the scheme will help raise the processed food sector’s share in India’s total exports basket. The government expects applications from both domestic and foreign players. “Today, India has agri-based exports of about Rs 3 lakh crore and the government has decided it needs to be increased to Rs 6 lakh crore.
“Today’s decision should directly increase the exports by Rs 30,000-35,000 crore but, personally, I believe such (a) scheme kickstarts a process which flows and accelerates, and that India can export Rs 1 lakh crore of processed foods alone,” Goyal added.
Like with the other PLI schemes, the incentives for companies manufacturing the eligible products will be subject to a stipulated minimum investment in plant and machinery as well as incremental sales of the products. The incentives will be paid for six years ending in 2026-27.
“The subsidy will be given on incremental sales. We will issue an EoI by end of April, where industries can respond,” said Food Processing Industries Secretary Pushpa Subrahmanyam. “The requirement for the industry is that they must commit to a minimum increase in sales and commit to a minimum level investment in each segment. If they achieve both, then, for the incremental sales, a percentage of that amount will be given,” she added.
However, this particular PLI scheme has a second component relating to support for branding and marketing to “incentivise emergence of strong Indian brands” abroad. Towards this end, it envisages a grant to applicant entities for in-store branding, shelf space renting and marketing abroad, according to a release by the Cabinet on the decision.
This PLI is “fund-limited”— the cost will be restricted to the approved amount. “The maximum incentive payable to each beneficiary shall be fixed in advance at the time of approval of that beneficiary,” stated the release.
The scheme will be monitored by the Empowered Group of Secretaries chaired by the Cabinet Secretary, while the Food Processing Industries Ministry would approve applicants for the scheme as well as sanction and release of incentives. It will be rolled out on an all-India basis and implemented via a project management agency responsible for appraisal of applications and proposals, verification of eligibility for support, and scrutiny of incentive claims.
The Ministry is expected to prepare an “Annual Action Plan” covering various activities for implementation of the scheme. A third party evaluation and mid-term review mechanism would be built in the programme.
Goyal noted that when the new farm laws were passed, the key issue in the Centre’s mind was to raise farmer incomes and create more paths for farmers to boost their incomes. He said the government was continuously considering how it could give farmers new options to “raise incomes, increase employment opportunities, increase investment in that agriculture sector and to process agricultural products and boost demand for such products” without impacting current sources of income for farmers.
The government should ensure that the scheme is tailor-made to benefit the micro, small and medium enterprises across the country, said Piruz Khambatta, CMD for Rasna. Unlike the mobile phone sector, which only has a few players, food processing is spread across India, he added.
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