What is PM FME - Formalization of Micro Food Processing Enterprises Scheme?
On June 29, 2020, the Ministry of Food Processing Industries (MoFPI) announced the PM Formalization of Micro Food Processing Scheme. The PM FME initiative aims to help current micro food processing businesses by providing financial, technical, and business support.
Why is PM FME in the News?
The capacity-building component of the PM FME was started by MoFPI in November 2020. The PM FME scheme's facts will come in handy for all competitive exams, including the IAS Exam. This article will discuss the scheme's goals, importance, and a quick overview of micro food processing businesses in India.
Overview of PM FME Scheme
- The idea behind PM FME scheme is to bring unorganized micro food enterprises into an organized framework given:
- There are roughly 25 lakhs unorganised food processing units.
- These facilities provide to 74 percent of employment in the food processing sector.
- Rural regions account for 66% of all such units.
The government has earmarked Rs. 10000 crores to benefit two lakh micro food processing enterprises. The scheme aims to support:
- Micro Food Entrepreneurs
- FPOs
- SHGs
- Co-operatives
The salient facts about the PM FME for UPSC Prelims are:
- It went live on June 29, 2020.
- It is a component of the Atmanirbhar Bharat Abhiyan (Atmanirbhar Bharat Abhiyan).
- It is a government-sponsored programme. The following is the breakdown of expenditures under the PM FME scheme:
- he central government and state governments are split 60:40, and UTS is in charge of the legislature.
- Central and North Eastern stTates receive 90:10 central help, whereas Himalayan states receive 100 percent central help.
- It will last five years, from 2020 to 2024-25. For the first year, regardless of who incurs the expense, the central government will bear it; thereafter, it will be adjusted in the above-mentioned ratio; and in the following four years, it will be adjusted in the above-mentioned ratio.
- The state will receive money from the federal government based on the approved Project Implementation Plan (PIP).
- The One-District One-Product Approach (ODOP) will be adopted, with input procurement, common services availability, and product marketing included.
- At the national level, the Inter-Ministerial Empowered Committee (IMEC) is constituted. The following is the structure of IMEC under PM FME:
- Chairman – Minister of Food Processing Industries
- Vice-Chairman – Minister of State of Food Processing Industries
- Member-Secretary
- Members
Objectives of PM FME Scheme
The PM Formalization of Micro Food Processing Enterprises Scheme has the following objectives:
- Capacity Building of Micro Food entrepreneurs
- They will be provided with technical knowledge
- Skill training is another component
- Hand holding support services to be given
- Upgrading the technology of current Micro Food Processing Enterprises by giving entrepreneurs more access to funding.
- Support Farmer Producer Organizations (FPOs), Self Help Groups (SHGs), Producers Cooperatives, and Cooperative Societies through their whole value chain to enable microenterprises to access shared services.
- A regulatory framework to put current disorganised micro food processing businesses into a legally compliant system.
- To assist the integration of current firms with organised supply chains, branding and marketing must be improved.
Four Main Components of PM FME
To address the need of the micro food processing sector, the following four components have been encompassed in the scheme:
- Support to individual and groups of micro-enterprises
- Branding and Marketing support
- Support for strengthening of institutions
- Setting up a robust project management framework
What is One-District One-Product (ODOP) Approach?
Product-specific traditional industrial centres will be formed under the PM FME Scheme using the ODOP methodology. It is based on Uttar Pradesh's ODOP initiative, which was established in all 75 of the state's districts to promote indigenous and specialised goods.
What is One-District One-Product?
The following are considered as ODOP under PM FME:
- Perishable agri-produce
- Cereal based product
- Food product widely produced in a district and allied sectors
The important points to remember about ODOP for UPSC Prelims are:
- It will serve as a foundation for the creation of value chains and the alignment of support infrastructure.
- Based on the availability of raw resources and existing clusters, each state will identify one product per district.
- A cluster can be associated with one or more districts.
- Existing businesses that can create items using the ODOP methodology will be given priority.
- Only meals offered under the ODOP programme will be eligible for assistance with common infrastructure, marketing, and branding. (An exception has been made)
- The ODOP method complements the government's existing promotional initiatives.
- Agriculture Export Policy
- National Rurban Mission
Need of FPU under PM – FME
- The unorganised food processing industry, which employs approximately 25 lakh people, accounts for 74 percent of all food processing jobs.
- A variety of obstacles confront the unorganised food processing sector, limiting its performance and expansion. Lack of access to contemporary technology and equipment, training, access to institutional financing, a lack of fundamental understanding of product quality control, and a lack of branding and marketing abilities, to name a few.
Despite its enormous potential, the unorganised food processing industry produces far less in terms of value addition and output as a result of these issues.
Nearly 66 percent of these units are in rural regions, and nearly 80 percent of them are family-owned businesses that support rural people' livelihoods and reduce migration to cities. These businesses are mostly classified as micro-businesses.
Benefits to Food Processing Units under PM-FME
| Beneficiaries/Components under PM-FME | Benefits |
| Existing Unorganized Food Processing Units | A maximum grant of up to Rs.10 lakhs |
| SHGs/FPOs/Cooperatives | Credit linked grant at 35 percent of the project cost for capital expenditure with maximum limit as prescribed |
| Person engaged in Food Processing | Rs.40000 as seed capital provided as working capital |
| Common Infrastructure | Credit linked grant at 35 percent of the project cost with a prescribed maximum limit |
| Marketing and Branding | Upto 50 percent of expenditure with a prescribed maximum limit |
Capacity Building and Research Component of PM FME
- The capacity-building component of the project will be led by the National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and the Indian Institute of Food Processing Technology (IIFPT) at the national level.
- NIFTEM and IIFPT will be supported at the state level by state technological institutes working in the food processing technology industry.
- The terms "training" and "capacity building" will be used interchangeably.
- Entrepreneurship development
- Essential functions of enterprise operations
- Bookkeeping
- Registration
- FSSAI standards
- Udyog Aadhar
- GST Registration
- General hygiene
- Packaging, and
- Marketing
- At the district level, Rural Self Employment Training Institutes (RSETI) along with other institutions will be used to impart training.
Partner Institutions of PM-FME
The PM Formalization of Micro-Food Processing Enterprises Scheme will be assisted by the following institutions:
- TRIFED
- National Scheduled Caste Development Finance Corporation
- National Cooperative Development Corporation (NCDC)
- Small Farmers Agri-Business Consortium
- National Rural Livelihood Mission (Read about NRLM in the linked article)
PM FME Scheme- UPSC Notes:Download PDF Here
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