Agro Processing Cluster Scheme

The Ministry of Food Processing Industries (MOFP) has launched the Agro Processing Cluster Scheme under the guidance of Pradhana Mantri Kisan Sampada Yojana. This scheme aims at the development of modern infrastructure to encourage entrepreneurs for setting up food processing units based on the cluster approach. In this article, we look at the Agro Processing Cluster Scheme in detail. To apply for FSSAI license in India, click here.

Objectives of the Scheme

The primary objectives of the Agro Processing Cluster Scheme are given below:

To build modern infrastructure for setting up food processing units closer to production areas.
To provide complete preservation infrastructure facilities from the farm gate to the consumer.
To create backward and forward linkages by linking groups of farmers or producers to the markets through the well-equipped supply chain.

Salient Features of the Scheme

The salient features of the Agro-processing cluster scheme are as follows:

The food processing units will be set up with an aggregate investment of minimum Rs. 25 crores in the Agro-processing cluster. These units will be set up by the promoters, associates of Project Execution Agency (PEA) and by entrepreneurs.
The modern infrastructure facilities will be developed in the agro-processing cluster for setting up food processing units. This infrastructure facilities developed in the agro-cluster will be as per the requirement of processing units to be set up in the cluster.
Agro-processing clusters will be developed by:
- The promoters who are willing to develop common infrastructure in the existing food processing cluster.
- The promoters who are willing to set up their processing units in the cluster and also allow for the utilization of common infrastructure to other units.
The preference will be given for setting up agro-processing clusters in the areas of horticulture or agriculture production identified by Central or State Government.
The food processing units set up in each Agro-processing cluster should generate employment opportunities for about 500 to 1500 persons.
The land required for establishing the agro-processing cluster would depend upon the business plan of the Project Execution Agency (PEA), which varies from project to project. The minimum of 10 acres of land for the project has to be arranged by the PEA either by purchase or on the lease of at least 50 years.

Components of the Scheme

The scheme will have the following two components are:

Basic enabling infrastructure

The basic enabling infrastructure includes site development such as the development of industrial plots, boundary wall, roads, drainage, water supply, electricity supply including power backup, effluent treatment plant, parking bay, weighbridges, common office space etc. However, the cost of basic enabling infrastructure will not be more than 40 % of the eligible project cost.

Core infrastructure

The core infrastructure contains common facilities based on the needs of the units, which will be set up in agro clusters. The common facilities of capital intensive include sorting and packing facilities, food testing laboratory, cleaning, grading, cold storage, steam generation boilers, dry warehouse, pre-cooling chambers, ripening chambers, IQF, specialized packaging, other common processing facilities, etc.

Pattern of Assistance

The assistance of 35% of the eligible project cost will be provided to the general areas.
The assistance of 50% of the eligible project cost not exceeding Rs.10 crores will be provided to the North Eastern States including Sikkim and Difficult areas including Himalayan States (Himachal Pradesh, Jammu and Kashmir and Uttarakhand), State Notified ITDP areas and Islands.

Note: The eligible project cost will exclude the land cost, pre-operative expenses and margin money for working capital from the total project cost.

Eligible Organizations

The below following are the Project Execution Agency (PEA) eligible for financial assistance under the scheme.

Public and Private Companies
Limited liability Partnerships
Corporate entity
Proprietorship firms
Partnership firms
Joint Ventures
Central and State Public Sector Undertakings
Farmer Producer Organizations (FPOs)
Non Governmental Organizations (NGOs)
Cooperatives
Self-Help Groups (SHGs)

Other Conditions

The net worth of the PEA should not be less than 1.5 times the grant amount.
The PEA should provide 20% of the total project cost as equity in general areas, and for the North East States, 10% of the total project cost to be provided.
PEA should obtain term loan from the Bank or Financial Institution for an amount of less than 20% of the project cost.
Any applicant who has availed financial assistance for a project under this scheme will not be eligible to apply for another project under the same scheme until one year after commencement of the earlier project.
The Agro-processing cluster will be sanctioned in the same district where the Central Processing Centre (CPC) of Mega Food Park (MFP) is situated. The promoters, who have been sanctioned for Mega Food Parks, will be eligible under the scheme after completion of the MFP.

Documents Required

The following documents are to be furnished at the time of applying for the scheme.

Chartered Accountant certificate for actual expenditure on each of the components of the project duly certified by the PEA has to be enclosed.
Statutory Clearances / Approvals for power, water connections, etc., from the Pollution Control Board, has to be submitted.
Item wise and cost wise details of Technical civil works duly certified by authorised Civil Engineer have to be enclosed.
Item wise and cost wise details of Plant and Machinery duly certified by authorised Mechanical Engineer have to be enclosed
Statement of TRA from the Bank or Financial Institution relating to the project.
Proof of setting up food processing units along with copies of licenses issued under the Food Safety and Standards Act has to be enclosed.
Certificate from the concerned bank or financial institution which has sanctioned 100% term loan for the project has to be submitted.
Declaration of project completion and the start of commercial operation, duly certified by the bank.

Online Application Procedure for Agro Processing Cluster

To apply for Agro Processing Cluster scheme, follow the steps which are mentioned below:

Step 1: Please, visit the official portal of Ministry of Food Processing Industries (MOFPI).

Step 2: Now, select the name of the scheme from the list.

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Agro Processing Cluster - Login Page

Step 3: Enter the user name and password to access the particular application form.

Step 4: Fill the application form with the necessary details and submit the form online along with the required documents.

The application form for agro-processing cluster scheme is reproduced below for quick reference.

[pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2019/07/Agri-.pdf" title="Agri"]

Step 5: On successful submission of the completed application on the Ministry’s portal, an acknowledgement number of the application will be sent on registered email IDs to the applicant for future reference.

Note: Subsequently, hard copy has to be sent by the applicant directly to MOFPI within 10 working days after successful uploading of the online application.

Release of Grant

The first instalment of 35% of the total approved grant is released to the PEA after acquiring an expenditure of 35% of the bank term loan and 35% promoters contribution or equity.
The second instalment of 40% of the total approved grant is released after acquiring an expenditure of 75% of the term loan from the bank and 75% of promoters’ contribution or equity.
The final instalment of 25% of the approved is on completion of the project and submission of requisite documents.