Last updated: June 15th, 2022 3:11 PM

Revised Guidelines of Scheme for Creation or Expansion of Food Processing Units

The Ministry of Food Processing Industries on 8^th June 2022 has published the revised guidelines of the Scheme for Creation or Expansion of Food Processing Units. The revised guidelines will apply to new applications received against Expression of Interest (EOI). The present article briefs the scheme in detail.

Objectives of the Scheme

The primary objective of the Scheme for Creation or Expansion of Food Processing Units is listed as follows:

• Create new processing & preservation units
• Expansion of existing food processing units
• Increasing the level of food processing
• Increase value addition
• Reducing food loss
• Increase in farmer’s income

Eligible sectors

The following food processing sectors are qualified to get financial assistance under the Scheme for Creation or Expansion of Food Processing Units  :

• Fruits and vegetable processing units
• Milk Processing units.
• Meat, poultry, and fish processing units.
• Ready-to-eat/ready-to-cook food products, Snacks, bakery, breakfast cereals, and other food products, including nutritional health foods
• Grains or pulses, oilseed milling, and processing units based on the latest technology.
• Modern Rice milling
• Other Agri-Horti products include spices, coconut, soybean, mushroom processing, honey processing, etc.
• Fruits or Honey based wines.
• Natural Food flavors, food additives, food extracts and colors, oleoresins, guar gum, cocoa products, etc.
• Manufacturing jaggery from sugarcane and value-added products from jaggery except sugar mills
• Any other sectors that make food products fit for human consumption
• Carbonated drinks/beverages containing fruit juice/pulp

Non- Eligible sectors

• The activities related to the manufacture of aerated water, packaged drinking water, and carbonated drinks will not be qualified for financial assistance under the Scheme.
• Also, the Sugar Mills and farming activities such as dairy farming, poultry farming, mushroom farming, hatcheries, etc., are not eligible under the scheme.

Eligible Processing Activities

The list of processing activities that are covered under the Scheme for Creation or Expansion of Food Processing Units is given below:

• Sorting, grading, washing, peeling, cutting, sizing
• Blanching, crushing, extraction, pulping
• Drying, de-husking, splitting, depending, de-hulling, deseeding, color sorting, pulverization, extrusion, freeze-drying or dehydration, frying, etc
• Pasteurization, homogenization, evaporation, concentration, etc
• Packaging equipment like canning, aseptic packaging, vacuum packaging, bottling, edible packaging, labeling, any other specialized packaging, etc
• Preservation activities such as pickling, chemical preservation, fermentation, or any other specialized facility are required.
• Individual Quick Freezing (IQF), plate freezing, blast freezing, quick spiral freezing, etc
• Controlled temperature transport like coolers, refrigerated, insulated, and ventilated transport
• All other processing, preservation, storage, transport facilities, etc. to increase food products.
• Firefighting equipment and insect repellents

Eligible Entities for Scheme for Creation or Expansion of Food Processing Units

Any organization or an individual; engaged in or that plans to engage in the creation/expansion/modernization of food processing and preservation capacities would be eligible for financial assistance under the Scheme for Creation or Expansion of Food Processing Units. Note: Proposal received from the Scheduled Caste/Scheduled tribe holding at least51% of stake in the entity will be treated as   SC/ST proposals.

Eligible Location of Project

The proposal under the scheme will be considered both inside and Mega Food Parks / Agro-processing clusters and anywhere outside Mega Food Parks / Agro-processing clusters.

• 60% of the fund will be allocated to units inside the MFPs/APCs
• 40% of the fund will be allocated to units inside the MFPs/APCs

Eligibility Criteria

The eligibility criteria to apply for the Scheme for Creation or Expansion of Food Processing Units are explained in detail below:

• The companied net worth of the applicant shall not be less than 1.5times of grants-in-aid sought under the scheme.
• In-principle/term loan sanction letter (inter alia indicating whether the proposal is for expansion /up-gradation or a fresh proposal from the bank is mandatory
• Term loan from the bank for an amount not less than 20% of the total project cost in respect of proposal from General areas.
• In case of proposals from difficult areas or proposals from SC/St or Farmer Producer Organization or Self-Help Groups, the term loan amount shall not be less than 10% of the total project cost.
• A detailed Appraisal not from the bank-specific to the proposal is also mandatory
• Only one application will be accepted from an entity against the expression of interest issued under the scheme
• Infusion of equity of at least 20% of the total project cost for proposal from General areas
• Minimum eligible project cost will be Rs.3 crore for proposal in General areas and Rs.1 Crore in case of a proposal from difficult areas and SC/ST proposal

Note:

• Expansion /up-gradation of the existing facility will not be allowed
• No second proposal from an entity or promoters of an entity who have grants in aid under this scheme will be allowed.
• Entities/promoters of entities that have availed financial assistance under another scheme of the ministry will be eligible for grants-in-aid only after two years from the date of commercial operation of the previous project.

Pattern of Assistance

The assistance provided under the Scheme for Creation or Expansion of Food Processing Units is as follows: Grants-in-aid will be at 35% of eligible project cost for projects in General Areas and 50% of eligible project cost for projects in difficult areas as well as for projects of SC/ST, FPOs, and SGHs subject to a Maximum of Rs.5 Crore. The grants in aid will be released in three equal installments.

Application Fee

The entities applying for financial assistance are required to submit a non-refundable fee of Rs.20, 000 through a demand draft, provided that the non-refundable fee shall be Rs, 15,000 for applications from SC/ST.

Documents Required

The documents required for the Scheme for Creation or Expansion of Food Processing Units is as follows:

• Detailed Project Report (DPR) indicating the financial profile of the entity, domain expertise available with the entity, raw material availability,
• CA/statutory auditor certificate prepared by the stator provision read with condition
• CA/statutory auditor certificate
• In-principle /final term loan sanction from a Bank
• A detailed appraisal note, specific to the scheme from a scheduled commercial bank
• Certificate of incorporation/registration, Memorandum, and Article of Association, Bye-laws of the society / co-operative / Self Help Group, Registered partnership deed, PAN, TAN
• Bio-data /background/experience of the entity relevant to the scheme
• Annual Reports, and audited financial statements of accounts for the last two years
• Details of land along with relevant documents
• Proof of submission of requisite fee
• Quotations from original Equipment Manufacturer  in respect of Plant & Machinery and equipment for the proposed project
• Correspondences for possible forward or backward linkages.

Application Procedure for Scheme for Creation or Expansion of Food Processing Units

The application for the Scheme for Creation or Expansion of Food Processing Units shall be submitted online on the SAMPADA portal of the MoFPI.

• The proposal will be invited by MoFPI through the Expression of Interest that will be valid for 45 days.
• The ministry will constitute a Technical Committee and Project Approval Committee for scrutiny of proposals received against EOI.
• The proposal found prima facie eligible will be evaluated inter-alia based on technical parameters as well as assessment criteria.
• A proposal will have to obtain a minimum of 60 marks to become eligible for consideration of grants-in-aid

Note: The maximum mark will be 45 for an applicant belonging to SC/ST.

• The ministry will issue an approval letter for successful application giving, inter-alia details of the project, total project cost, eligible project cost, approved grants-in-aid, completion schedule of the approved project, and other relevant details.
• Once the acceptance letter and affidavit are provided, the applicant will be called Project Implementing Agency as (PIA).

Click here to get the official document of the Ministry of Food Processing Industries (MOFPI).