PM Formalisation of Micro Food Processing Enterprises Scheme (PM FME)

India's unorganised food-processing sector comprises nearly 25 lakh unregistered, informal enterprises — contributing 74% of employment (a third of it women) but only 12% of output, held back by low productivity, weak food-safety systems, poor branding, and limited access to credit. PM FME is designed to upgrade and formalise these micro units and to tap the potential of groups and cooperatives across the value chain.

Stated Objectives

• •Increase access to credit for existing micro food-processing entrepreneurs, FPOs, SHGs, and cooperatives.
• •Integrate units with the organised supply chain by strengthening branding & marketing.
• •Support the transition of 2,00,000 existing enterprises into the formal framework.
• •Increase access to common services — common processing, laboratories, storage, packaging, marketing, and incubation.
• •Strengthen institutions, research, and training in the food-processing sector.
• •Increase access to professional and technical support for enterprises.

The One District One Product (ODOP) Approach

The scheme adopts an ODOP framework to reap economies of scale in input procurement, common services, and marketing. States identify one focus food product per district — with a bias toward perishables — such as mango, potato, litchi, tomato, tapioca, kinnu, bhujia, petha, papad, pickle, millet-based products, fisheries, poultry, meat, honey, or minor forest / tribal produce (turmeric, amla, etc.).

A. Individual Micro Enterprises (Para 4.2)

• •Existing micro food-processing unit in operation (evidenced by electricity bill / inventory / machines / sales).
• •Enterprise is unincorporated and employs fewer than 10 workers.
• •Preferably engaged in the district's ODOP product (others may also be considered).
• •Applicant holds ownership right; proprietary or partnership firm.
• •Applicant is above 18 years and at least VIII standard pass.
• •Only one person per family (self, spouse, children) is eligible for assistance.
• •Willing to formalise, contribute a minimum 10% of project cost, and obtain a bank loan.
• •Land cost is excluded; a ready-built / leased / rented workshed may be included, with lease rental capped at 3 years.

B. FPOs / Producer Cooperatives (Para 5.2.2)

• •Preferably engaged in processing of ODOP produce.
• •Minimum turnover of ₹1 crore; proposed project cost not larger than present turnover.
• •Members with a minimum 3 years' experience in the product.
• •Sufficient internal resources — or State-Government sanction — to meet 10% of project cost and working-capital margin money.

C. Self Help Groups (SHGs)

• •Seed capital: only SHG members presently engaged in food processing; committed to using the amount for working capital and small tools.
• •Credit-linked capital grant: SHG has own funds for 10% of project cost and 20% working-capital margin (or State grant for the same), with members holding 3 years' ODOP experience.

D. Common Infrastructure (Para 6.2)

Available to FPOs, SHGs, cooperatives, any Government agency, or private enterprises — provided the created infrastructure is also available to other units / the public on a hire basis for a substantial part of capacity. Fundable types:

• •Farm-gate premises for assaying, sorting, grading, warehouse, and cold storage.
• •Common processing facility for ODOP produce.
• •Incubation Centre (one or more product lines, run commercially, usable by smaller units on hire).

E. Branding & Marketing (Para 7.5)

• •Proposal relates to ODOP; minimum product turnover ₹5 crore.
• •Final product sold to the consumer in retail pack.
• •Applicant is an FPO / SHG / cooperative / regional or State-level SPV aggregating many producers.
• •Product and producers scalable to larger levels.

A. Individual Micro Units — Credit-Linked Capital Subsidy

35% of eligible project cost, ceiling ₹10 lakh per unit. Beneficiary contributes a minimum of 10%; the balance is a bank loan.

B. SHG Seed Capital

₹40,000 per SHG member for working capital and purchase of small tools — provided as a grant at the SHG-federation level (SNA / SRLM), which on-lends to members.

C. Group Capital Investment & Common Infrastructure

D. Branding & Marketing

Support limited to 50% of total expenditure, at State / regional level for the ODOP product. Vertical products at the national level may be supported on the same lines (proposal routed to MoFPI).

E. DPR, Handholding & Study Support

Enterprises supported under PM FME are eligible for benefits under the following, subject to each scheme's own guidelines:

Selection Process (Individual Units)

• •Two-pronged identification: Resource Persons (RPs) survey ODOP clusters and identify potential units; applications are also invited at the district level on an ongoing basis, with RP field verification and due diligence.
• •District Level Committee (DLC) studies each RP report, interviews interested applicants, and recommends cases (States may finalise at DLC or SNA level).
• •For recommended cases, RPs help prepare the DPR for the bank loan, submitted with necessary documents for sanction.

RP Due Diligence — Each Unit

Group / Common-Infra Proposals

A DPR (prescribed format) with project cost, manpower, turnover, marketing channel, raw-material sources, estimated P&L, and cash flow goes to the SNA; after SLAC approval it is recommended to MoFPI. Any group grant above ₹10 lakh is sent to MoFPI for approval; on approval the proposal is forwarded to the bank for loan sanction.

• •Nodal Bank: MoFPI appoints a national Nodal Bank to route subsidy to lending banks and liaise with them.
• •Mirror account: the lending bank opens a mirror account in the beneficiary's name and reports the loan sanction to the Nodal Bank.
• •Grant transfer: Centre transfers 60% and State 40% of its share to the Nodal Bank, which sends the combined grant to the lending branch → placed in the mirror account.
• •Disbursement: the lending bank disburses the sanctioned loan to the beneficiary / supplier per normal banking practice.

Adjustment of the Grant

• •If, after 3 years from the last loan tranche, the account is standard and the unit operational, the grant is adjusted into the beneficiary's account.
• •If the account becomes NPA before 3 years, the grant is adjusted by the bank towards repayment.
• •Where the grant is adjusted after 3 years on a standard account, no interest is payable on the loan portion equal to the grant, from the date the bank received the grant.

Additional Credit Benefits

CGTMSE credit-guarantee cover is available on loans under the scheme, and a 2% interest subvention under the Interest Subvention Scheme for MSMEs 2018 applies to the outstanding balance.

Centre-State Sharing

National Level

State Level

District Level

The entire flow of data and approval of proposals takes place on an online MIS / National Portal developed by MoFPI — PIPs, individual loan applications, DPRs and handholding details, forwarding to banks, loan sanctions, payments, and a ledger for each individual and group. Committees at National, State, and District levels monitor progress through dashboards. Specific allocations for SC / ST and NER are made based on population, usable only for those beneficiaries (or groups with >50% SC/ST members).