The Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) scheme is a Centrally Sponsored Scheme launched under the Aatmanirbhar Bharat Abhiyan to enhance the competitiveness and promote the formalisation of the unorganised segment within the food processing industry.
Administrative and Financial Structure
Nodal Ministry and Governance
The scheme is executed by the Ministry of Food Processing Industries (MoFPI). At the national level, the Inter-Ministerial Empowered Committee (IMEC) oversees the implementation. The IMEC is structured as follows:
- Chairman: Union Minister of Food Processing Industries.
- Vice-Chairman: Minister of State for Food Processing Industries.
Implementation Timeline and Outlay
The scheme was launched on June 29, 2020, with an initial five-year implementation period from FY 2020-21 to FY 2024-25, which has been extended up to September 30, 2026. The total financial outlay allocated for the scheme is ₹10,000 crore, aiming to directly assist two lakh micro food processing units.
Center-State Funding Pattern
The financial expenditure under the scheme follows a structured sharing ratio across different categories of states and Union Territories:
| Category of State / Union Territory | Central Share | State Share |
| General States and UTs with Legislature | 60% | 40% |
| North Eastern and Himalayan States | 90% | 10% |
| Union Territories without Legislature | 100% | 0% |
Core Objectives and Target Sector Background
Sector Rationale
The unorganised food processing sector in India comprises approximately 25 lakh units, which contribute to nearly 74% of total employment within the food processing sector. Notably, around 66% of these unorganised units are located in rural areas. These enterprises frequently face challenges such as lack of access to institutional credit, low awareness of food safety regulations, lack of branding capabilities, and limited technical knowledge.
Specific Objectives
- Formalisation: Integrating unorganised micro-enterprises into a regulatory framework compliant with agencies like the Food Safety and Standards Authority of India (FSSAI).
- Credit Access: Increasing the availability of institutional credit to existing micro-entrepreneurs, Farmer Producer Organizations (FPOs), Self-Help Groups (SHGs), and Cooperatives.
- Supply Chain Integration: Strengthening branding and marketing to successfully integrate micro-units with organized retail supply chains.
- Common Services: Providing access to shared infrastructure like common processing facilities, testing laboratories, storage, and incubation services.
Implementation Strategy: The ODOP Approach
Concept of One District One Product
The PMFME scheme adopts the One District One Product (ODOP) framework to leverage the benefits of scale concerning raw material procurement, common services, and product marketing. States are responsible for identifying unique products for each district, prioritizing perishable commodities, minor forest produce, and traditional local food items.
Eligible ODOP and Non-ODOP Categories
- Existing Units: Existing micro-enterprises manufacturing non-ODOP items are eligible for upgradation support.
- New Units: New setups applying for financial assistance under the scheme are strictly supported only if they align with the designated ODOP of that particular district.
- Special Focus Areas: The framework prioritizes waste-to-wealth products, minor forest produce in tribal areas, and enterprises situated in Aatmanirbhar/Aspirational Districts.
Key Financial Components and Benefits
The scheme offers specific credit-linked subsidies and financial grants tailored to individual entrepreneurs and collective groups:
Support for Individual Units
- Capital Subsidy: Credit-linked capital subsidy at 35% of the eligible project cost, subject to a maximum ceiling of ₹10 lakh per unit.
- Beneficiary Contribution: The applicant must contribute a minimum of 10% of the project cost, with the remaining portion funded via a bank loan.
Support for Group Categories (SHGs, FPOs, Cooperatives)
- Capital Investment: A credit-linked grant of 35% is provided for capital investment along the entire value chain.
- Seed Capital for SHGs: Seed capital of ₹40,000 per SHG member is provided for working capital and the purchase of small tools, with a maximum cap of ₹4 lakh per individual SHG. This is disbursed as a loan through the SHG federation to its members.
- Common Infrastructure Support: A credit-linked capital subsidy of 35% up to a maximum limit of ₹3 crore is granted to FPOs, SHGs, cooperatives, and state government agencies to develop common facilities.
Branding and Marketing Support
- Grant Scale: Financial assistance up to 50% of the total expenditure is provided for branding and marketing activities to FPOs, SHGs, Cooperatives, or a Special Purpose Vehicle (SPV) representing micro-enterprises.
- Eligible Activities: Funding covers market study, product standardization, packaging design, quality control, and retail chain tie-ups. It excludes branding support for individual entrepreneurs.
Common Infrastructure and Capacity Building
Types of Infrastructure Supported
The scheme funds shared infrastructure projects to reduce post-harvest losses and improve processing standards:
- Farm-Gate Facilities: Assaying, sorting, grading, warehousing, and cold storage units.
- Common Processing Facilities: Dedicated processing lines tailored to local ODOP commodities.
- Incubation Centres: Multi-product line processing centers available on a commercial hire basis to micro-units, which also double as practical training centers.
Institutional Capacity Building and Partners
The scheme provides fully funded training in entrepreneurship development, technical skills, and food safety standards. MoFPI partners with premier institutes like the National Institute of Food Technology Entrepreneurship and Management (NIFTEM) to coordinate training modules. Specialized institutional collaborations include:
- TRIFED: For developing value chains around tribal and minor forest products.
- NAFED and NCDC: For executing regional and national branding campaigns and managing logistics networks.
- Union Bank of India: Appointed as the primary Nodal Bank for central subsidy disbursement.
Performance and Key Facts for Prelims
National Progress Trends
- Top Beneficiary State: Bihar has emerged as the top-performing state under the PMFME scheme in terms of total supported units, successfully establishing clusters for local specialties like foxnut (makhana) and litchi.
- Leading Follow-up States: Maharashtra, Uttar Pradesh, Tamil Nadu, and Madhya Pradesh follow Bihar in terms of the number of micro-enterprises supported.
- Inclusivity: Over 40% of the total beneficiaries supported under the credit-linked subsidy scheme are women entrepreneurs.
- Sectoral Concentration: The maximum participation and credit disbursement under the scheme have been recorded in grain and cereal processing, oilseeds processing, and fruits and vegetable preservation units.