Why the Centre wants to extend its ₹10,000 cr food-pro­cessing scheme

The min­istry of food pro­cessing indus­tries has sought a five-year exten­sion of its flag­ship ₹10,000 crore Pra­dhan
Man­tri Form­al­iz­a­tion of
Micro Food Pro­cessing Enter­prises (PMFME) scheme. Mint explains the rationale for extend­ing the scheme, launched in fiscal year 2021 (FY21), and how more fin­an­cing could help micro enter­prises.
What is PMFME?
Launched on 29 June 2020 as a cent­rally sponsored scheme, PMFME was allot­ted ₹10,000 crore for FY20-25. The scheme was later exten­ded through FY25-26 and sub­sequently con­tin­ued until 30 Septem­ber 2026.
It provides fin­an­cial, tech­nical and busi­ness assist­ance to entre­pren­eurs for set­ting up new units or upgrad­ing exist­ing ones. The expendit­ure under the scheme is shared between the Centre and states in a 60:40 ratio, while the ratio is 90:10 for the north-east­ern
EXPLAINER
and Him­alayan states. For Union ter­rit­or­ies with legis­latures, the Centre and Union ter­rit­or­ies share costs in a
60:40 ratio, while the Centre bears 100% of the expendit­ure for other Union ter­rit­or­ies.
The scheme provides a 35% credit-linked cap­ital sub­sidy for eli­gible micro food-pro­cessing enter­prises, with sub­sidy sup­port avail­able for projects cost­ing up to ₹30 lakh.
The scheme aims to help small and informal food-pro­cessing busi­nesses become formal, improve their oper­a­tions and gain access to insti­tu­tional fin­ance.
Why does form­al­iz­a­tion mat­ter?
Form­al­iz­a­tion can help small busi­nesses move from informal oper­a­tions to organ­ized struc­tures. For micro food-pro­cessing units, it can also aid invest­ments in bet­ter equip­ment, pack­aging, qual­ity stand­ards and tech­no­logy.
This can improve pro­ductiv­ity and reduce post-har­vest losses. Formal busi­nesses may also find it easier to access organ­ized retail­ers and e-com­merce plat­forms, expand­ing their mar­ket reach.
For the gov­ern­ment, greater form­al­iz­a­tion improves vis­ib­il­ity of the sec­tor, enabling bet­ter tar­get­ing of fin­an­cial assist­ance and infra­struc­ture sup­port.
This comes against the back­drop of the agri­cul­ture and allied sec­tors con­trib­ut­ing around 16% of India’s eco­nomy, with 46% of the work­force depend­ent on agri­cul­ture.
How has it per­formed?
As on 30 June, 200,421 micro food enter­prises have been approved with cred­itlinked sub­sidy of ₹5,954.57 crore and private invest­ment of about ₹14,480.24 crore. More than 40% of the bene­fi­ciar­ies are women entre­pren­eurs, high­light­ing the scheme’s role in pro­mot­ing inclus­ive growth and rural live­li­hoods.
PMFME has emerged as a sig­ni­fic­ant ini­ti­at­ive in strength­en­ing India’s food­pro­cessing sec­tor, par­tic­u­larly bene­fit­ing micro and small food entre­pren­eurs across rural and semi-urban areas.
Source: Pressreader