India’s food processing industry is growing exponentially. It plays a crucial role in the development of the economy. Apart from being among the largest producers and exporters of spices in the world, India also has a high share in food grains, fruits, vegetables, and milk production. This has an immense potential to increase export earnings while also boosting domestic growth. To promote the growth of such sectors, the Government of India launched the PM Formalisation of Micro Food Processing Scheme (PM FME) on 29th June, 2020. Continue reading to learn more about the scheme.

What is PM FME scheme?

The PM FME Scheme is a government scheme launched by the Ministry of Food Processing Industries (MoFPI). The purpose of this scheme is to provide financial, technical, and business assistance to micro food processing enterprises so that they can upgrade their new and existing micro food processing unit. It is also meant to bring unorganised micro food enterprises into an organised framework. The scheme is part of India’s self-reliant program – Aatmanirbhar Bharat Abhiyan. MoFPI aims to implement the scheme for a period of five years (2020-21 to 2024-25) with a total outlay amounting to ₹10,000 crore.

Important aspects to know about PM FME scheme

Some of the crucial components associated with the PM FME Scheme are as under:

  • The scheme predominantly focuses on Individual entrepreneur, Proprietorship, partnership, private ltd. Also, supporting groups involved in the food processing sector. Such groups include Farmer Producer Organisations (FPOs), Self-Help Groups (SHGs), Micro Food Processing Entrepreneurs, and Cooperatives along with their entire value chain.

  • The scheme supports food processing enterprises with a credit-linked subsidy of up to 35% of the eligible project’s cost with a maximum ceiling amount of ₹10 lakh per unit.

  • The Central and State governments will share the expenditure under the scheme. The expense-sharing ratio is 60:40. However, the expense-sharing ratio between the Central Government and the North Eastern or Himalayan States is 90:10. In the case of Union Territories, the expense-sharing ratio is 60:40 with the legislature and 100% contributed by the Central government without legislatures.

  • The initial seed capital provided under the scheme is ₹40,000 for SHGs to fulfil working capital requirements and purchase small tools.

Support Benefits of PM FME Scheme

Some of the fundamental benefits of the PM FME scheme for food processing entities are as follows:

  • Marketing & branding support

Under the scheme, you receive a 50% financial grant solely for branding and marketing support. You can use this amount to promote your existing and prospective processed food products.

  • Assistance for capacity building

Capacity building is an integral part of business growth. Hence, it is included as a component under the PM FME scheme. Through capacity building, you receive training on food processing entrepreneurship and development programs.

  • Adequate support for kickstarting operations

The substantial seed capital under the scheme helps you fulfil your working capital needs. You can also buy small tools for your business for up to ₹4 lakhs.

  • Establishment of common infrastructure

You can establish a food processing line along with the value chain, incubation centres, and other common infrastructure components under the scheme. To assist you, the scheme provides a credit-linked subsidy of 35% of the eligible project cost with a maximum limit of ₹3 crore.

Grow your food processing venture with assistance from HDFC Bank

​​​​​​​The PM FME scheme is a beneficial initiative aimed at expanding and elevating your food processing venture as it develops. With HDFC Bank, you can avail of a Term Loan or Working Capital Loan to effectively handle your business expenses. You can also explore Agriculture Credit and other relevant loan options tailored to your specific financial requirements and eligibility. By utilising credit to efficiently manage food processing unit, you can substantially grow your venture.

Seek credit from HDFC Bank at competitive interest rates to expand your food processing project.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Term Loan at the sole discretion of HDFC Bank Limited. Loan disbursal is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.