Food Processing Minister Harsimrat Kaur Badal said a ‘one district, one product’ cluster approach will be adopted while providing credit-linked subsidy for setting up 2 lakh micro processing units across the country under a ₹10,000 crore central scheme launched on Monday.

The ‘PM Formalization of Micro Food Processing Enterprises (PM-FME)’ scheme aims to take “local brand to global” by addressing the challenges of credit, technology and retail market access, she said.

Strengthening of micro food processing units will lead to reduction in wastage, creation of off-farm job opportunities and help in achieving the overarching government objective of doubling farmers’ income, she added.

This was announced as part of the ₹20 lakh crore package to tackle the economic slump resulting from COVID-19 pandemic.

“It is a historic day. We have launched the scheme. We will adopt a cluster approach of ‘one district, one product (ODOP)’ in terms of procurement of inputs, availing common services and marketing of products. States will have flexibility to decide,” Ms. Badal said after the launch.

The government, in a separate statement, said the scheme would generate a total investment of ₹35,000 crore and create 9 lakh skilled and semi-skilled employment. It will benefit 8 lakh units through access to information, training, better exposure and formalization in the next five years.

Elaborating on the ODOP approach, the minister said states would identify food products for a district keeping in view the existing clusters and availability of raw materials.

The ODOP product could be a perishable product, cereal-based or a food product widely produced in a district and their allied sectors.

The products could be mango, potato, litchi, tomato, tapioca, kinnu, bhujia, petha, papad, pickle, millet-based products, fisheries, poultry, meat as well as animal feed, among others. Preference would be given to those producing ODOP products.

However, units producing other products would also be supported. Support for common infrastructure and branding and marketing would be for ODOP products. The scheme also focusses on waste to wealth products, minor forest products and aspirational districts, she added.

The expenditure under the scheme would be shared by the Centre and states in the ratio of 90:10 in North Eastern and Himalayan states and in the ratio of 60:40 in other states and Union Territories (UTs) with legislature. For other UTs, 100 per cent expenditure would be incurred by the Centre.

Under the scheme, the government said existing individual micro food processing units desirous of upgrading their units can avail credit-linked capital subsidy at 35 per cent of the eligible project cost with a maximum ceiling of ₹10 lakh per unit.

A seed capital of ₹40,000- per Self Help Group (SHG) member would be provided for working capital and purchase of small tools. Farmer producer organisations (FPOs)/ SHGs/ producer cooperatives would be provided a credit linked grant of 35 per cent for capital investment along the value chain.

Support would be provided through credit linked grant at 35 per cent for development of common infrastructure including common processing facility, lab, warehouse, cold storage, packaging and incubation center through FPOs/SHGs/cooperatives or state owned agencies or private enterprise to be used by micro units in the cluster.

Support for marketing and branding would be provided to develop brands for micro units and groups with 50 per cent grant at state or regional level which could benefit large numbers of micro units in clusters.

The scheme would place special focus on capacity building and research. The training would be provided in collaboration with NIFTEM and IIFPT, two academic and research institutions under the Food Processing Ministry along with state-level technical institutions. The training would include product development, appropriate packaging and machinery for micro units, the statement added.

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