PM FME Scheme: Transforming Food Processing Businesses in India
New Delhi : India is one of the largest global producers of food grains, fruits, vegetables, and milk, the country holds immense potential to boost its domestic economy and export earnings. Recognising this opportunity, the Government of India launched the PM FME scheme under the Aatmanirbhar Bharat Abhiyan.
Officially known as the Prime Minister Formalisation of Micro Food Processing Enterprises scheme, it aims to revolutionise the micro food processing sector in India. Let us explore how the PM FME scheme is transforming businesses and supporting the industry’s growth through financial assistance and infrastructure development.
Understanding the PM FME Scheme
The PM FME scheme was launched by the Ministry of Food Processing Industries (MoFPI) on 29th June 2020. It is designed to provide financial, technical, and business support to micro food processing units across India. Aimed at formalising unorganised enterprises, the scheme focuses on enhancing competitiveness, upgrading infrastructure, and promoting sustainability in the food processing sector. With a total outlay of ₹10,000 crore, the government intends to implement the scheme over five years (2020-21 to 2024-25).
The scheme provides a significant government subsidy loan for businesses, encouraging micro-food processing enterprises to grow and modernise. By supporting individuals, Self-Help Groups (SHGs), Farmer Producer Organisations (FPOs), and cooperatives, the PM FME scheme brings together stakeholders from across the food processing value chain.
Key Components of the PM FME Scheme
The PM FME scheme offers targeted support in various areas essential for micro food processing enterprises. These include:
1. Credit-Linked Subsidy
Businesses are eligible for a government credit-linked subsidy amounting to 35% of the project cost. The maximum limit for individual units is ₹10 lakh. This enables enterprises to upgrade their equipment and infrastructure effectively.
2. Expense-Sharing Ratio
The funding under the PM FME scheme is shared between the central and State Governments. For general states, the ratio is 60:40. In the North Eastern and Himalayan states, the Centre contributes 90%, while the states provide 10%. For Union Territories without legislatures, the central government bears 100% of the expenditure.
3. Seed Capital for SHGs
The scheme provides ₹40,000 per SHG member as seed capital for working capital requirements and small tool purchases. This ensures that grassroots enterprises have the resources to sustain operations and scale their businesses.
4. Common Infrastructure Support
A key focus is the establishment of common infrastructure facilities such as food processing lines, incubation centres, and value chain support. The government subsidy loan for businesses covers up to 35% of the eligible project cost, with a cap of ₹3 crore.
5. Capacity Building and Training
Through skill development and training programs, micro-food entrepreneurs gain access to modern techniques and entrepreneurial knowledge, ensuring their competitiveness in the evolving market.
6. Branding and Marketing Support
The scheme provides 50% financial assistance for branding and marketing initiatives. Enterprises can use these funds to improve the visibility of their processed food products and expand their reach.
Benefits of the PM FME Scheme for Food Processing Businesses
The PM FME scheme is a transformative initiative for micro-food processing units. Its targeted benefits provide the necessary financial and technical assistance for growth and modernisation. Let us look at some fundamental advantages:
1. Access to Financial Support
The PM FME scheme provides businesses with a substantial credit-linked government subsidy loan. This allows food processing units to upgrade machinery, improve infrastructure, and adopt advanced technologies without excessive financial burden.
2. Seed Capital for SHGs
Self-help groups (SHGs) are vital in empowering small-scale businesses. Under the scheme, SHGs receive ₹40,000 as seed capital, enabling them to meet immediate financial needs and purchase essential tools for operations.
3. Enhanced Marketing and Branding
The scheme helps micro enterprises promote their products in a competitive market by providing a 50% grant for branding and marketing activities. This includes funding for packaging, labelling, and promotional campaigns, which drive product visibility.
4. Skill Development and Training
Training programs under the PM FME scheme focus on improving entrepreneurial skills, food safety standards, and technical expertise. By equipping business owners with essential knowledge, the scheme ensures sustainable and efficient operations.
5. Infrastructure Development
The scheme supports the establishment of common infrastructure, such as processing units, cold storage facilities, and value chain systems. This creates a robust ecosystem for micro food processing enterprises to thrive.
6. Improved Formalisation
The PM FME scheme aims to formalise the unorganised food processing sector by providing regulatory, financial, and structural support. This ensures micro-enterprises have access to formal credit systems, enabling long-term growth.
Impact of the PM FME Scheme on the Food Processing Industry
The PM FME scheme has significantly transformed India’s food processing sector by formalising micro-enterprises and improving credit access. It has enabled small businesses to adopt modern tools, enhance production quality, and boost profitability. The scheme’s support has also promoted rural entrepreneurship, created jobs, increased farmer incomes, and strengthened rural economies, fostering growth on both national and global levels.
How to Avail Support Under the PM FME Scheme
Entrepreneurs and micro food processing businesses can benefit from the PM FME scheme by following a streamlined application process. Here are the steps to avail of the scheme’s benefits:
1. Eligibility Check: Ensure your enterprise qualifies for the scheme, whether as an individual entrepreneur, SHG, FPO, or cooperative.
2. Project Proposal: Submit a project proposal detailing the costs, infrastructure requirements, and proposed use of the credit-linked government subsidy loan for business.
3. Application Submission: Interested applicants can access the application process through the Ministry of Food Processing Industries’ official platform or authorised state websites.
4. Approval Process: Once the application is approved, the subsidy is disbursed through financial institutions as a credit-linked grant.
5. Capacity Building and Support: Entrepreneurs are provided with training and technical assistance to ensure the effective utilisation of funds.
The Future of Food Processing with the PM FME Scheme
The PM FME scheme is revolutionising India’s micro-food processing sector by providing financial assistance, infrastructure development, and capacity-building support. Through government subsidy loans, it empowers small businesses to modernise, adopt advanced technologies, and compete globally.
Entrepreneurs can leverage this opportunity to formalise operations, scale production, and boost profitability, driving growth and innovation in the industry.
For tailored financial solutions to support your business under initiatives like the PM FME scheme, financial providers such as HDFC Bank offer a range of loan services. Reach out today to explore how they can help you achieve your growth goals.
