2021-05-27 13:54:48

PRODUCTION LINKED INCENTIVE SCHEME FOR FOOD PROCESSING INDUSTRY (PLISFPI)

INTRODUCTION

The Cabinet at its meeting approved the Scheme Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) to support the development of global food production units in line with India’s natural useful resource endowment and help Indian manufacturers of meals merchandise withinside the worldwide markets with an outlay of Rs. 10900 crore.

BACKGROUND

The food processing industry in India integrates the manufacturing business in all sectors from small to large industries. India is having an aggressive benefit in phrases of aid endowment, massive home marketplace, and scope for selling price brought products. Achieving the full potential of this sector would require Indian companies to improve their competitive strength vice-versa. A global partner in terms of output, production, value addition, and their interaction with the global price chain. The production linked Incentive Scheme for the food processing industry has been formulated based on the Production Linked Incentive Scheme of NITI AAYOG under “AatmaNirbhar Bharat Abhiyaan for enhancing India’s manufacturing capabilities and enhancing exports”.

OBJECTIVES OF THE SCHEME

Support Food Manufacturing entities with stipulated minimum sales and willing to make a minimum stipulated investment for expansion of processing capacity and Branding abroad to incentivize the emergence of strong Indian brands.
To support the creation of global food manufacturing champions.
To strengthen for selecting Indian brand of food products for global visibility and wider acceptance in the international markets.
Increase the employment opportunities of off-farm jobs.
For ensuring remunerative prices of farm produce and higher income to farmers.

SALIENT FEATURES

Central sector scheme with an outlay of Rs. 10900 crore.
The first component relates to incentivizing manufacturing of four major food product segments i.e. ready to cook, ready to eat, (RTS/RTE) foods including Millets based products, processed fruits, and vegetables, marine products, mozzarella cheese.
Innovative or organic products of SMEs including free-range- eggs, poultry meat, egg products in these segments are also covered under the above component.
The selected applicant will be required to undertake investment, as quoted in their application (Subject to the prescribed minimum) in Plant and Machinery in the first two years i.e. 2021-22 and 2022-23.
The investment made in 2020-21 also to be counted for meeting the mandated investment.
The conditions of stipulated minimum sales and mandated investment will not be applicable for entities selected for making innovative and organic products.
The second component relates to support for branding and marketing abroad to incentivize the emergence of strong Indian brands.
For the promotion of the Indian Brand abroad, the scheme envisages grants to the applicant entities for in-store branding, shelf space renting, and marketing.
The scheme will be implemented over a six-year period from 2021-22 to 2023-27.

IMPLEMENTATION TARGETS AND STRATEGIES

The program will be presented to all Indians.
The program will be implemented through the Project Management Agency (PMA).
The PMA will, among other things, be responsible for evaluating applications/proposals, ensuring eligibility for funding, examining claims for eligibility for a grant.
The incentive fee under this program will be paid for a period of six years ending in 2026-27. Incentives paid for one year will have to be paid the following year. The duration of the program will be six years i.e. 2021-22 to 2026-27.
The plan is "limited to the fund", which means the cost will be limited to the authorized amount. The maximum incentive paid per beneficiary will be adjusted prior to the beneficiary's approval period. Regardless of how it is achieved, this limit will not be exceeded.
The implementation of this program will help expand the processing capacity of processed food production of Rs 33,494 crore and create employment opportunities for approximately 2.5 lakh people by 2026-27.

ADMINISTRATIVE AND IMPLEMENTATION MECHANISM

The scheme will be overseen by a Center of Delegated Secretariat led by the Cabinet Secretary
The Ministerial Approval Committee (IMAC) will approve the selection of applicants who will be placed under the scheme, punished, and disbursed funds as incentives.
The Department will prepare an Annual Performance Plan which will include various activities to implement this program.
A third-party evaluation system will be developed and a mid-year review process.

In addition, to increase domestic production and sales, the Government also wants to encourage Indian food products to compete in international markets and will support its branding (In-store branding, shelf space renting in large stores, and marketing). Additional grants, at a maximum of Rs 50 crore, will be provided through marking and marketing services, a 5-year basic plan to be submitted by the applicant. While detailed guidelines are yet to be released, the broad framework as announced in the accreditation order, promises a bright future for the sector. For example, the mechanisms for additional investment in machinery, as stated in the approved scheme, are reasonable and encouraging as reflecting current market trends.

It can also raise hopes if the CAGR also adheres to the practice in recent years. Since then, the food processing sector has seen an average growth rate of 10% in recent years, and the expectation of the CAGR should be in line with the sector's growth trends, in order to make its reach more effective. Reducing the maximum sales of Rs500 will also contribute to the overall success of the program, as it will enable more food processors to apply for benefits.

Other important inputs are expected to be specified in the detailed guidelines for the list of suitable products within certain categories, in particular, that biscuits and confectionery products will be included in the RTE / RTC product component.

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