PM FME – Formalisation of Micro Food Processing Enterprises Scheme

The ancient food culture and the combined efforts of the modern food processing units in the nation have allowed India's food processing industry to have a huge manufacturing base and a wide variety of food products. It is said that India is the largest milk-producing country worldwide and the world's largest producer, consumer, and exporter of spices also, the world's second-largest producer of food grains, fruits, and vegetables.


PM FME – Formalisation of Micro Food Processing Enterprises Scheme

PM FME – Formalisation of Micro Food Processing Enterprises Scheme

Also Read: Production Linked Incentive (PLI) Scheme | UPSC IAS IPS IFS

On June 29, 2020, the PM FME programme was introduced in order to boost the nation's food processing industry even further. The programme is a component of the Hon. Prime Minister Shri Narendra Modi's "Vocal for Local" campaign and the Atmanirbhar Bharat Abhiyan.

The scheme aims to support:-

  • Micro Food Entrepreneurs
  • FPOs
  • SHGs
  • Co-operatives

PM FME is a centrally funded sector scheme that seeks to support the nation's small-scale food processing facilities financially, technically, and commercially. The scheme will cost $ 1.3 billion in total, divided over 5 years from 2020–2021 to 2024–2025. The Center and State governments will split the funding under the programme in the following proportions:-

  • For States and UTs with the legislature: 60% by Centre and 40% by State/ UT
  • Himalayan and North Eastern States: 90% by Centre and 10% by State
  • UTs without legislature: 100% by the Centre

Under the programme, credit-linked subsidies will be provided directly to almost 2 lakh micro food manufacturing facilities. Additionally, the sector's institutional architecture and shared infrastructure facilities will receive enough assistance.



  • Micro unit formalisation through GST, Udyog Aadhar, and FSSAI registrations
  • Individual units receive financial support for upgrading their food processing capabilities. Through instruction and technical knowledge, quality is improved and skills are developed.
  • Financial support for the establishment of common infrastructure facilities are provided to producer's cooperatives, Self Help Groups, and Farmer Producer Organizations (FPOs).
  • Support for FPOs, SHGs, and producer cooperatives in branding and marketing
  • Aid and support with obtaining bank loans and creating thorough project reports (DPR)


Schemes Inspiration One District-One Product (ODOP) Approach

The One District One Product (ODOP) Programme of the Uttar Pradesh (UP) government, which aims to establish product-specific traditional industrial centres across 75 districts of UP, served as the model for the PM FME programme. According to this method, the state chooses a food item for the district, which could be a perishable agricultural commodity like grains or an item that is mostly produced in the district. Some of the food items covered by the ODOP are fishery, chicken, meat, potatoes, tomatoes, mangos, litchis, millet-based products, and animal feeds. The programme also supports novel and traditional products including honey, small-scale forest products in tribal communities, and herbal products like turmeric. Therefore, under PM FME, the following are regarded as ODOP:-

  • Agriproducts that perish quickly
  • Cereal-based item
  • Diverse food products are produced in a district and related industries.

The ODOP approach-based micro food businesses would be given special preference. Such units would receive support in the form of shared infrastructure and help with branding and marketing. However, other food processing facilities that are already operational but are not using the ODOP strategy would also receive adequate funding. As of June 2021, ODOP, which consists of 137 unique goods, had been chosen by over 707 districts across 35 states and union territories.

The crucial ODOP facts to keep in mind are:-

  • It will offer a framework for the alignment of support infrastructure and the creation of value chains.
  • Based on the availability of the raw materials and existing clusters, each state will designate one product for each district.
  • A cluster could be a part of one or more districts.
  • Preference is to be given to businesses that already create goods using the ODOP technique.
  • Only those items that are offered under the ODOP programme will be eligible for support for shared infrastructure, marketing, and branding. (An exception is given)

The ODOP strategy enhances the government's current marketing initiatives by:-

  • Agriculture Export Policy
  • National Rurban Mission


PM FME Scheme Components

To meet the needs of the Indian food processing industry, the programme largely consists of four components:-

a) Assistance for food processing facilities

Unorganized micro food processing facilities are eligible for an upgrade grant under the programme that is credit-linked and worth up to Rs. 10 lakhs (US$ 13,500) per unit, or 35% of the project cost. A startup grant of Rs. 40,000 (US$ 540) is also available to members who operate in micro food processing for operating capital and the acquisition of small instruments. As of June 2021, the State Nodal Agency had approved seed money for 8,040 members and given the State Rural Livelihood Mission (SRLM) money totalling Rs. 25.25 crores (US$ 340 million) 

b) Help with branding and marketing

FPOs, cooperatives, SHGs, and regional or state-level Special Purpose Vehicles (SPVs) of micro food processing firms receive assistance with marketing and branding. The programme supports consumer retail sales in areas like packaging and branding, quality control, standardisation, and food safety adherence.

The two organisations tasked with providing marketing and branding help are the Tribal Co-operative Marketing Federation of India (TRIFED) and the National Agriculture Co-operatives Marketing Federation of India (NAFED).

FPOs, co-operatives, and SHGs are eligible to receive assistance from the State Nodal Agency for the preparation of a Detailed Project Report (DPR) for marketing and branding proposals up to Rs. 5 lakhs (US$ 6,750). The programme only covers 50% of the total cost of marketing and branding; it does not, however, cover the price of starting retail locations.

c) Support for the creation of shared infrastructure

The programme provides assistance to businesses like FPOs, cooperatives, Self Help Groups, government agencies, and private businesses to create shared infrastructure, such as incubators, shared processing facilities, warehouses, laboratories, and cold storage facilities. When establishing a project's financial eligibility, factors such as the absence of private investment, the viability gap, the criticality of the value chain, and the overall benefit to the industry are taken into account. Grants with credit terms of up to 35% of the project's overall cost are available.

d) Building capacity and research

The process of converting unorganized micro food processing units into organised units heavily relies on training. Grant recipients must attend training to develop their abilities. This requirement applies to both individuals and organisations. In addition, even if they are not receiving help from the credit-linked grant, additional ODOP producers and units that are a part of the support for marketing & branding in the districts receive training.

The National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and the Indian Institute of Food Processing Technology (IIFPT), two national-level food processing technology organisations under MOFPI, are in charge of capacity building and training. The state government chose a technology institution at the state level to perform capacity building and training, and these two organisations have partnered with it.


Development so far

Union Bank of India was chosen to serve as the PMFME scheme's Nodal Bank in December 2020, while 11 other banks were chosen to serve as the program's official lending partners.

The MOFPI virtually launched the Seed Capital Module on the Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) MIS Portal in September 2021 as part of the PM FME plan. Urban SHGs engaged in micro food processing can use this portal to access the PM FME scheme's seed capital assistance of Rs. 40,000 (US$ 540), per SHG member.

State governments continuously carry out modifications to maximize the advantages of the PMFME programme. Several recent events in different states include:-

  • The Kerala government has disclosed plans to build an online marketplace for the sale of goods produced by small food processing businesses.
  • The Madhya Pradesh government announced a credit outreach initiative for all 52 of its districts on October 24, 2021. In accordance with the programme, all government programmes, including the Pradhan Mantri Mudra Yojna, Stand Up India, and PM FME, will be sanctioned and have loans disbursed to them.
  • The Odisha government launched 30 unique products in January 2021 for 30 districts under the PM FME's ODOP scheme. It will market these products internationally with a focus on micro food processing facilities run by women SHGs.
  • The PM FME scheme would receive a total investment of Rs. 450 crores (US$ 60.75 million) from the Andhra Pradesh (AP) government, which will be distributed over the course of five years to support 10,035 micro food processing units in the state. The AP government announced a credit outreach campaign in October 2021 to distribute and approve loans to various government programmes.


Way ahead

In terms of production, consumption, and exports, the food processing sector is one of India's main economic sectors. Gaps in supply chain infrastructure, lack of access to cutting-edge technology and equipment, and a lack of marketing and branding experience are the main issues facing the food processing industry. However, it is anticipated that these issues will be resolved in the next years thanks to the broad adoption of continuing reforms and business-friendly policies from the federal and state governments to strengthen the nation's unorganised food processing sector.

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