Recently on 31st March 2021, India approved the ₹10,900 crore Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) scheme. The scheme aims to help farmers and reduce crop wastage. Duration of PLISFPI will be six years i.e. from 2021-22 to 2026-27. According to the government, it will attract domestic as well as global investments in the food processing sector and will also create employment for 2.5 lakh people.The scheme will also help in expanding the food processing capacity of the country as it is expected to generate processed food output worth ₹33,494 crore by 2026-27. This will provide big boost to Indian food product companies in the international market.
What is PLI scheme
PLI or Production Linked Incentive Scheme was launched by the central government this year in march to cut down import bills by boosting domestic production. The objective of this scheme is to aid companies with incentives on incremental sales from products manufactured in domestic units. It will not only attract foreign companies for setting shop in India but will also encourage domestic companies to set up or expand existing manufacturing units. Till now, only mobile equipment, pharmaceutical ingredients and medical devices companies were getting benefitted from this scheme. After the launch of PLISFPI, the food processing sector will also get the same benefits.
Current status of food processing industry in India
Food processing sector of India is a high profit sector due to its huge potential for value addition. The Indian food market is the sixth largest market in the world. It’s retail market contributes for 70 per cent of the total sales. The potential is even more in case of the food processing industry. Food processing industry contributes for 32 percent of the country’s total food market. Before this scheme, the cabinet also approved Pradhan Mantri Kisan Sampada Yojna (PMKSY) in may 2017 with a total allocation of Rs.6000 crore. Some of its components are – Mega Food Parks (MFP), creation of Backward and Forward Linkages (BFL), Food Safety and Quality Assurance Infrastructure etc.
Implementation of the Scheme
The scheme will be implemented all over India and will be done through a Project Management Agency (PMA). The agency would be responsible for appraisal of applications/proposals, scrutiny of claims eligible for disbursement of incentive and verification of eligibility for support. The scheme is “fund-limited”, i.e. cost shall be restricted to the approved amount. The Scheme would be monitored by the Empowered Group of Secretaries chaired by the Cabinet Secretary. A mid-term review mechanism and third party evaluation would be built in the programme. The Ministry of Food Processing Industries would be responsible for approval of selection of applicants for coverage under the scheme, sanction and release of funds as incentives. It will also prepare an Annual Action Plan covering various activities for implementation of the scheme.
India’s food processing industry to go ‘Aatmanirbhar’
PLIFPI has been introduced under ‘Aatmanirbhar Bharat Abhiyaan’ of the Indian government. The Government of India has launched many initiatives to improve the food processing sector of India. It would prepare the industry to face global competition. This will also increase product demand among foreign buyers. Earlier, The Government had relaxed foreign direct investment (FDI) norms for the sector and allowed up to 100 per cent FDI in food product e-commerce through automatic route. These steps will make India ‘Aatmanirbhar’ in real sense if implemented successfully.