One District One Product – PMFME Scheme

The program uses the One District One Product (ODOP) approach to grow economically in terms of input purchases, shared service usage, and product marketing. The ODOP plan provides a framework for developing value chain and communication and support infrastructure. There may be collections of many ODOP products in the region. There may be an ODOP product group that includes many districts close to the government. This article emphasizes the PMFME one district one product – PMFME scheme.

Key Abstract

The Indian food processing sector produces the most food items and has the greatest manufacturing base. In India, there are over 25, 00,000 unorganised food processing companies, with 66% of them situated in rural regions and over 80% owned by family-based companies that provide an economic source to rural populations. These unorganised processing units, on the other hand, confront substantial hurdles such as a lack of institutional capital, access to current equipment and technology, and branding and marketing experience.

To address these difficulties, the Government of India, through the Ministry of Food Processing Industries, has launched many programmes to increase investment in the food processing sector (MOFPI). Furthermore, the government has approved 100% FDI through the automatic route in food processing sectors, resulting in a rise in FDI inflows in this sector from US$ 628 million in 2018-19 to US$ 904 million in 2019-20. According to KPMG, the food processing sector was valued at US$ 290 billion in 2019 and is predicted to grow to more than US$ 500 billion by 2025.

Pradhan Mantri Formalization of Micro Food Processing Enterprises (PMFME)

On June 29, 2020, Prime Minister Mr. Narendra Modi launched the Pradhan Mantri Formalization of Micro Food Processing Enterprises (PMFME) programme under the “Aatmanirbhar Bharat Abhiyan” and “Vocal for Local” campaigns to provide technical, financial, and business support to micro food processing units in the country. The total funds allocated for this programme were valued at Rs. 10,000 crores ($1.3 billion) and will be disbursed between 2020 and 2025. The government intends to provide direct financial and technical assistance to around 200,000 micro food processing units under this programme. The Central Government bears 100% of all expenditure in the first year (2020-2021), whether incurred by the Centre or the States, and the same expenditure will be adjusted in the proportions given below in the funds disbursed to the States equally in the next four years.

Objectives of PMFME Scheme

The following of PMFME Scheme:

• Access to existing micro food processing enterprises, Farmer Producer Organizations (FPOs), Cooperatives, and Self-Help Groups (SHGs) for technology upgradation.
• Helping 200,000 existing micro food processing units to transform them into organised units by strengthening their marketing and branding and integrating the supply chain with formal units.
• Better access to shared services such as storage, incubation facilities, and packaging
• Professional and technical support for food entrepreneurs.
• Proper training and research for individual or group-owned food businesses

The PMFME Scheme’s Components

To fulfil the demands of the Indian food processing sector, the programme essentially consists of four components:

• Food processing unit assistance: Unorganized micro food processing facilities are eligible for a credit-linked capital grant of 35% of the project cost, with a maximum limit of Rs. 10 lakhs (US$ 13,500) per unit for upgradation under the plan. Members involved in micro food processing are also eligible for a seed financing of Rs. 40,000 (US$ 540) for operating capital and the acquisition of small instruments. As of June 2021, the State Nodal Agency has authorised seed capital for 8,040 members and disbursed funding to the State Rural Livelihood Mission totalling Rs. 25.25 crore (US$ 340 million) (SRLM).

• Marketing and Branding Assistance: FPOs, co-operatives, SHGs, and regional or state-level Special Purpose Vehicles (SPVs) of micro food processing companies receive marketing and branding assistance. The strategy benefits consumer retail sales in areas such as packaging and branding, quality control, standardisation, and food safety adherence.The State Nodal Agency may grant up to Rs. 5 lakhs (US$ 6,750) to FPOs, co-operatives, and SHGs for the preparation of a Detailed Project Report (DPR) for marketing and branding proposals. The plan only pays 50% of total marketing and branding expenditures; it does not cover the price of operating retail locations.The National Agriculture Co-operatives Marketing Federation of India (NAFED) and the Tribal Co-operative Marketing Federation of India (TRIFED) have been tasked with providing marketing and branding assistance.

• Support for the Development of Common Infrastructure: Under the plan, companies such as FPOs, co-operatives, Self-Help Groups, state agencies, and private businesses are given financial assistance to create common infrastructure such as incubation centres, common processing facilities, warehouses, labs, and cold storages. When establishing the project’s financial eligibility, variables such as the absence of private investment, the viability gap, the criticality of the value chain, and the overall benefit to the sector are taken into account. There are credit-linked grants available for up to 35% of the overall project cost.

• Research and Capacity Building: Training is a critical component in the transformation of unorganised micro food processing units into organised units. Individuals and organisations that get funding are expected to undergo training in order to enhance their abilities. In addition, even if they are not supported by the credit-linked grant, additional ODOP producers and units that are part of district marketing and branding assistance get training.The National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and the Indian Institute of Food Processing Technology (IIFPT) are two national-level food processing technology organisations under MOFPI that manage capacity building and training. These two organisations collaborate with a state-level food processing technology institution chosen by the state government to provide capacity building and training.

One District One Product – PMFME Scheme 

The PMFME scheme adopted the ODOP approach from the ODOP program launched by the Government of Uttar Pradesh (UP) in 2018. Under this approach, the state identifies and selects a food product for a district, which could be a perishable agricultural crop such as cereals or a food a product largely produced in the district. Tomatoes, mangoes, potatoes, litchis, millet-based products, fisheries, poultry, meat and animal feed are some of the food products covered by the ODOP. The scheme also supports traditional and innovative products like honey, minor forest products in tribal areas and herbal products like turmeric.

Features of ODOP Program

Following are the features of ODOP Program:

• During this time, more than 9,000 small entrepreneurs completed their registration and more than 2,500 started working with the help of the government.
• The minister launched the programme for the Prime Minister of India.
• The Prime Minister initiated the ODOP programme as part of the National Livelihood Mission.
• Through this scheme, our country will develop.
• The government also provides logistical and financial assistance as well as common facilities to increase production of selected items.
• Products will ultimately be assessed for geo-tagging. This could offer them an advantage over other items in the world market.
• Product selection varies across the country.
• In the case of capital investments, aid would be received by groups, especially those dealing with ODOP products.
• ODOP products for groups or individuals only support new units.
• The ODOP scheme will provide the basis for developing the value chain and aligning the infrastructure to support it.

Benefits of ODOP Program

The following are the benefits of ODOP Program:

• Developing and preserving local skills and crafts while promoting and preserving the arts.
• There is an increase in income and local job opportunities (resulting in a decrease in labour migration).
• Improving product quality and developing skills
• Transforming products into art (through packaging or branding).
• Link production with tourism.
• Address the problems of regional imbalances and economic disparities.
• After successful implementation at the state level, expand the ODOP idea to the national or international level.
• Extremely useful for the development of our nation.
• Support for agricultural products will be focused on processing, efforts to reduce waste, and storage and marketing.
• Common infrastructure support and marketing/branding will only be available for ODOP products.
• The Department of Commerce focuses on crops using a clustering approach to export promotion in its agricultural export policy.

Major Recent Developments

Union Bank of India was named Nodal Bank in December 2020, and 11 other banks were chosen as official lending partners for the PMFME programme.

Under the PMFME plan, MOFPI would virtually publish the Seed Capital Module on the Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) MIS Portal in September 2021. This site allows urban SHGs in the micro food processing industry to apply for seed capital assistance of Rs. 40,000 (US$ 540) per SHG member via the PMFME programme.

State governments are continually implementing reforms to maximise the PMFME scheme’s advantages. Some recent advancements in several states include:

• The Kerala government has announced intentions to launch an online marketplace for micro food processing unit products.
• The Madhya Pradesh government announced a financial outreach effort in all 52 districts on October 24, 2021. The initiative will help with loan sanctioning and distribution for all government programmes, including the Pradhan Mantri Mudra Yojna, Stand Up India, and PMFME.
• The Odisha government announced 30 distinct goods for 30 districts under the PMFME’s ODOP plan in January 2021 and would promote these products on the global market, with a particular emphasis on micro food processing facilities run by women SHGs.
• The Andhra Pradesh (AP) government announced in November 2020 a total investment of Rs. 450 crores (US$ 60.75 million) for the PMFME initiative, which would be dispersed over a five-year period to assist 10,035 micro food processing facilities in the state. The AP government initiated a credit outreach initiative in October 2021 to disburse and grant loans to different government programmes.

Conclusion

In terms of production, consumption, and exports, the food processing industry is one of India’s most important industries. The food processing industry has several major issues, including gaps in supply chain infrastructure, access to contemporary technology and equipment, and a lack of marketing and branding skills. However, the national and state governments’ widespread embrace of ongoing reforms and industry-friendly policies to improve the country’s unorganised food processing sector is likely to overcome these difficulties in the future years, propelling the sector ahead.