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4 years of Modi govt: 100% FDI in food processing set to give impetus to 'Make in India'

By Vikas

The NDA government's decision to allow 100% Foreign Direct Investment (FDI) in the food processing was a masterstroke which not only ushered in foreign investment but also gave impetus to 'Make in India' program. As per 2017's data, India's food processing industry received 43% higher foreign direct investment (FDI) in the fiscal 2016-17 on the back of favourable policy measures.

100% FDI in food processing set to give impetus to Make in India

The Ministry of Food Processing Industries (MOFPI) is responsible for formulation and administration of the rules and regulations and laws relating to food processing in India. The ministry was set up in the year 1988, with a view to develop a strong and vibrant food processing industry, to create increased employment in rural sector and enable farmers to reap the benefits of modern technology and to create a surplus for exports and stimulating demand for processed food.

The ministry is currently headed by Harsimrat Kaur Badal, a Cabinet Minister, and Minister of State Niranjan Jyoti.

In the Budget for fiscal 2018-2019 Rs. 500 crore was allocated for 'Operation Greens' to address price volatility of perishable commodities like Tomato, Onion and Potato. Allocation for Ministry of Food Processing was doubled in the Budget 2018-19 to Rs. 1400 Crores. It was decided that specialized Agro Processing Financial Institutions would be established to ensure timely, accessible and affordable credit to Food Processing sector.

Lets look at other initiative of the government to boost Food Processing industry:

Pradhan Mantri Kisan SAMPADA Yojana: The Schemes of the Ministry have been restructured and new schemes have been approved by Cabinet and launched as Pradhan Mantri Kisan SAMPADA Yojana. The SAMPADA Scheme will target creation of Infrastructure and increasing capacities of processing and preservation in entire supply chain of food processing sector right from farm gate to retail outlets. The New Scheme will help in integrating food processing units and food trade with the farmers creating huge opportunities for employment of increasing income of the farmers. PMKSY is an umbrella scheme incorporating ongoing schemes of the Ministry like Mega Food Parks, Integrated Cold Chain and Value Addition Infrastructure, Food Safety and Quality Assurance Infrastructure, etc. and also new schemes like Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages, Creation / Expansion of Food Processing and Preservation Capacities.

World Food India, 2017: Ministry organized World Food India 2017 in Delhi and showcased investment potential of India in the food processing sector and attracted investment worth $18.8 billion in the entire supply chain for inclusive development. Food Street was the World food India's most attractive highlight. Food Street is an experiential platform that will bring together culinary practices, flavours, fragrances from the world's cuisines, and celebrate India's rich cultural heritage and diverse uniqueness of its produce to create contemporary renditions and fusion food.

Investor's Portal 'Nivesh Bandhu' Launched:

Information on potential and opportunities for investment in the food processing sector and incentives provided by the Central and State Governments were made available to the prospective investors at a single point. The queries of the investors were received and answered through the portal guiding them and making it easier for them to take decision.

The government allowed 100% FDI for trading including through e-commerce, in respect of food products manufactured or produced in India. 100% FDI is already permitted in manufacturing of food products through automatic route. This will provide impetus to the foreign investment in food processing sector, benefit farmers immensely and will create vast employment opportunities.

Mega Food Parks: Setting up of state of art testing facilities in all the 42 Mega Food Parks was aimed at encouraging export of agri-commodities realizing their full potential. Creation of a Special Fund of Rs. 2000 crore in NABARD would also pay off in the long run. Availability of affordable credit to Mega Food Parks and food processing units has been set up therein Rs. 540.62 crore sanctioned to 15 Projects and Rs. 255.78 crore was disbursed.

Grievance Redressal System Strengthened: Under the infrastructure schemes of Mega Food Parks and cold chain, a committee of three Independent Monitors was constituted to address the grievances of applicants whose proposal for Mega Food Parks and Cold Chains could not be selected. The committee also provides personal hearing to the applicants before disposing of their grievances.

Food Map of India launched: The Food Map enables investor to take decision with regard to locating their projects as the food map showed mapping of the potential of food processing in surplus production areas.

Project Monitoring process streamlined: The close monitoring of the projects regularly led to completion of three Mega Food Parks in comparison to two projects in previous six years and completion of 14 cold chain projects as against 12 in last six years. This has also lead to significant improvement in utilization of plan fund allocation nearly 200% in all the schemes. Food and agro-based processing unit and cold chain infrastructure have been classified under agriculture activities for Priority Sector Lending. Availability of additional credit for food processing activities and infrastructure.

Service Tax on pre-conditioning, pre-coding, ripening, waxing, retail packaging and labelling of fruits and vegetables exempted in cold chain projects. This is a big relief in terms of tax exemption to the cold chain operators as this facility was only available to the farmers at farm gate but not to the cold chain operators. This enhanced the viability of cold chain projects, encouraging more investment in the sector.

To enhance the transparency and reduce human interface, an on-line software has been developed and put in use for filing of claims for the infrastructure development projects. This has also been expanded to other schemes. Investment tracking and facilitation Desk of Invest India has been set up in the Ministry. The desk will identify new potential investors and approach them in a focussed and structured manner for investment and follow-up the investment cases by providing hand holding services. The desk will also assist Ministry in organising roadshows both in India and abroad and organizing investment meets.

e-NAM to be expanded from 250 to 585 APMCs: e-NAM Market would have primary processing facilities. e-NAM will be provided assistance for creating primary processing to cleaning, grading, packaging. This will encourage and make easier direct procuring of raw-material by the processing units and retail traders resulting in increased income to farmers. Primary Processing will increase value addition of the farmers produce and fetch better price. This will also lead to quality consciousness.

Model Law on Contract Farming prepared to integrate farmers: The Contract Farming Law will integrate backward integration of the food processors with the farmers and attracting investment in post-harvest management activities leading to increased benefit to the farmers and reduction in wastages. A Dairy Processing and Development Fund of Rs. 8000 core set up in NABARD. The Fund is used to modernize old and obsolete milk processing units particularly in cooperative sector and will result in enhancing milk processing capacity thereby adding more value to the produce of the farmers and increasing their income

Additional fiscal concessions:

  • Reduction in Excise Duty on Refrigerated Containers from 12.5% to 6%.
  • Reduction in Basic Custom Duty on Refrigerated Containers from 10% to 5%.
  • 5% Basic Customs Duty as presently available under project imports for cold storage, cold room also extended for Cold Chain including pre-cooling unit, pack house, sorting and grading lines and ripening chambers.
  • Excise Duty on Machinery reduced from 10% to 6%.

The following Mega Food Parks are operational:

  • Patanjali Food and Herbal Park, Haridwar (Uttarakhand);
  • The Indus Mega Food Park, Khargone (Madhya Pradesh);
  • Jharkhand Mega Food Park Ranchi (Jharkhand),
  • Jangipur Bengal Mega Food Park, Murshidabad(West Bengal)
  • Srini Food Park, Chittoor, (Andhra Pradesh);
  • North East Mega Food Park, Nalbari, (Assam);
  • International Mega Food Park, Fazilka, (Punjab);
  • Integrated Food Park,Tumkur, (Karnataka);
  • MITS Mega Food Park Pvt Ltd, Rayagada, (Odisha)
  • M/s Satara Mega Food Park Pvt. Ltd (Maharashtra)
  • M/s Greentech Mega Food Park Pvt. Ltd, Ajmer (Rajasthan)

Foundation Stone for the following Mega Food Parks have been laid:

  • Punjab Agro Industries Corporation Mega Food Park Project, Ludhiana
  • Mega Food Park developed by KINFRA at Palakkad in Kerala
  • Mega Food Park developed by KSIDC at Alappuzha in Kerala
  • Maize Based Mega Food Park in Kapurthala, Punjab

A Mega Food Park is likely to benefit about 25000-30000 farmers apart from creating employment for 5000-6000 persons, especially in rural areas. The Mega Food Park project at Udham Singh Nagar was naugurated on 5th April, 2018 and Agartala (Tripura) is at advanced stage for operationalisation.

NABARD has sanctioned term loan of Rs. 540.62 Crore to 11 Mega Food Park projects and 1 designated Food Park and 3 processing units under 'Food Processing Fund' of Rs. 2000 Crore and out of this an amount of Rs. 255.78 Crore has been disbursed. The Ministry has notified 181 designated food parks in different States for the purpose of availing affordable credit from special fund with NABARD.

Integrated Cold Chain and Value Addition Infrastructure:

Ministry of Food Processing Industries is assisting 238 integrated cold chain projects (Including completed and ongoing projects) having capacity of 7.64 lakh metric tonnes of cold storages, 231.75 metric tonnes per hour of individual Quick Freezing(IQF), 104.99 lakh litres per day of Milk processing/storage and 1383 reefer vans.

A total of 119 integrated cold chain projects have been completed/operationalized as on 31.03.2018 and out of this, 82 integrated cold chain projects have been completed/operationalized during 2014-2018. With the operationalization of these 82 projects, Ministry has created an additional capacity of 2.65 lakh metric tonnes of cold storages, 82.45 metric tonnes per hour of individual Quick Freezing(IQF), 34.55 lakh litres per day of Milk processing/storage and 516 reefer vans during 2014-2018.

The guidelines of Scheme have been revised on the basis of feedback and experience of this Ministry to make them investor friendly. On an average, each cold chain project benefits to around 500 farmers in fruits and vegetables sector and around 5000 farmers in dairy sector and creates employment for 100 persons.

Under the Scheme of Setting up/ Modernization of Abattoirs, one project at Panji (Goa) has been operationalized.

10 Food Testing Labs have been completed:

FSSAI has approved a large number of new Additives harmonized with the International Codex Standards and notified an amendment to the regulations as a result of which non-standardized food products called proprietary foods (except novel food and nutra-ceuticals) that use ingredients and additives approved in the regulations will no longer require product approval. This has provided considerable relief to the industry.

The National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) at Kundli, Sonepat, Haryana and Indian Institute of Crop Processing Technology (IICPT) at Thanjavur, Tamil Nadu are being developed by the Government as the Centres of Excellence. The pass-outs of these institutes have got 100% placements.

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