Govt invites EoI latest by June 17 for Rs 11k-cr food processing PLI scheme

The scheme would help expand the domestic capacity for food processing and potentially generate additional Rs 33,500 crore worth of processed foods

Issuing detailed operational scheme guidelines for its Production Linked Incentive (PLI) scheme, the food processing industries ministry Monday invited an expression of interest latest by June 17 so that it takes off at the earliest. The Cabinet on March 31 had cleared a production-linked incentive (PLI) scheme to promote processed food manufacturing, with an estimated cost of Rs 10,900 crore to the exchequer over the next six years.

Announcing the Cabinet decision, minister for commerce, railways and food and public distribution Piyush Goyal had said that the scheme for food processing would contribute to the government’s efforts to increase farmers’ incomes through better processing of agricultural produce and attract huge foreign investments in the high-potential sector.

According to the guidelines, large entities under category-I should have minimum sales (all food products during 2019-20) turnover of Rs 500 crore for ready to cook/ready to eat (RTC/RTE) food, Rs 250 crore for processed fruits and vegetables, Rs 600 crore for marine products and Rs 150 crore for mozzarella cheese to become eligible for the scheme.

Similarly, the minimum investment for these large entities has been fixed at Rs 100 crore for RTC/RTE, Rs 50 crore for processed fruits and vegetables, Rs 75 crore for marine products and either 10 tonne per day capacity plant or Rs 23 crore for mozzarella cheese. Under Category-II (SMEs applicants), Udyog Aadhar/Udyami registered entities should have minimum sales of Rs 1 crore during 2019-20 for each of the innovative/organic products proposed to be incentivized to participate in EoI. Only Apeda-registered organic products are eligible under PLI scheme.

Main conditions to apply for PLI grant for undertaking branding and marketing activities abroad include only Indian brands completely manufactured in India. Branding and marketing shall be undertaken either by the applicant directly or through its subsidiary or any other agency.

The RTE/RTC products as per guidelines include potato fries, tikki, etc. (potato chips excluded), table sauces, pasta sauces, cooking sauces, dry sauces, ketchup, mustard, oyster sauces, salad dressings, dips, and other sauces and all fruit based jam/jellies. Fruits and vegetable category includes packaged processed products which are steamed/boiled/frozen/dried/pickled/provisionally preserved/ or preserved through additive and preservatives. Spices (both mixed and single spices) packed in consumer size packs would be included under the scheme.

The scheme would help expand the domestic capacity for food processing and potentially generate additional Rs 33,500 crore worth of processed foods with a potential to create 2.5 lakh employment, according to an official estimate. The eligibility criteria — in terms of investment and turnover — for firms to avail of the incentives will be decided later in consultation with the industry.

In all, 13 PLI schemes are being rolled out, including those for automobiles, pharmaceuticals, IT hardware including laptops, mobile phones & telecom equipment, white goods, chemical cells and textiles. Prime Minister Narendra Modi said the 13 PLI schemes could lead to an incremental manufacturing output of $520 billion and double the work force in relevant sectors over the next five years. The idea behind the PLI schemes is to lure large companies to grow to become ‘global champions’ with the use cutting-edge technology.

The total incentives under the PLI schemes, are seen at Rs 1.97 lakh crore over a 5-6 years. However, the government could be a net gainer as by increased domestic manufacturing and sales could the its tax revenue – not only indirect taxes like GST, but even the corporate tax revenue will be given a boost due to the increased profitability of companies.