Importance of FMCG industry in India

Introduction

Importance of FMCG industry in India

The Fast-Moving Consumer Goods (FMCG) industry plays a vital role in the Indian economy, representing one of the largest and fastest-growing sectors. It encompasses a wide range of products, including food and beverages, personal care, household care, and other consumer goods. The FMCG sector is a significant contributor to India’s GDP, and its consistent growth has led to increased employment opportunities and a better standard of living for millions of people. With rising disposable incomes, rapid urbanization, and changing consumer preferences, the demand for FMCG products in India is expected to soar in the coming years

Overview of the Indian government’s support for the FMCG industry

Recognizing the potential of the FMCG industry and its impact on the nation’s socio-economic landscape, the Indian government has implemented various schemes and initiatives to support and promote the growth of the sector. These schemes aim to enhance the food processing industry, reduce food waste, increase farmer income, create employment opportunities, and improve food safety and quality. By offering financial assistance, technical support, and other resources, the government seeks to create a favorable environment for the FMCG industry to thrive and contribute to the country’s development.

Need a loan? Experience hassle-free assistance and swift approvals with Refer Loan. Simplify borrowing and achieve your aspirations effortlessly! CONTACT REFER LOAN

Schemes in FMCG Industry

The following table provides a comprehensive overview of various subsidies and schemes available for the FMCG industry in India. These subsidies aim to support and promote the growth and development of the sector by offering a wide range of benefits, including financial assistance, infrastructure development, and skill enhancement. The table outlines the benefits, eligibility criteria, application process, and additional information for each subsidy, making it easier for interested individuals and organizations to identify and apply for the most relevant programs.

Overview of PMKSY Scheme

Introduction to PMKSY

The Indian government introduced the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) to support farmers and enhance the food processing industry. They allocated 6000 crore rupees for this program between 2016 and 2020. The primary goal was to build modern facilities and manage the entire food supply chain from farms to stores efficiently.

Benefits of PMKSY

This initiative aimed to help farmers increase their income, create job opportunities (particularly in rural areas), minimize food waste, and boost food exports.

Seven Components of PMKSY

The PMKSY had seven key components:

1. Mega Food Parks
2. Value Addition Infrastructure & Integrated Cold Chain
3. Infrastructure for Agro-Processing Clusters
4. Creation of Backward and Forward Linkages
5. Preservation Capacities and Creation/Expansion of Food Processing
6. Food Safety and Quality Assurance Infrastructure
7. Human Resources and Institutions

Operation Greens

In 2018, the government introduced a new initiative called “Operation Greens” to enhance the production and marketing of tomatoes, onions, and potatoes. Later, this project was expanded to include 22 different fruits and vegetables, such as mangoes, bananas, apples, and carrots.

Continuation and Future of PMKSY

Initially, the government decided to extend the PMKSY for another year after 2020. Later, they approved the continuation of the program until 2026, with a budget of 4600 crore rupees. The Ministry of Food Processing Industries (MoFPI) will be responsible for implementing this plan.

Subsidy Name: Scheme

Value Addition Infrastructure & Integrated Cold Chain Description: This scheme aims to provide an uninterrupted cold chain and value addition infrastructure for non-horticulture produce, dairy, meat, poultry, and marine/fish products. The objective is to decrease post-harvest losses and connect producers with food processors and the market through an efficient supply chain, ensuring fair prices for farmers and year-round food product availability for consumers.

Benefits:

1. Reduction of post-harvest losses
2. Better prices for farmers
3. Year-round food product availability
4. Strengthened food processing industry
5. Creation of job opportunities

Eligibility: Individuals and organizations (FPOs, FPCs, NGOs, PSUs, firms, companies) with business interests in cold chain solutions and supply chain management can set up Value Addition Infrastructure & Integrated Cold Chain projects.

How to Apply: Applications must be submitted online on the Sampada Portal of the Ministry. No physical applications will be accepted. Applicants must provide all necessary documents and fulfill the eligibility criteria.

Key Points:

1. The scheme has several components, including farm-level infrastructure, processing centers, distribution hubs, refrigerated vans/trucks, and irradiation facilities.
2. To avail financial assistance, projects must include farm-level infrastructure and at least one other component.
3. Assistance is not available for standalone facilities/components except irradiation facilities.
4. Applicants must meet net worth criteria based on the grants-in-aid sought and the type of area (general or difficult).
5. Applicants must have a term loan sanctioned by a bank or financial institution.
6. Entities can only have one application accepted against an Expression of Interest.
7. Expansion or upgradation of existing facilities is not eligible.
8. Entities that have availed grants-in-aid earlier under this Scheme are not eligible for a second proposal.
9. A non-refundable fee must be submitted with the application, and a refundable bank guarantee is required upon selection for financial assistance.
10. Applications that are incomplete or contain inaccurate information may be disqualified.

Subsidy Name: Scheme for Preservation Capacities & Creation/Expansion of Food Processing

The scheme aims to create and expand processing and preservation capacities, modernize existing food processing units, increase processing levels, add value, reduce food loss, and enhance farmers’ income.

Benefits:

• Increased level of processing and value addition
• Reduction in food loss
• Enhanced income for farmers

Eligibility:

Open to individuals and organizations engaged or planning to engage in food processing and preservation capacities

Projects can be located inside or outside Mega Food Parks (MFPs) and Agro-Processing Clusters (APCs)

How to Apply: Submit an application online through the Sampada Portal of the Ministry.

Key Points:

• 21 eligible sectors include fruits & vegetables, milk, meat/poultry/fish processing, ready-to-eat/ready-to-cook foods, grains/pulses/oilseed milling, etc.
• Eligible processing activities include peeling, grading, sorting, washing, cutting, sizing, blanching, extraction, pulping, drying,crushing, pasteurization, preservation, packaging etc.
• The applicant’s combined net worth should be at least 1.5 times the grants-in-aid sought under the scheme
• The applicant must have a final/in-principle term loan sanction letter from a bank
• Only one application will be accepted per entity, and no second proposal will be considered from those who have already availed grants-in-aid
• A non-refundable fee of Rs. 20,000 (Rs. 15,000 for SC/ST applicants) and a refundable bank guarantee for 5% of the eligible grants-in-aid must be submitted.
• Proposals originating from Difficult Areas or submitted by SC/ST candidates are eligible for a minimum project cost of Rs. 1 crore. On the other hand, for proposals in General Areas, the minimum project cost accepted is Rs. 3 crore.
• 
  Entities or promoters that have availed financial assistance under another scheme of the Ministry can apply for grants-in-aid only after two years from the date of commercial operation of the previous project
  
  
  Seeking a loan? Discover clear guidance and speedy approvals at Refer Loan. Streamline your borrowing process and effortlessly attain your goals! GET IN TOUCH WITH REFER LOAN

Subsidy Name: Agro Processing Cluster Scheme (APC)

The Indian government has introduced the Agro Processing Cluster Scheme under the PRADHAN MANTRI KISAN SAMPADA YOJANA to create modern infrastructure for food processing units, focusing on a cluster-based approach. The scheme aims to reduce food waste, increase farmer income, and create local employment.

Benefits:

1. Modern infrastructure for food processing.
2. Integrated preservation infrastructure.
3. Effective backward and forward linkages for food supply chain.
4. Employment generation and increased farmer income.
   

Eligibility:

1. Various entities such as government departments, PSUs, joint ventures, NGOs, cooperatives, SHGs, FPOs, private sector companies, and firms.
2. Net worth requirements apply.
   

How to Apply:

1. Get an in-principle/final term loan sanction letter from a bank.
2. Ensure compliance with net worth and term loan requirements.
3. Submit an application following the Expression of Interest invitation.

Key Points:

1. Minimum of 5 food processing units with a total investment of Rs. 25 crore.
2. Requires at least 10 acres of land for the project.
3. Preference given to projects in identified agri-horti clusters and export-oriented clusters.
4. Ineligible items for grants-in-aid are specified.
5. Net worth and term loan requirements vary based on location and applicant type.

Food Safety & Quality Assurance Infrastructure

In today’s competitive global market, food safety and quality have become essential factors for success in the food processing industry. To promote comprehensive development of the sector and to protect consumer safety and public health, it’s crucial to ensure that the food products manufactured and sold meet stringent food safety regulations.

To achieve these objectives, the government provides financial assistance under the following components:

1.Establishing and Upgrading Food Testing Laboratories:

This component aims to support the creation and improvement of food testing labs, which play a crucial role in maintaining high-quality food standards.

2.Establishing and Upgrading Quality Control/Food Testing Laboratories:

This component focuses on setting up and enhancing quality control facilities and food testing labs to ensure compliance with food safety regulations.

3.Implementation of HACCP/ISO Standards/Food Safety/Quality Management Systems:

Financial assistance is provided to help food processing businesses implement internationally recognized safety and quality management systems, such as HACCP and ISO standards. This ensures the production of safe and high-quality food products that can compete in the global market.

Subsidy Name: Food Testing Laboratory Support Scheme

This scheme aims to strengthen the food quality control infrastructure and make it available to the food processing sector and other stakeholders, ensuring compliance with domestic and international food safety standards. It also aims to reduce the turnaround time for food sample analysis.

Benefits:

1. Financial assistance for setting up or upgrading food testing laboratories.
2. Improved food quality and safety for consumers.
3. Improves the competitiveness of food processing businesses in the global market.

Eligibility:

1. Private organizations, including Joint Ventures, Public & Private Companies, Limited Liability Partnerships, and Proprietorship/Partnership Entities, as well as government organizations, can apply.
2. Grants-in-aid are provided for commercial purposes only, not for academic or research purposes.
3. Food testing activities must be specified in the organization’s by-laws, Memorandum of Association, or Articles of Association.
4. Applicants must meet specific eligibility criteria outlined in the scheme (e.g., term loan, equity, etc.).

How to Apply:
Applicants must submit an online application through the Sampada portal of the Ministry, including all required documents as specified in the scheme guidelines.

Key Points:

1. Financial assistance is offered for equipment, technical civil work, and furniture & fixtures.
2. Ineligible items for grants-in-aid include land cost, site development, administrative office building, etc.
3. A non-refundable processing fee is required with the application.
4. Successful applicants must submit a refundable bank guarantee for 5% of the eligible grants-in-aid.

Financial assistance will be provided according to merit, prioritization guidelines, and evaluation of the proposal following the assessment criteria available on the Ministry’s website.

Subsidy Name: HACCP/ ISO Standards/Food Safety/Quality Management Systems

A component of the Pradhan Mantri Kissan Sampada Yojana, this scheme aims to encourage food processing companies to adopt food safety and quality assurance mechanisms, ensuring consumer health and improving product acceptance in the market.

Benefits:

• Promotes the adoption of food safety and quality standards.
• Helps businesses comply with strict hygiene norms
• Enhances product acceptance by overseas buyers
• Keeps Indian industry in line with international best practices

Eligibility:

• Central/State government organizations, private sector firms
• Units processing perishable items (fruits, vegetables, milk, meat, poultry, seafood, fish)
• Minimum 3 years of operation prior to application
• Not previously assisted by MoFPI for setting up/expansion/modernization

How to Apply:
Submit proposals for financial assistance through the Ministry of Food Processing Industries’ online portal.

Key Points:

• Grant-in-aid provided as a reimbursement of expenditure for implementing food safety and quality standards
• Assistance released in one installment after obtaining necessary certification and submitting required documents
• Different levels of assistance based on general or difficult areas, with additional provisions for SC/ST promoters
• Incomplete applications may be rejected; decision of the Ministry is final in all matters relating to the scheme

Subsidy Name: MoFPI R&D Grant

A financial aid program by the Ministry of Food Processing Industries for R&D in the food processing sector, aimed at product and process development, equipment design, improved storage, shelf-life, and packaging.

Benefits:

1. Funding for equipment, consumables, and research personnel.
2. Assistance for travel and institutional charges.
3. Support for innovative projects with commercial value.

Eligibility:

1. Universities, IITs, Central/State Govt. Institutions, Govt. funded organizations, and recognized R&D labs in public and private sectors.
2. Research proposals of applied nature with commercial value, focused on food processing industry development.
3. Preference given to projects benefiting SMEs and farmers, using previous R&D outcomes, and aimed at commercialization.

How to Apply:

1. Submit the research proposal in the prescribed format (ANNEXURE-A) to MoFPI, Panchsheel Bhawan, August Kranti Marg, New Delhi – 110049.
2. Applications must be forwarded through the Head of the concerned institution with required certifications and supporting documents.
3. Collaborative projects involving multiple institutions must have consent from each institution.

Key Points:

1. MoFPI evaluates proposals through peer review and/or Expert Committee.
2. In-principle approval is given after evaluation, followed by sanction upon fulfillment of criteria.
3. Funds are released in installments based on the progress and requirements of the project.

Food Processing Skill Development
This scheme aims to develop training modules, assist Training Centers (TCs) in building infrastructure, and increase the number of skilled workers in the food processing industry. It follows the National Skill Qualification Framework (NSQF) and seeks to create resources for Training Partners (TPs) and course content developers.

Benefits: The scheme offers standardized training and course modules in different languages. It also provides grants-in-aid for infrastructure development, plant & machinery purchase, and course content development.

Eligibility: Eligible institutions and organizations include recognized universities, colleges, professional agencies with experience in developing training modules, and national-level food processing industry associations.

How to Apply: Applications should be submitted in the prescribed format online on the MoFPI web portal with relevant documents.

Key Points:

1. Follows NSQF and operational procedures established by the Sector Skill Council.
2. Provides grants-in-aid for course content development and translation, as well as establishing or expanding TCs.
3. Offers grants for a maximum of 5 training modules per TC.
4. Proposals will be scrutinized by a committee and considered for final approval by the Ministry.

The scheme aims to strengthen two major institutions in the food processing sector: the National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) and the Indian Institute of Food Processing Technology (IIFPT).

Benefits: The scheme provides funds for creating and improving academic and administrative infrastructure, promoting research activities, expanding Village Adoption Programs (VAP), and enhancing skill development in the food processing sector.

Eligibility: This scheme is specifically designed for NIFTEM and IIFPT.

How to Apply: As the funds are specifically allocated to the two institutions, there is no application process for external organizations.

Key Points:

1. NIFTEM has been allocated Rs. 100 crore for various infrastructure and program improvements.
2. IIFPT has been allocated Rs. 75 crore for expanding its campus, improving infrastructure, and opening training cum incubation centers.
3. Both institutions offer B.Tech., M.Tech., and Ph.D. courses and undertake R&D projects in the food processing sector.
   
   Production Linked Incentive (PLI) Scheme for Food Processing Industry

The scheme aims to support the creation of global food manufacturing champions, promote Indian food brands, increase employment opportunities, and ensure remunerative prices for farmers.

Benefits: Financial incentives will be provided to eligible companies based on increased sales and investments in food manufacturing. The scheme has three components: incentivizing manufacturing of specific food products, supporting innovative/organic products of SMEs, and assisting branding and marketing abroad.

b: Food processing companies and SMEs involved in innovative/organic products are eligible. Specific eligibility criteria, including minimum sales and investments.

How to Apply: Complete and submit an application to the Project Management Agency (PMA) using the Application Format specified in the Scheme Guidelines, accompanied by the necessary supporting documents and application fee.

Key Points:

1. The scheme covers four major food product segments and innovative/organic products of SMEs.
2. Applicants can apply for one or more segments under Category-I but must make separate applications for each product segment.
3. The entire chain of manufacturing processes for the food products must take place in India.
4. The duration of the program spans six years, from fiscal year 2021-22 to fiscal year 2026-27.

Subsidy Name: Micro Food Processing Enterprises Support Scheme

This scheme aims to enhance the capabilities of micro food processing enterprises in India by providing financial assistance, integrating them with organized supply chains, supporting transition into formal frameworks, and improving access to common services and professional support. The scheme adopts the One District One Product (ODOP) approach to facilitate value chain development and align supportive infrastructure.

Benefits:

1. A credit-linked capital subsidy of 35% of the eligible project cost, capped at Rs.10.0 lakh per unit.

1. Credit, shared services, and professional assistance will be made more accessible to micro food processing entrepreneurs, Co-operatives, Self Help Groups and , FPOs.

1. Integration with organized supply chains through branding and marketing support.

1. Support for the transition of 2,00,000 enterprises into a formal framework.

1. Institutions, research, and training in the food processing sector will be strengthened.

Eligibility:

1. Operational micro food processing units.
2. Units should be unincorporated and employ less than 10 workers.
3. Applicants should have ownership rights of the enterprise and be at least 18 years old with a minimum of VIII standard pass educational qualification.
4. Only one person per family is eligible to receive financial assistance.
5. Willingness to formalize, contribute 10% of the project cost, and obtain a bank loan.

How to Apply:
Applicants can approach the designated state-level agencies or resource persons for guidance on the application process. A detailed project report needs to be submitted along with the application, and the approval process will be carried out by the state government.

Key Points:

1. The scheme has an outlay of Rs. 10,000 crore over five years (2020-2025).
2. The expenditure is shared between Central and State Governments with varying ratios depending on the region.
3. A credit-linked subsidy will be directly provided to 2,00,000 micro food processing units.
4. The ODOP approach is centered on cereal-based products,perishable agri-produce, and other commonly produced food products in a district and their associated sectors.
5. Support for agricultural produce focuses on processing, reducing wastage, proper assaying, storage, and marketing.
6. New units will only be supported for ODOP products, while existing units producing other products may also receive support.
7. The program comprises four components: support for individual and group microenterprises, branding and marketing support, institutional strengthening, and setting up a robust project management framework.

Scheme Name: Operation Greens Scheme (Extended)

The Operation Greens Scheme has been extended to cover all fruits and vegetables, for a period of six months on a pilot basis.The scheme aims to protect growers from being forced to sell their produce at a loss and minimize post-harvest losses.

Benefits: Eligible entities engaged in processing and marketing of fruits and vegetables, such as food processors, FPO/FPC, co-operative societies, individual farmers, licensed commission agents, exporters, state marketing/co-operative federation and retailers, will receive a subsidy of 50% of the cost of transportation and/or hiring storage facilities for eligible crops.

Eligibility: The scheme is applicable to eligible crops such as mango, banana, guava, kiwi, lichi, papaya, citrus, pineapple, pomegranate, jackfruit, French beans, bitter gourd, brinjal, capsicum, carrot, cauliflower, chillies (green), okra, onion, potato and tomato. Additional fruits and vegetables may be included in the future based on suggestions from the Ministry of Agriculture or State Government.

How to apply: Eligible entities can undertake the transportation and/or storage of notified crops from notified surplus production cluster without prior approval from MoFPI, and submit their claim for subsidy on the online portal.

Key points: The scheme will provide assistance for a duration of six months from the date of notification, and will cover transportation and hiring of storage facilities for eligible crops. The cost of subsidy is subject to the cost norms, and any other fruit or vegetable can be added in the future based on recommendations.

Conclusion

The impact of government schemes on the FMCG industry in India

Government schemes, such as PMKSY, Value Addition Infrastructure & Integrated Cold Chain Scheme, Scheme for Creation/Expansion of Food Processing & Preservation Capacities, Agro Processing Cluster Scheme, and Food Safety & Quality Assurance Infrastructure, have significantly impacted the FMCG industry in India. These initiatives have facilitated the modernization of infrastructure, improved supply chain efficiency, and enhanced food safety and quality. As a result, the FMCG sector has witnessed rapid growth and expansion, positioning itself as a key player in the Indian economy.

Opportunities for growth and development in the FMCG sector

The government’s continued support for the FMCG industry has created numerous opportunities for growth and development. FMCG companies can leverage these schemes to expand their processing and preservation capacities, establish and upgrade food testing laboratories, and implement internationally recognized safety and quality management systems. This will not only increase the competitiveness of Indian FMCG products in the global market but also cater to the evolving demands of the domestic consumers.

The role of FMCG companies in contributing to the Indian economy and a sustainable food processing industry

FMCG companies play a pivotal role in contributing to the Indian economy by generating employment, promoting exports, and supporting the overall growth of the country. By actively participating in government schemes, FMCG firms can create a more sustainable food processing industry, reduce food waste, and ensure a stable supply of high-quality products for consumers. Additionally, their commitment to innovation, safety, and quality will help improve India’s global competitiveness and strengthen the nation’s position as a leading player in the FMCG sector.

Let Refer Loan guide you through the loan process, from choosing the right option to getting approved fast!

Refer Loan is your one-stop solution for identifying the best loan options at competitive rates. Our team of experts works diligently to guide you step by step through the loan processing journey. We offer personalized assistance in documentation, ensuring accuracy and compliance, and our strong network of lenders helps facilitate fast processing. With Refer Loan, you can trust that we have your back, making the borrowing experience seamless and efficient.