Guidelines on PLI scheme for Food Processing Industry

The Ministry of Food Processing Industry launched the Production Linked Incentive Scheme for Food Processing Industry (PLISFPI). Under this scheme, food manufacturing entities will be supported for significant expansion of food output to increase the level of processing, minimization of wastage, and increase value addition. MoFPI issued the Guidelines on PLI scheme for Food Processing Industry vide a Notification dated 26.05.2021.  This article briefs the Guidelines on PLI scheme for Food Processing Industry.

The objective of the Scheme

The key objective of the Production Linked Incentive (PLI) Scheme for the Food Processing Industry is as follows:

• To support the creation of global food manufacturing champions
• To promote Indian food product brands
• To increase employment opportunities for off-farm jobs
• To ensure remunerative prices of farm produce and higher income to farmers

Components of PLI scheme for Food Processing Industry

The objectives are sought to be achieved through the introduction of a Production Linked Incentive (PLI) Scheme. The scheme has three broad components. The first component relates to the provision of financial incentives to select large manufacturers of food products who commit to making prescribed minimum investments and achieve an increase in sales as per the prescribed growth rates in the following four segments.

• Ready to cook/ready to Eat (RTC/RTE) including millet-based foods
• Processed Fruits and vegetables
• Marine Products
• Mozzarella Cheese

The second component is for providing support to the small and medium enterprises in the four segments that manufacture innovative /organic products The third component of the scheme provides a grant to companies for branding and marketing abroad to incentivize the emergence of strong Indian global brands.

Eligible Entities for PLI scheme

Eligible criteria for the PLI scheme for Food Processing Industry are listed as follows:

• Proprietary Firm
• Partnership Firm
• Limited Liability Partnership (LLP)
• A Company registered in India
• Co-operatives
• Small to Medium Enterprise (SME)
• The applicant may include a company applying on its own behalf and its subsidiary provided the Applicant Company holds more than 50% of the stock of its subsidiary and that none of such subsidiary company/s is included in any other Applicant company under the Scheme.
• Marketing Federation of Apex level co-operatives can also apply on behalf of Member Unions or Member co-operatives in the case of co-operatives

Note: Any Company registered in India is eligible under the scheme to apply on its own behalf or with its subsidiary

Eligibility Criteria under PLI Scheme

Eligibility Criteria for Production Linked Incentive (PLI) Scheme for Food Processing Industry is as follows:

• Support under the scheme shall be provided only to the applicants engaged in manufacturing of food products in India and sales of such products covered under the target Segments
• To avail the benefit of the scheme, SME Applicants should engage in such activities for innovative/ organic food products.

Eligibility criteria, in terms of total sales of food products and Minimum Investment for different Categories of Applicants, is as follows: [caption id="attachment_111035" align="aligncenter" width="582"] Guidelines on PLI scheme for Food Processing Industry - Eligibility Criteria

• An applicant should have a total sale of food products above minimum sales in the Base Year. For minimum sales here the food products mean any food product sold in consumer packs including the food products included in four segments
• The entire chain of manufacturing processes, including primary processing, of the food products of the relevant segment applied for coverage under the scheme, need to take place in India. However, for additives, flavors, and edible oils, this condition is not applicable.
• The entire chain of the manufacturing process of food products, starting for raw materials, shall be specified in the Application in respect of food products included in the Application and having sales above Rs 50 crore per annum.
• Applicants are eligible to apply for one or more Segments under Category I. However, such Applicants will be required to make separate applications for each of the product segments and meet minimum Sales and investment criteria for each of the Segments applied for
• The Applicant should not have been declared as bankrupt or willful defaulter or defaulter or reported as fraud by any bank or financial institution or non-banking financial company.
• The Applicant/ Promoters should not appear in the SEBI Debarred List.

Different Categories of Applicant

As per the Guidelines of PLI scheme for Food Processing Industry, there are three categories of Applicants:

• Category I: Entities who apply for incentives based on Sales and Investment Criteria. Applicants under this category could undertake Branding and Marketing activities abroad also and apply for Incentives under the scheme.
• Category II: SME applicants manufacturing innovative or organic products.
• Category III: Applicants applying solely for incentives for undertaking Branding & Marketing activities abroad.

Note: The Applicants need to indicate the Segment and the Product Groups in that Segment in the application for coverage under the Scheme.

Different segments of Food Products covered under the PLI scheme

Under Category-I, the following four Segments of food products are covered under the PLI scheme

• Ready to Eat/ Ready to Cook (RTE/RTC) including products containing Millet
• Fruits and Vegetable Products
• Marine Products
• Mozzarella Cheese

Kindly find the attachment to know more about the Product Groups and food Products covered under the above four Segments. Note: An Applicant under Category-I will be required to choose any of the Product Segments.

The Tenure of the Scheme

The tenure of the Production Linked Incentive (PLI) Scheme for the Food Processing Industry is six years from Financial Year 2021-22 to Financial Year 2026-27. Note: The Incentive will be payable on Incremental sales beginning from 2021-22. The incentive for a particular 6 years will be due for payment in the following year. The Incentive payable for 2026-27 will be due for payment in 2027-28

Investment Details

Investment shall mean expenditure incurred on the installation of new plant & machinery, technical civil work, and associated infrastructure by the Applicant and its contract manufacturers. All Noncreditable Taxes & duties included in expenditure.

Support for promotion of Branding and Marketing

Support for promotion of Indian Brands envisages grant to the applicant entities for branding and marketing including in-store branding and shelf space renting in large stores.

• The entities will submit a five-year program for availing such assistance
• The government of India will provide 50% of the grant on the expenditure made by the company subject to a limit of 3% of turnover or Rs.50 crore per year whichever is less.
• For companies not getting incremental sales-based incentives, grants will be provided at 50% of the total expenditure on branding and marketing abroad. This grant will be subject to a limit of 3% of turnover or Rs.50 crore per year whichever is less.
• All eligible Applicants shall be ranked based on marks obtained in the evaluation criteria
• The Applicant securing the highest marks for a segment applied for shall be ranked first, followed by Applicant securing second highest marks and so on.
• The selection of the Applicants shall be in the order of their ranks

The incentive under the PLI scheme

The incentive under the scheme will be paid for six years from 2021-2022 to 2026-2027 on incremental sales over the base year. The scheme is fund limited, meaning that the selected entities will only be paid the incentive from the total funds allocated for the scheme. [caption id="attachment_111033" align="aligncenter" width="665"] Guidelines on PLI scheme for Food Processing Industry - Incentive The base year for calculation of incremental sales will be 2019-2020 for the first 4 years. For the 5^th & 6^th years, the base year will be 2021-2022 and 2022-2023 respectively. The incentive will be payable to the selected applicants on the incremental sales over the base year.

Eligibility Criteria for Incentive

The criteria for claiming the incentive by the selected Applicants are as follows:

• Achieve minimum CAGR in Sales over the base year, as given in Appendix-D.
• Achieve the Committed Investment, year-wise, as proposed in the Application

Applicable Fee for PLI Scheme

A non-refundable Application fee would be payable for each Application.

Sl.No	Applicant Category	Fee
1	Category-I Applicants	Rs 1,00,000
2	Category-II Applicants	Rs 10,000
3	Category-III Applicants	Rs 10,000
4	SME and other Applicants	Rs 50,000

Application Procedure for PLI scheme for Food Processing Industry

The Application for PLI scheme for Food Processing Industry will be invited through Expression of Interest (EOI). EOI for Category-I Applicants: EOI will be released for Category-I Applicants in 2021-22 for coverage under Sales-based Incentive and Branding/ Marketing. The selection will be for the entire program period. EOI for Category-II Applicants: EOI will be released for Category-II SME Applicants for innovative/ Organic products for Sales-based Incentive a EOI for Category-III Applicants: EOI will be released for Category-III for Branding & Marketing during each of the first 3 years viz. 2021-22, 2022-23, and 2023- 24 depending upon the availability of funds. The coverage of such Applicants will be for the balance of the program period ie from the date of selection till 31.3.2027

Online Application

• All applications will be submitted through an official web portal of the Production Linked Incentive Scheme (PLIS).
• To apply, the applicant needs to register on the portal. Click on the Register option to proceed further.

Guidelines on PLI scheme for Food Processing Industry - Homepage

• An application page for user registration will be displayed. Provide all mandatory details such as Organization details and Authorized Person Details. After furnishing the details click on the Register option.

Guidelines on PLI scheme for Food Processing Industry - User Registration Guidelines on PLI scheme for Food Processing Industry - User Registration2

• On successful registration, the username and password will be sent to the official mail ID. Select the login option from the homepage to log in to the portal.
• The applicant is required to submit the Application in a prescribed format. The format of application for the PLI scheme for the Food Processing Industry is attached here for reference.
• An Applicant shall submit an undertaking in the below format consenting audit of their manufacturing sites/ offices for verification of information/ data submitted along with the Application

On receipt of an Application in the prescribed format, PMA will conduct an examination within 15 working days from the date of application submission.

• On receipt of Applications, the PMA should share relevant information with the concerned Committees for their advice as decided by MOFPI.
• The PMA would process the Applications and make appropriate recommendations to the MoFPI for approvals under the Scheme.
• The MoFPI would consider Applications, as recommended by PMA for approval under the Scheme.
• All the Applications should be finalized within 90 days from the date of closure of the Application window, subject to the completeness of documents from the Applicants, as required, for evaluation
• After receiving approval from MoFPI, the PMA should issue a letter to the selected Applicants within 5 working days, communicating approval under the Scheme

Procedure to Clamining Incentive

For claiming Incentive under the Scheme, Applicants shall submit claims for disbursement of Incentive to the PMA.

• An Applicant shall submit a claim for disbursement of Incentive on an annual basis that is for the Sales made from April to March of the previous Financial Year.

• Claims for disbursement of Incentive shall be filed by the Applicants within 9 months from the end of the financial year to which the claim pertains to
• On receipt of Claim for disbursement, the PMA should share relevant information with the concerned Technical Committee for their advice as required in the mandate of the Committee or on any other issue referred by MOFPI to the concerned Committee. The Committees should provide their advice on the matters referred to them
• MoFPI would disburse funds after completion of all pre-disbursal formalities by PMA.
• The disbursement of Incentive would be through Direct Bank Transfer through PFMS or any other mechanism of adjustment in the name of Applicant only