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Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme


Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme

To provide financial, technical, and business support to the entrepreneurs who engaged in food processing, the Ministry of Food Processing Industries (MoFPI) has introduced the Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme. This Rs. 10000 crore plan has been started as a part of Atmanabir Bharat Abhiyan. Under this scheme, micro-enterprises will get a 35% subsidy on project cost with a ceiling of Rs.10 lakh. The PM FME scheme lays a special focus on SC/ST entrepreneurs, women entrepreneurs, Farmer Producer Organization (FPO), Self Help Groups (SHGs), producer cooperative, and entrepreneurs from aspirational districts.

The objective of the PM FME Scheme

The key objective of this PM FME scheme is to bring new technology and to providing affordable loans to help new entrepreneurs to enter new markets.

  • To increase the access to credit to existing micro food processing entrepreneurs for technology up-gradation
  • The scheme aims to provide capacity building of entrepreneurs through technical knowledge, skill training, and handholding support services;
  • To enhance the competitiveness of existing individual micro-enterprises in the unorganized segment of the food processing industry
  • To promote formalization of the food processing sector;
  • To provide Support Farmer Producer Organizations (FPOs), Self Help Groups (SHGs) and Producers Cooperatives along their entire value chain

Benefits of PM FME Scheme

The benefit of the Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme is as follows:

  • As part of this scheme, approximately eight lakh micro-enterprises will benefit through access to information, better exposure, and formalization.
  • This scheme will enable the small entrepreneur to formalize, grow, and become competitive.
  • The PM FME Scheme will generate nine lakh skilled and semi-skilled jobs in India.
  • The primary focus of the scheme is to existing micro food processing entrepreneurs, women entrepreneurs, and entrepreneurs in the Aspirational Districts.
  • The entrepreneur will get better integration with organized markets.
  • The scheme will increase access to common services like sorting, processing, packaging, storage, etc.

PM FME Scheme Duration

The PM FME Scheme will be implemented over five years from 2020-2021 to 2024-2025.

Note on One District One Product (ODOP)

The PM FME scheme adopts the One District One Product (ODOP) approach for providing additional benefits to an entrepreneur in terms of the following:

  • Procurement of inputs
  • Availing common services
  • Marketing of products

As part of this, the States will identify food products for a district considering the existing clusters and availability of raw material. The ODOP includes perishable agri-produce, cereal-based product, or a food product widely produced in a district and their allied sectors. The PM FME scheme will give preference to an entrepreneur who producing product under the ODOP approach

Expenditure under the PM FME scheme

The PM FME scheme will provide an outlay of Rs. 10,000 crore and the expenditure under the scheme will be shared in the following manner:


Expenditure under the PM FME scheme


Central and State Governments 90:40 Ratio


North Eastern and the Himalayan States

90:10 ratio


Union Territory with the legislature

60:40 Ratio

4 Center for other Union Territory


Financial Assistance Details

The financial assistance under the Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme is as follows:

Support to Individual Micro Enterprises

As part of this scheme, Individual micro food processing units will get credit-linked capital subsidy at a rate of 35% of the project cost with a maximum ceiling of Rs.10.0 lakh per unit. The beneficiary contribution should be a minimum of 10% of the project cost with the balance being a loan from the prescribed Bank.

Support to FPOs / SHGs / Cooperatives

The PM FME scheme will provide support to Farmer Producers’ Organisations (FPO), Self-help group (SHG), Producer Cooperatives for capital investment along the entire value chain with credit linked grant at the rate of 35%.

Seed Capital to Self-help group

As part of this scheme, the Government will provide seed capital at a rate of Rs.400000 to Self-help group who engaged in the food processing. This assistance can be used for working capital or to purchase small tools.

Seed capital as a grant will be provided to the Self-help group federation which, in turn, would be extended to members as loan through the SHGs.

Common Infrastructure Development

PM FME scheme will provide a credit-linked grant at a rate of 35% to FPOs, SHGs, cooperatives, State-owned agencies, and private entrepreneurs for the development of common infrastructure. This amount can be used for the development of a common processing facility, lab, warehouse, cold storage, and packaging and incubation centre.

Branding and Marketing Support

Marketing and branding support will be provided at the State or regional level to FPOs, SHGs, Cooperatives, or an SPV of micro food processing enterprises. Support for branding and marketing is limited to 50% of the total expenditure.

Eligibility criteria for PM FME Scheme

The eligibility criteria for the Pradhan Mantri Formalization of Micro Food Enterprises (PM FME) Scheme are as follows:

Eligibility criteria for Individual micro food processing units

  • Individual / Partnership Firm with ownership right of the enterprise can apply for the scheme
  • The assistance under the scheme is provided only to the existing micro food processing units which are verified by the Resource Person
  • To avail the benefit, the entrepreneur should be above 18 years of age
  • The entrepreneur  should possess at least 8th standard pass educational qualification
  • Only one person from one family is eligible for obtaining financial assistance under the scheme.

Eligibility criteria FPOs/ SHGs/ Producer Cooperatives

  • To avail the financial assistance, the entity should be engaged in processing of ODOP produce for at least three years
  • In the case of FPOs or cooperatives, they should have a minimum turnover of Rs.1 crore and the cost of the project proposed should not be larger than the present turnover;
  • The SHG, cooperative, FPO should have sufficient internal resources to meet 10% of the project cost and margin money for working capital.

Eligibility of SHG to Obtain Seed Capital

For obtaining Seed Capital under the PM FME scheme, only SHG members who are presently engaged in food processing need to apply. The SHG member has to commit to utilizing this amount for working capital as well as the purchase of small tools and need to commit in this regard to the SHG and SHG federation.

PM FME Scheme Application Procedure

Existing food processing units desirous of seeking assistance under this scheme need to apply online through the official website of the FME portal. The Resource Persons (RPs) engaged for field-level support will provide handholding support for the following:

  • Preparation of Detailed Project Report
  • Availing bank loan
  • Obtaining necessary registration and licenses including food standards of FSSAI, Udyog Aadhaar, and GST

Applications for support for FPOs, SHGs, cooperatives, common infrastructure and marketing, and branding need to be submitted to the State Nodal Agency (SNA) along with a Detailed Project Report. The State Nodal Agency will appraise the project and recommend it for a bank loan.

The bank sanctioning the loan would open a mirror account in the name of the beneficiary. Grant by the Government would be deposited in this account of beneficiary in the lending bank branch by the Government. If after three years from the disbursement

Note: If after three years from the disbursement of the last tranche of the loan, the beneficiary account is still standing and the Unit is operational, this amount would be adjusted in the bank account of the beneficiary.

Training for Entrepreneur

Under this scheme, Training support will be provided for units that are part of a support for Marketing and Branding or have the potential to join such a network.

National Institute for Food Technology Entrepreneurship and Management (NIFTEM) and Indian Institute of Food Processing Technology (IIFPT), two national-level food processing technology institutions under MOFPI are providing training to small entrepreneurs.

Training to individual entrepreneur and group beneficiaries will focus on following

  • Entrepreneurship development
  • Essential functions of enterprise operations,
  • Bookkeeping and registration
  • FSSAI standards
  • Udyog Aadhaar and GST Registration
  • General hygiene, packaging, and marketing