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Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)

Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)

The Ministry of Food Processing Industry has 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 in the level of processing, minimization of wastage and increase in value addition. This Rs.10900 plan has been formulated based on the Production Linked incentive scheme of NITI Aayog under Aaatmanirbhar Bharat Abhiyaan for Enhancing India’s Manufacturing Capabilities and Enhancing Exports. The current article briefs the Production Linked Incentive Scheme for Food Processing Industry.

Objectives of the PLISFPI Scheme

The primary objective of the scheme is to support the creation of global food manufacturing champions commensurate with India’s natural resource endowment and support Indian brands of food products in the international markets

  • To create global food manufacturing champions
  • To strengthen the Indian brand of food products for global visibility and wider acceptance in the international markets
  • To Increase the employment opportunities of off-farm jobs
  • For ensuring remunerative prices of farm produce and higher income to farmers

Benefits of the Scheme

This Rs. 10900 crore scheme will run over six years through 2026-2027 and the scheme will create jobs for 250,000 people and attract investments from global and domestic companies in the food processing sector.

The PLISFPI Scheme will also help expand the food processing capacity to generate processed food output worth Rs.33,494 crore by 2026-2027.

Components of PLISFPI Scheme

The first component relates to the provision of financial incentive to select large manufactures of food products who commit to make 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 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.

Eligibility Criteria

  • Food manufacturing entities willing to make a minimum stipulated investment for expansion of processing capacity will be eligible for incentive under the scheme.
  • Minimum investments for the eligibility of the applicants are as follows:
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  • Small and Medium Enterprises (SME) with innovative/organic products will be provided incentive on increased sales above the base year as is provided to large entities.
  • Selection of SME will be based on the nature of the product, stage of product and market development, business plan and potential for scalability as specified in their project proposal.
  • The condition of minimum sales and committed investment will not be applicable in such cases.

Note: The committed investment should be made in the product segment that the entity has been selected for in the years 2021-2022 and 2022-2023. Investment already made in the year 2020-2021 would also be included in this.

Coverage of food products

The scheme is applicable only for the sale of products whose entire manufacturing process has taken place in India.

Incentive on Sales

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.

The base year for calculation of incremental sales will be 2019-2020 for the first 4 years. For the 5th & 6th 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.

The rates of incentive for each of the food segments are as follows:

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The selected entities will need to achieve a minimum cumulative Aggregate Growth rate each year to be eligible to receive the incentive.

The incentive payable for a particular year will be due for the payment in the following.

Segment Allocation

No company will get more than 25% of the total budget for that segment and no company should get less than 5% segment outlay. For the processed fruits and vegetable segment, MoFPI may relax norms of a minimum of 5% per company.

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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 programme for availing such assistance
  • The government of India will provide a 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 also grant 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.

Salient features of the PLISFPI Scheme

The selected applicant will be required to undertake investment, as quoted in their Application (Subject to the prescribed minimum) in Plant and Machinery in the first two years i.e. in 2021-2022 & 2022-2023. The investment made in 2020-2021 also to be counted for meeting the mandated investment.

  • The conditions of stipulated Minimum Sales and mandated investment will not be applicable for entities selected for making innovative/organic products.
  • The second component relates to support for branding and marketing abroad to incentivize the emergence of strong Indian brands.
  • For the promotion of the Indian Brand abroad, the scheme envisages grants to the applicant entities for store Branding, shelf space renting, and marketing.
  • The scheme will be implemented over six years from 2021-2022 to 2026-2027.

Implementation of the Scheme

The PLISFPI Scheme will be rolled out on An India basis and implemented through a Project Management Agency (PMA)

  • The Project Management Agency (PMA) will be responsible for the appraisal of applications, proposals, verification of eligibility for support, scrutiny of claims eligible for disbursement of incentive
  • The Scheme would be monitored at the Centre by the Empowered Group of Secretaries chaired by the Cabinet Secretary
  • Ministry of Food Processing Industries would approve the selection of applicants for coverage under the scheme, sanction, and release of funds as incentives.
  • The MoFPI will prepare an Annual Action Plan covering various activities for implementation of the scheme
  • A third-party evaluation and mid-term review mechanism would be built into the scheme.

PLISFPI Scheme Application Procedure

The application will be invited through Expression of Interest. The application window will be specified in EOI.

The detailed guidelines of the scheme will be uploaded on the website of the Ministry of Food Processing Industries. The scheme guidelines will include a list of products eligible for incremental sales based incentive in each product category, minimum cumulative Aggregate Growth Rate to be achieved each year by the selected entities to be eligible to receive an incentive, the procedure for applying.

Portal for PLISFPI Scheme

A National level portal will be set up wherein the applicant enterprise could apply to participate in the Scheme. All the scheme activities would be undertaken on the National portal.