Revised Guidelines of Scheme for Agro-Processing Clusters
Revised Guidelines of Scheme for Agro-Processing Clusters
The Ministry of Food Processing Industries has notified the Revised Guidelines of Scheme for Agro-Processing Clusters to vide a notification dated 4th December 2020. This new guideline stipulates the procedure that applies to set-up food processing units and operation of Agro-Processing Clusters. The scheme aims at the development of modern infrastructure to encourage entrepreneurs to set up food processing units based on the cluster approach. The current article briefs the Revised Guidelines of Scheme for Agro-Processing Clusters.
Scheme for Agro-Processing Clusters
The Ministry of Food Processing Industries (MOFP) has launched the Agro Processing Cluster Scheme as a sub-scheme of Central Sector Scheme – “PRADHAN MANTRI KISAN SAMPADA YOJANA (PMKSY)”. The scheme is to be implemented in the area of horticulture/agriculture production identified through a mapping exercise. These clusters will help in reducing the wastage of the surplus produce and add value to the horticultural/agricultural produce which will result in an increase of income of the farmers and create employment at the local level
Objectives of the Scheme
The major objectives of the Agro-Processing Clusters are as follows:
- To create modern infrastructure for food processing units
- To provide integrated and complete preservation infrastructure facilities from the farm gate to the consumer
- To create effective backward and forward linkages by linking groups of farmers to the processors and markets through the well-equipped supply chain
Salient Features of the Scheme
At least 5 food processing units with a minimum aggregate investment of Rs. 25 crores will be set up in the Agro-processing cluster. These units can be formed by the promoters and associates of Project Execution Agency (PEA) and by other entrepreneurs. The investment in these units will not be eligible under this scheme
Agro-processing clusters may be developed by the following person:
- The promoter willing to set up their own units in the cluster and also allow utilization of common infrastructure to other units in the area
- The promoter willing to develop common infrastructure for use by the units to be set up in the food processing cluster by other entrepreneurs
- The promoter willing to develop common infrastructure in the existing food processing cluster
Government Departments, Public Sector Units, Joint Ventures, NGOs, Cooperatives, Self Help Groups (SHGs), Farmer Producer Organizations (FPOs), Private Sector Companies, Partnership Firms and Proprietorship Firms etc. can be Project Execution Agency (PEA) who will be eligible for financial assistance under the scheme
Eligibility criteria for PEA
The combined net worth of the PEA should not be less than 1.5 times of the grant amount sought
- PEA needs to bring in at least 20% of the total project cost as equity or contribution in general areas and at least 10% of the total project cost in the North East States and difficult areas namely Himalayan States State notified ITDP areas and Islands
- PEA needs to bring in term loan from the Bank or Financial Institution for an amount not less than 20% of the project cost
- The land for the project will be arranged by the PEA either by purchase or on the lease of at least 50 years
- Only one agro-processing cluster will be sanctioned in a district. In case of more than one proposal from the same district, the proposal having a higher score in the merit-based on criteria for assessment will be considered.
- Any entity which has availed financial assistance for a project under Scheme for Agro-Processing Clusters will not be eligible to apply for another project under the same scheme until one year after operationalisation of earlier project.
- The same entity will not be sanctioned more than two projects in five years under this scheme of MoFPI from the date of sanction of the first project
- The promoter of the Agro-Processing Clusters approved by MoFPI will be eligible for availing financial assistance under other schemes of State / Central Governments including MoFPI for setting up of the units in this cluster.
Pattern of Assistance
- The scheme for Agro-Processing Clusters envisages grants-in-aid at a rate of 35% of the eligible project cost in general areas
- The scheme envisages grants-in-aid at a rate of 50% of the eligible project cost in the North East States including Sikkim and difficult areas namely the Himalayan States, State notified ITDP areas & Islands of Union Territories of Lakshadweep and Andaman & Inco bar Islands subject to a maximum of Rs. 10.00 crore per project.
- The eligible project cost will exclude the cost of land, pre-operative expenses and margin money for working capital from the total project cost.
- SC or/and ST promoter will hold a 100% stake in the Project Execution Agency (PEA) and PEA will be treated at par with the difficult areas to extend benefits under the scheme.
- The registered value of the land would be taken as part of the total project cost.
- The Government of India grant will not be used for procurement/purchase of land.
- In case of land acquired by PEA on a lease, such cost may not be part of project cost and may be considered part of operating cost.
- The cost norms notified by Mission for Integrated Development of Horticulture(MIDH) / National Horticulture Board / Ministry of Food Processing Industries will be applied while calculating the eligible project cost and grants-in-aid for the proposals received under the scheme
Release of Funds
The grants-in-aid under the scheme for Agro-Processing Clusters will be released to PEA in four instalments as below:
The first instalment of 35% of the total approved grant will be released to the PEA in the designated Bank account after incurring an expenditure of 35% of the bank term loan and 35% PEA contribution/equity on eligible project cost
The second instalment of 40% of the total approved grant will be released to the PEA in the designated Bank account after incurring an expenditure of 75% of the bank term loan and 75% of PEA contribution/equity on eligible project cost
The third instalment of 15% of the approved grant will be released to PEA in the designated Bank account after incurring an expenditure of 90% of the bank term loan and 90% of PEA’s contribution/equity on eligible project cost
Fourth and Final instalment
Fourth & final instalment of 10% of the approved grant will be released to PEA in the designated Bank account on completion of the project
Components of the Scheme
The Scheme for Agro-Processing Clusters will have the following two components are:
Basic enabling infrastructure
The basic enabling infrastructure includes site development such as the development of industrial plots, boundary wall, roads, drainage, electricity supply including power backup, effluent treatment plant, parking bay, weighbridges, common office space etc. However, the cost of a basic enabling infrastructure will not be more than 40 % of the eligible project cost.
The core infrastructure contains common facilities based on the needs of the units, which will be set up in agro clusters. The common facilities of capital intensive include sorting and packing facilities, food testing laboratory, cleaning, grading, cold storage, steam generation boilers, dry warehouse, pre-cooling chambers, ripening chambers, IQF, specialized packaging, other common processing facilities, etc.
Land requirement for establishing the agro-processing cluster
The extent of land required for establishing the agro-processing cluster will depend upon the business plan of the Project Execution Agency (PEA), which may vary from project to project.
- At least 10 acres of land for the project need to be arranged by the PEA either by purchase or on the lease of at least 50 years
As part of the scheme for Agro-Processing Clusters, preference will be provided to the following units:
- Setting up agro-processing clusters in Agri-Horti clusters identified from time to time by Central / State Governments and its entities such as Department of Agriculture, Co-operation and Farmers Welfare (DAC&FW) under Mission for Integrated Development of Horticulture (MIDH), APEDA etc.
- Setting up of export-oriented agro-processing clusters aligned with the clusters identified by the Department of Commerce and mentioned in their Agri-export Policy 2018 document
- Setting up agro-processing clusters by State Government or its entities on Public-Private Partnership (PPP) mode
Schedule for completion and operationalisation of the project
The schedule for completion and operationalisation of project will be 24 months from the date of approval for general areas and 30 months for the North East States including Sikkim and difficult areas namely Himalayan States (i.e. Himachal Pradesh, Jammu & Kashmir and Uttarakhand), ), State notified ITDP areas & Islands.
- Detailed Project Report (DPR) consisting of technical, commercial, financial and management aspect of the project
- In-principle or final term loan sanction from any Bank/ Financial Institution including Nonbanking Financial Companies (NBFCs) registered with Reserve Bank of India(RBI)
- A detailed appraisal note from the Bank / Financial Institution including Non-Banking Financial Companies (NBFCs) registered with Reserve Bank of India(RBI).
- Certificate of incorporation of the applicant firm, Memorandum and Articles of Association in case of Company, Bye-laws of the Society, Co-operative, Self Help Group or Registered partnership deed, etc.
- Bio-data/background/ experience of the project promoters Project Execution Agency
- Documents in support of net-worth of the PEA and also promoters / proposed shareholder of PEA
- Annual reports and Audited Financial Statement of Accounts of the applicant firm, company, cooperative, Partnership, Self Help Group for last three years
- Annual reports and Audited Financial Statement of Accounts of the applicant firm/company/cooperative/ Partnership/ Self Help Group, etc. for the last three years
- Undertaking by PEA as per prescribed format
Application Procedure – Scheme for Agro-Processing Clusters
In response to the notice inviting Expression of Interest (EoI) by Ministry of Food Processing Industries for selection of Projects, a proposal for the proposed agro-processing cluster need to be submitted by the applicant in the prescribed application format including the documents mentioned above.
The format of application for Scheme for Agro-Processing Clusters is as follows:further_revised_operational_guideline_of_creation_of_infrastructure_for_agro-processing_clusters_apc_-_04122020-17-19
Technical Committee (TC) headed by the Special / Additional / Joint Secretary (MoFPI) will scrutinize the proposals and submit its recommendations to the Inter-Ministerial Approval Committee (IMAC).
The Inter-Ministerial Approval Committee (IMAC) headed by Hon’ble Minister of Food Processing Industries shall select the projects and grant approval to the projects keeping in view the TC recommendations
Please click on the official link to know more about Revised Guidelines of Scheme for Agro-Processing Clusters
Post by Renu Suresh
Renu is experience content writer specialised in compliances and company rules.