India’s agricultural and food processing sectors are undergoing significant transformation through numerous government schemes aimed at improving infrastructure, reducing wastage, and enhancing market access. These schemes, including the Pradhan Mantri Kisan Sampada Yojana (PMKSY), the Unit Scheme, and the Cold Chain Development Scheme, alongside additional state-level incentives, play a vital role in boosting the agricultural economy. The food processing sector has been declared a thrust sector by the government, recognizing its pivotal role in adding value to agricultural produce, creating jobs, reducing waste, and boosting exports. Through modern infrastructure development, these initiatives are supporting the agro-processing and food testing sectors, which are key to achieving greater efficiency and sustainability in the food value chain.
Under the Unit Scheme, the government aims to develop modern infrastructure and common facilities for food processing units through a cluster approach, linking farmers to processors and markets via well-equipped supply chains. Each agro-processing cluster under this scheme includes essential enabling infrastructure such as roads, water supply, power supply, drainage, and effluent treatment plants, alongside core infrastructure like warehouses, cold storage, Individual Quick Freezing (IQF) facilities, sorting and grading facilities, and at least five food processing units, with a minimum investment of ₹25 crore. These units are set up simultaneously with the creation of common infrastructure, and at least 10 acres of land is required for setting up the clusters. The grant-in-aid provided under the scheme includes 35% of the eligible project cost in general areas and 50% in North East States, Himalayan States, and for SC/ST entrepreneurs, subject to a maximum of ₹10 crore per project. Grants are released in four installments: 35% after 35% of term loan and promoter’s contribution are spent; 40% after 75% of term loan and promoter’s contribution are utilized; 15% after 90% completion of the project; and the final 10% after project completion. As of September 2024, 591 units have been sanctioned under the Unit Scheme, with approved grants of up to 75% in some cases, providing significant support to food processing units across the country.
The Cold Chain Development Scheme plays a critical role in maintaining ideal storage conditions for perishables, reducing wastage, and preserving the quality of harvested food products, ultimately benefiting both farmers and consumers. Cold chain infrastructure includes essential components such as reefer transport and distribution hubs. Financial assistance is available to projects that incorporate farm-level infrastructure and at least one of these components. For eligibility, applicants need a net worth of 1.5 times the grant applied for, and the promoter’s equity should be at least 20% of the total project cost. Grants are released in three installments: 25% after 25% of the promoter’s contribution and term loan are spent; 40% after 65% utilization; and the final 35% after full utilization of the term loan and promoter’s contribution. As of September 2024, more than 400 Cold Chain Infrastructure projects have been approved by the Ministry, with grants totaling ₹3009.71crore and total investment amounting to ₹8673.12 crore .
Food testing is essential to ensuring food safety, hygiene, and quality for both domestic production and exports. Government organizations can receive 100% grants for approved equipment, while private entities are eligible for 50% grants in general areas and 70% in difficult areas. The assistance for food testing is released in three installments: 40% after 40% of the promoter’s contribution and term loan expenditure, 40% after 80% of contributions are utilized, and 20% after full utilization of the grant. These schemes, along with state-level incentives, play a crucial role in transforming India’s agricultural economy into a more resilient and competitive sector on the global stage.
The Agricultural and Food Processing Clusters (APC) scheme plays a pivotal role in linking farmers, processors, and markets more effectively. Under this scheme, food processing clusters are developed to ensure the creation of infrastructure and facilities that enable farmers to process and sell their produce at higher value. These clusters, which are created alongside the development of basic enabling infrastructure, such as water and power supply, storage facilities, and effluent treatment systems, are key to creating a thriving ecosystem for agro-processing. Through a cluster-based approach, the scheme fosters the growth of small and medium-sized food processing units, creating economies of scale and fostering innovation. This scheme is crucial for promoting investment in rural areas and ensuring that farmers have direct access to markets through well-established supply chains.
The Pradhan Mantri Kisan Sampada Yojana and other government initiatives have undoubtedly brought a significant transformation to India’s agricultural and food processing sectors. These schemes are instrumental in improving infrastructure, reducing wastage, enhancing food safety, and boosting exports. The ongoing development of food processing clusters, cold chain infrastructure, and food testing facilities positions India’s agricultural economy as more resilient, competitive, and sustainable in the global market.
About Shripadm Group
At Shripadm Group, we are dedicated food processing advisors committed to helping businesses navigate the complex world of government incentives, financing, and export marketing. With a focus on fostering growth and efficiency in the food processing sector, we provide expert guidance in availing grants and subsidies through government schemes like PMKSY, ensuring businesses capitalize on available opportunities. Our team works closely with clients to streamline the process of setting up food processing units, optimizing supply chains, and accessing new market avenues, both domestically and internationally. Whether you’re seeking funding, technical assistance, or strategic advice, Shripadm Group is here to help you realize your vision for success in the food processing industry.
