PM Formalisation of Micro Food Processing Enterprises Scheme (PM FME Scheme)



As part of Atmanirbhar Bharat Abhiyan, Government of India has launched a new Centrally Sponsored Scheme for ‘Formalization of Micro Food Processing Enterprises’ to be implemented over a period of 5 years from 2020-21 to 2024-25.  The total outlay of the scheme is Rs. 10,000 Cr. to be shared @ 60:40 by GoI and States/UTs.

It has been estimated that there are nearly 25 lakh food processing enterprises in the country which are unregistered and informal. These enterprises contribute 74% of employment and 12% of output in the food processing sector. Nearly 66% of these units are located in rural areas and about 80% of them are family run enterprises.

The performance and development of this segment of the food processing industry is badly impacted due to i) limited skills and lack of access to modern technology and machinery for production and packaging; ii) deficient quality and food safety control systems, including lack of basic awareness on good hygienic and manufacturing practices; iii) lack of branding and marketing skills and inability to integrate with the supply chains; and iv) capital deficiency and low bank credit.

The unorganized micro food processing units require intensive hand holding support for skill training, entrepreneurship, technology, credit and marketing across the value chain.

The aim of the ‘PM FME’ Scheme is to enhance the competitiveness of existing individual in the unorganized segment of the food processing industry and promote formalization of the sector, and support Farmer Producer Organizations, Self Help Groups and Producers Co-operatives along their entire value chain for sorting, grading, assaying, storage, common processing, packaging, marketing, processing of agri-produce and testing laboratories.

The objective of the scheme is to build capability of microenterprises to have increased access to credit; integration with organized supply chain; transition into formal framework and increased access to common services like common processing facility, laboratories, storage, packaging, marketing and incubation services.

The scheme envisages to directly assist 2,00,000 micro food processing units with credit linked subsidy.

Individual micro food processing units would be provided credit-linked capital subsidy @ 35% of the eligible project cost with a maximum ceiling of Rs. 10 lakh per unit. Under the group category, FPOs/Producer Cooperatives would also be provided credit linked subsidy @35% with a maximum ceiling to be prescribed by MoFPI in due course. The members of SHGs dealing in food processing would be provided this subsidy @35% with maximum amount being Rs. 10 lakh. SHG members would also given seed capital @ Rs. 40,000/-per member for working capital and purchase of small tools.

The scheme adopts One District One Product (ODOP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products. ODOP will provide the framework for value chain development and alignment of support infrastructure.

Existing individual micro units producing ODOP products would be given preference. However, units producing other products would also be supported. In case of capital investment by groups (FPOs/Producer Cooperatives), largely those involved in ODOP products would be supported.

Scenario of Punjab

There are over 66,000 small and micro food processing enterprises in Punjab engaged in the production of pickles & murraba, jaggery, savouries, bakery products,  mustard oil, milk products, Poultry, Meat and Fish processing, fruit pulp & juice, sherbet, ready-to-eat/ready-to-cook products, sweet meat, honey, papad, wadiyan, amchoor etc. Besides, FPOs/SHGs/Registered Co-operatives are also engaged in cleaning, grading and direct selling of fresh fruits and vegetable. Some of the micro enterprises and co-operatives have taken proper training from institutions like PAU as to how to make food products in a hygienic manner, but majority of them are running their age old enterprises using primitive ways. Today, many small and micro enterprises have to put in more effort and money to sustain in business as the consumer look for safe and hygienically packed products. The Scheme envisages formalizing over 6,672 un-organized enterprises in Punjab over a period of five years starting 2020-21. Department of Food Processing, Punjab and Punjab Agro Industries Corporation have been designated as the ‘Nodal Department’ and ‘State Nodal Agency’ respectively to implement the ‘PM FME Scheme’ in Punjab.

One District One Product

The geographical area of the state is 50.33 Lakh hectare, of this the net sown area is nearly 82% (41.25 Lakh hectare). The area sown more than once is 37.00 Lakh hectare resulting a cropping intensity of over 190% as against the national average of 142%. Punjab is amongst the top three states having highest cropping intensity in India. The other being Tripura and Haryana. Wheat and paddy are the two major rabi and kharif crops occupying over 84% of the total cropped area. The third major crop is cotton followed by maize and potato. Area under all vegetables has reported a cumulative growth of over 11% in last three years with 2,73,253 Hectare (54,42,220 MT) during 2018-19. During the same period the area under fruits has grown by 8% with 86,673 Hectare (18,50,269 MT) during 2018-19. Kinnow is the main fruit occupying over 61% of the total area under fruit crops. Milk has reported a cumulative growth of about 13% in last three years with 133.47 Lakh kilo liters during 2019-20. Fish farming is also picking up and reported a cumulative growth of about 11% in last three years with 1,51706 MT during 2019-20. The number of commercial layer and broiler farms has also increased in last three years.

The baseline study for ODOP started with a desk review of district wise secondary data of area and production of all food crops with special reference to fruits & vegetables and production of milk, fish & poultry products during last three years followed by interactions with individual micro enterprises, FPOs, SHGs, Registered Co-operatives etc. dealing with these produce and allied products. Data was sourced from the concerned departments of the state government, and feedback on the present status and scope of shortlisted produce was obtained by making phone calls and holding Video Conference meetings with over 500 small and micro enterprises, FPOs, SHGs, subject experts, farmers, Kisan Vigyan Kendras etc.

On the basis of secondary research it was observed that the major categories of food processing that can have a large contribution from micro enterprises and FPOs/SHGs/Registered Co-operatives are

  • Grain and oilseed processing
  • Fruits and vegetables processing
  • Dairy product processing
  • Poultry, Meat and Fish processing
  • Packaged food items such as bakery, savouries, etc.

There are 22 districts in the state. Category wise produce/products of the district were shortlisted and then the same were analyzed amongst each other and rated as having high/medium/low potential from the point of view of ‘ODOP’.  The produce/product falling in the high potential bracket was again assessed and then the most suitable one has been recommended as the most suitable one produce/product for that district.


The following table depicts the name of the district, list of high potential produce/products and the ‘One Product’ recommended:

S. No. District ODOP
1. Amritsar Pickle & Murabba
2. Barnala Poultry, Meat and Fish products
3. Gurdaspur Cauliflower & allied
4. Hoshiarpur Jaggery & allied products
5. Pathankot Litchi
6. Jalandhar Potato
7. Kapurthala Tomato
8. SBS Nagar Peas
9. Bathinda Honey
10 Sri Mukatsar Sahib Milk and Milk products
11. Mansa Milk and Milk products
12. Fatehgarh Sahib Jaggery
13. Roopnagar Mango
14. Sangrur Onion
15. SAS Nagar Milk & Milk products
16. Fazilka Kinnow
17. Faridkot Poultry, Meat and Fish products
18. Ferozpur Chillies
19. Tarntaran Pear
20. Patiala Gauva
21. Ludhiana Bakery Products
22. Moga Potato



Contact Person

Mr. Rajnish Tuli,
General Manager (Food Processing),
Phone no. : +91 95920 09121
Email Id :