In April 2021, the Ministry of Food Processing Industries (MoFPI) released the Production Linked Incentive (PLI) scheme for the food processing industry. This move was taken to upgrade the local manufacturing ecosystem for select product segments in India, with the aim to create global food champions in the country. We have briefly covered the scheme outline and details of segments and their available incentives.
Scheme Outline
Source: MoFPI
(1 USD = 75 INR)
Scheme Components and Categories
The scheme incentivizes three broad categories highlighted below:
Eligibility and Threshold Criteria by Categories
Category –I for local manufacturing (Incentive Outlay: INR 90.4 billion ~USD 1.2 billion)
*Base year for the calculation of incremental sales is
2019-20 for the initial 4 years. For years 5 and 6, the base year
would shift to 2021-22 & 2022-23, respectively
**on incremental sales by target segment required for availing
incentives
Category –II for SMEs (conditions to be fulfilled below) (Incentive Outlay: INR 2.5 billion ~USD 33 million)
Category –III for only branding and marketing activities (Incentive Outlay: INR 15 billion~USD 200 million)
Applicants' acceptance criteria for incentives under the scheme
Our Comments
With a view to move the country up the value chain of processed foods and create a sustainable ecosystem for value-added products, Production Linked Incentive scheme has been launched for the Food Processing Sector for specific target segments. Considering the change in lifestyle, consumption patterns and the pandemic's impact, the future and opportunities in the Indian food processing ecosystem are higher in the tertiary and value-added processed goods in the form of RTE/RTC segments, processed fruits and vegetables, etc. which is also evident from selected target segment in the PLI scheme.
Moreover, the scheme provides an opportunity for complete participation in all the target segments across the value chain –production, distribution, innovation and marketing. This further validates India's push towards enabling food processing businesses and its focus on becoming a global hub and champion of food processing in the future.
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