Cabinet approves Rs 11,000-crore PLI scheme to promote food processing

The rewards will be spread over a six-year period on the manufacture of various items; there are also perks on sales and funding for branding and selling abroad.

The Cabinet approved a production-linked incentive (PLI) scheme to encourage processed food manufacturing on Wednesday, at a cost to the exchequer of Rs 10,900 crore over the next six years.

According to an official estimate, the scheme will help increase domestic food processing capacity and generate an additional Rs 33,500 crore worth of processed foods, with the potential to create 2.5 lakh jobs. After consultation with the industry, the eligibility requirements for companies to obtain the incentives — in terms of expenditure and turnover — will be determined later.

Minister for commerce, railways, food, and public distribution Piyush Goyal announced the Cabinet decision, saying the food processing scheme would help the government increase farmers’ incomes by better processing agricultural produce and attracting major foreign investments high-potential market.

The PLI programs aim to entice large corporations to use cutting-edge technology to evolve into global champions.

Over the next 5-6 years, the PLI schemes’ cumulative benefits are expected to be Rs 1.97 lakh crore. However, the government may benefit because increased domestic production and sales would increase tax revenue – not only indirect taxes like GST but also corporate tax revenue will be boosted due to increased company profitability.

“Indian produce, manufactured using cutting-edge machinery while preserving hygiene and following international standards, will be in high demand all over the world,” Goyal predicted.

More people would embrace refined foods made from highly nutritious millets. The scheme includes canned fruits and vegetables, mozzarella cheese, marine products, and innovative/organic products such as free-range eggs, poultry meat, and egg products. RTC/RTE food, which caters to the Indian diaspora and others, will also be a major focus area for increasing exports.

The rewards will be spread over a six-year period on the manufacture of various items; there are also perks on sales and funding for branding and selling abroad.

“Expansion of manufacturing in the processed food sector would help minimize wastage, which is 20-30% in fruits and vegetables and 4% in foodgrains,” said food policy expert Vijay Sardana. The PLI scheme, along with the earlier amendment to the Essential Commodities Act to establish storage, is timely step that will help reduce wastage and increase commodity value, according to Sardana, who noted that India has one of the highest post-harvest losses in the world.

The PLI schemes are structured so that large companies with high export potential are the primary beneficiaries. For example, qualifying applicants whose global manufacturing revenue exceeded Rs 5,000 crore in FY20 will receive up to Rs 11,000 crore (73 percent of the total incentives of Rs 15,000 crore) under the pharmaceuticals scheme.

In the food processing program, no eligibility thresholds have yet been established for businesses to take advantage of. According to Pushpa Subrahmanyam, the government will issue an expression of interest (EoI) by the end of April, secretary in the ministry of food processing industries. “In each section, the industry is expected to commit to a minimum increase in revenue and a minimum level of investment. If they accomplish both, they will be charged a percentage of the incremental profits (as an incentive). It varies by segment, for example, 7 percent in one segment and 10% in another,” Subrahmanyam explained.


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