The Indian food processing industry, valued at over $400 billion, plays a vital role in linking agriculture with manufacturing and distribution. Startups can benefit greatly from MoFPI food processing schemes, which provide subsidies, training, and infrastructure support to grow their business and add value to agricultural products.
Food processing remains undeveloped because of three main challenges post-harvest losses and insufficient infrastructure and minimal value creation. The existing gap enables food processing startups to develop products that create additional value while increasing export capabilities and decreasing their need for imported goods..
The Ministry of Food Processing Industries (MoFPI) provides various government subsidy programs to assist entrepreneurs through three specific programs. The PMFME program and the PMKSY program and the PLI program provide grants and incentives and training and infrastructure support to beneficiaries. This guide explains these schemes in simple terms, including eligibility, benefits, and best use casesThe PMFME program and the PMKSY program and the PLI program provide grants and incentives and training and infrastructure support to beneficiaries. The guide presents an easy-to-understand explanation of the schemes which shows eligibility requirements and available benefits and recommended use cases.
What are MoFPI Schemes for Food Processing Startups?
The government programs which MoFPI implements assist food processing enterprises throughout their business development process. The programs establish basic facilities which will provide financial support to businesses while offering production incentives and employee development programs.
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How MoFPI Support Works-MoFPI schemes for food processing startups
MoFPI offers three types of assistance to business at all levels of development:
- Scattered facilities such as mega food parks, cold chains and common processing units.
- Scale incentives that reward companies when costs and sales are driven.
- Micro units subsidies at higher amounts, and the provision of training and access to markets that are not otherwise available.
These three layers create a strong pathway for startups to scale progressively.
Pradhan Mantri Kisan SAMPADA Yojana (PMKSY)
PMKSY lessens the risk of failure of new business initiatives through 35-50% credit linked grants. Some of the opportunities offered under PMKSY are:
- Mega Food Parks – Popularization of cold storage facilities, dry storage warehouses, and laboratory usage. Additionally, start-ups avoid high capital investments and can concentrate on the actual manufacturing.
- Integrated Cold Chain- Subsidization of pre-cooling, ripening chambers, refrigerated vehicles, and minimal processing units (MPUs). This is suitable for dairy, fruits, vegetables, meat, and seafood.
- CEFPPC (Factory Expansion)- Grants worth up to 5 crores rupees are offered to small factories for modernizing and/or increasing the scale of production.
- Agro-Processing Clusters – shared facilities located in close proximity to the cultivable lands with grants up to 10 crores.
- Operation Greens – provides support for the stocking, processing, and transporting of 22 perishable crops.
PMKSY also finances food laboratories and training facilities. This also assists start-ups in the timely attainment of food safety and export regulations.
Read More: Food Processing Opportunities for Indian Entrepreneurs
Production Linked Incentive Scheme for Food Processing Industry (PLI)
PLISFPI rewards enterprises for the new additional sales in the target areas such as ready-to-eat and heat foods, processed fruits, marine products, food products with new innovations, and others.
Also, overseas marketing expenses are subsidized. The scheme is primarily directed at bigger companies, but small start-ups can collaborate with bigger companies as suppliers or contract manufacturers(MoFPI schemes for food processing startups).
Prime Minister’s Formalisation of Micro Food Processing Enterprises (PMFME)
Moreover, PMFME aids micro and unregistered food processing enterprises by providing the following:
- 35 percent credit-linked subsidy up to 10 lakh rupees
- Assistance for FPOs, SHGs, and cooperatives
- Help with training and certification
- One District One Product (ODOP) clusters for geographically delimited foods
This program allows micro enterprises to more hygiene, finance, and enter more advanced supply networks.
Emerging Infrastructure and Regional Advantages
MoFPI is further developing the national grid of mega food parks, cold-chain systems, and testing laboratories. More Northeastern and tribal regions offer greater subsidies and tax incentives. Startups can pick locations that lower initial investment and enhance circulation.
Import-Export Signals for Startups
India has high import levels of processed products like nut-based spreads, chocolates, vegan dairy, and specialty cheese. However, such imports indicate untapped business potential within the country(MoFPI schemes for food processing startups).
Conversely, the Middle East, Africa, and Southeast Asia, along with the diaspora, have high demand for exported products, especially snacks, spices, ready-to-eat meals, and other plant-based items. Trading agreements like the UAE-INDIA CEPA greatly facilitate and reduce the cost of exports.
Read More: Business Opportunity in Food Processing
For more uncomplicated exporting, startups should seek HACCP, BRC, or ISO 22000.
Segments for High-Potential Startups
- Moreover, ready-to-eat and ready-to-cook meals, such as frozen dishes and instant meal preparations.
- Healthy foods and millet-based products -> gluten-free products, bars, and cereals.
- Nut and plant-based alternatives -> meat alternatives, vegan dairy.
- Purees, frozen vegetables, juices -> beverages, fruit, and vegetables.
- Value addition on dairy products and snacks -> ethnic snacks, artisanal cheese, and spice blends.
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Ways to Reduce Common Startup Risks
- Start with a small pilot unit and scale up with increasing orders.
- Reduce cost of equipment by using PMKSY or PMFME subsidies.
- To ensure a consistent supply of raw materials, work with cooperatives and FPOs.
- To engage with HACCP and regular lab tests, do it earlier.
- Collaborate with CFTRI or recruit food technologists.
- Offer several product lines to ensure raw-material price volatility remains low.
Learnings Derived from Successful Models
- Amul demonstrates the benefits of a strong brand and cooperative sourcing.
- Lijjat Papad demonstrates the importance of quality and collaboration in a small, growing unit.
- Trust creation through packaging and storytelling is the Paper Boat way.
- Haldiram’s focus on the growth drivers of automation, distribution, and standardisation.
Read More: Top 10 Government Schemes for Food Processing Startups in India
Simple Action Plan for Founders
- Market the product category of your choice. Do a study on its demand.
- Estimate the costs, cash flow, ROI, and create a DPR.
- Apply for MSME, PMLKY, or PMFME schemes.
- Establish links with farmers to ensure quality raw materials.
- Pilot testing can be conducted in third party accredited laboratories.
- Geographical concentration can be achieved through Parks, Clusters, or Contract Manufacturing.
- Branding, Certification, and Export Readiness are required.
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How NPCS Assists Entrepreneurs-MoFPI schemes for food processing startups
Niir Project Consultancy Services (NPCS) composes exhaustive Market Survey cum Detailed Techno-Economic Feasibility Reports. These comprise of process flows, lists of machinery, raw materials, layouts of the plant, and financial forecasts.
Moreover, NPCS assists in subsidy strategy, documentation, and planning of exports. PPP NPCS assists entrepreneurs in Startups to reduce their risks and facilitate obtaining loans or investments.
Top FAQs-MoFPI Schemes for Food Processing startups
1. Which MoFPI scheme is the best suited for tiny units?
A. PMFME, as it offers a 35% subsidy up to 10 lakh for machinery.
2. Are small start ups able to derive any benefit from PLI?
A. Yes, if they are supplying or if they are in partnership with PLI approved companies.
3. Is it worthwhile to join a Mega Food Park?
A. Yes, because it helps in cost reduction and also provides laboratories, cold chain and other facilities.
4. Which Certifications are Export Friendly?
A. HACCP, ISO 22000, and BRC are quite popular in the market.
5. How can I reduce the Raw-material Risk?
A. Collaborate with FPOs, establish long-term contracts, and diversify your sourcing from to different areas.
