PLI scheme guidelines for food processing don’t have measures to benefit MSMEs, says industry body AIFPA

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PLI sceme, food processing ministry, Production Linked Incentive, processed food manufacturing, ready to cook/ready to eat (RTC/RTE) food,, Piyush Goyal,AIPFA had earlier asked for the inclusion of some food products based on the draft guidelines that were issued last month.

Ease of Doing Business for MSMEs: Apex industry body for food processing industry in India All India Food Processors’ Association (AIFPA) is looking to make another representation to the government to inculcate more pro-MSME measures in the operational guidelines for the Production Linked Incentive (PLI) scheme. The Ministry of Food Processing Industries on Monday had issued the PLI guidelines for the food processing sector along with a dedicated online knowledge portal for the same. “Certain features suitable for MSMEs, which would have benefitted them, had not been incorporated in the guidelines. So, we would look at sharing another representation to the government now,” Subodh Jindal, National President, AIFPA and Founder, Excelsior Food & Chemical Industries told Financial Express Online.

For instance, according to AIFPA, the range of products covered under the scheme is narrow and could have been widened to cover other products. The scheme covered Ready to Cook or Ready to Eat foods including millet products, processed fruits & vegetables, marine products, and mozzarella cheese. “Innovative/ organic products of SMEs in these segments, including free-range – eggs, poultry meat, egg products,” the scheme said. “The range of products offered is very little and equivalent to not offering the scheme. Also, asking for organic and innovative products is as good as saying you don’t’ participate in the scheme. How many SMEs you would find having novel products or with patents,” Jindal added.

AIPFA had earlier stressed on the inclusion of some food products based on the draft guidelines that were issued last month. “Products like mayonnaise have been excluded even though it has huge export potential to the Middle East and African Countries and the choice for Indian products in this range is increasing with the efforts of the MSME sector. ‘Soya Sauce’ is another excluded product having good potential.”

Also read: Digital transactions for MSME Min, attached offices decline for third straight year; KVIC tops in volume

Moreover, “no definition has been provided for ‘Innovative Products’ and it is left to technical committees. Actually, innovative products are well defined by consumers and their choices, and importance should be given to consumer research findings and the way consumers think of an innovative product rather than the selection of just a committee,” the association had said.

Further, according to the guidelines, applicants will be extended grant at 50 per cent of expenditure on branding and marketing abroad. However, this would be subject to a maximum grant of 3 per cent of sales of food products or Rs 50 crore per year, whichever is less. The minimum expenditure for branding abroad has to be Rs 5 crore over a period of five years. “Doing this abroad is also a non-starter because the level at which they want to do it is too low for SMEs,” said Jindal. According to AIFPA’s earlier suggestions, the 3 per cent incentive on turnover is very little as most companies go up to 15 per cent to 20 per cent of their turn over for branding & marketing efforts abroad to build brands which help India. AIPFA had asked for increasing it to at least 7 per cent to bring meaningful results.

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