Seed Capital component of PM FME Scheme

Guidelines for implementation of Seed Capital component of PM FME Scheme

Ministry of Food Processing Industry (MoFPI) has launched Prime Minister Formalisation of Micro food processing Enterprises (PM FME) scheme under the Aatmanirbhar Bharat Abhiyan with the aim to enhance the competitiveness of existing individual micro-enterprises in the unorganized segment of the food processing industry and promote formalization of the sector.

 The scheme to be implemented over a period five years from 2020-21 to 2024-25 with a total outlay of Rupees 10,000 crore. The scheme has a special focus on supporting Groups engaged in Agri-food processing such as Farmer Producer Organizations (FPOs), Self Help Groups (SHGs) and Producers Cooperatives along their entire value chain.

The PMFME scheme support in terms of:

  1. Seed capital @ Rs. 40,000/- per SHG member for working capital and purchase of small tools
  2.   Food processing entrepreneurs through credit-linked capital subsidy@35% of the eligible project cost with a maximum ceiling of Rs.10 lakh per unit
  3.  Credit linked grant of 35% for capital investment to FPOs/ SHGs/ producer cooperatives. iv. Support for marketing & branding to micro units

Eligibility Criteria for Seed Capital for SHGs

  1. Only SHG members that are presently engaged in food processing would be eligible for financial support;
  2.   The SHG member has to commit to SHG and CBO for utilization of this amount only for working capital and purchase of small tools related to food manufacturing
  3.  Before providing the seed capital, SRLM through its CBOs would collect basic details for each of the members viz. Details of the product being processed, annual turnover, Source

Scale of Assistance to SHGs

The loans to SHG members for working capital and procurement of the tools would depend on the annual turnover of their existing enterprises.

 The enterprises could of two categories – those that are seasonal and others that operate throughout the year. The funding support would vary depending on the nature of operations. The following table provides the maximum loans amount and the details of release permissible under the working capital and for purchasing equipment

Type of enterpriseAnnual Turnover RsMaximum Loan amount for working capital RsMaximum Loan for small tools / equipment RsMaximum loan amount Rs.
Seasonal enterpriseX100% of X40% of X40,000
Perennial enterpriseX50% of X40% of X40,000

If a seasonal enterprise has a turnover of Rs 20,000, then the maximum permissible loan for meeting the working capital is 100% of 20,000 ie. Rs 20,000. For tools it is 40% of 20,000 ie. Rs 8,000. So, the maximum permissible loan to SHG member is Rs 28,000. If the perennial enterprise has a turnover of Rs 20,000, the maximum permissible loan for meeting the working capital is 50% of 20,000 ie. Rs 10,000. For tools, it 40% of 20,000 ie. Rs 8,000. So, the maximum permissible loan is Rs 18,000.

 Interest Rate for loan to SHGs:

 The PM FME beneficiary can be charged a maximum interest of 6% for the loan. The interest spread to be provided to SHG, VO and CLF would be decided by the SRLM

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