Agri, Dairy and Food Processing is defined as transforming agricultural products into food that are in consumable form or transforming one food item into another by adding value to it. Agri, Dairy and Food Processing shall exclude individual grading, packaging, cleaning, and sorting units whereby no physical properties or value addition in terms of increased shelf life is being undertaken.
Based on physical properties of the final product, food processing is generally classified in two categories, manufactured processes and other value-added processes as defined below: »
- Manufactured Processes–
- Other Value-Added Processes
- Dairy and Milk Processing
Incentive For MSME Sectors
The policy provisions for food processing units include:
(i) Investment promotion assistance: Food Processing Industries having an investment of more than ₹10 crores to the maximum limit of medium enterprises in Plant & Machinery (P&M) will get 1.5 times of basic investment promotion assistance (BIPA)
(ii) New Food Processing Units having an investment of more than ₹5 crore and up to the maximum limit of medium enterprises in Plant & Machinery will be eligible for the following assistance in addition to basic investment promotion assistance
Production Linked Incentives: Assistance of 1% on annual net sales turnover will be provided for a period of five years, subject to a maximum limit of ₹5 crore. This assistance will commence from the first financial year following the date of commercial production or the Industry Development Subsidy/Investment Promotion.
Fiscal Incentives
Basic Investment Promotion Assistance (BIPA)
Infrastructure Development Assistance 50% assistance for developing power, water, gas pipeline, road, drainage and sewage infrastructure upto the factory gate subject to a maximum of ₹5 Crore if the investor acquires private land or gets undeveloped Government land for setting up of the unit
Green Industrialization Assistance Capital subsidy of 50%, max upto ₹5 Crore for setting up of waste management systems (such as Effluent Treatment Plant, Sewage Treatment Plant, pollution control devices etc.) and maximum of ₹10 Crore for setting up Effluent Treatment Plant with Zero Liquid Discharge. Sanctioning in 2 equal annual instalments.
Assistance for IPR and Organic Certification
- IPR Assistance: 100% reimbursement of expenses incurred for filing patents, copyrights, trademarks, and geographical indications (GI), subject to a maximum of ₹10 Lakh per unit.
- Organic Certification Assistance: 100% reimbursement of expenses incurred for obtaining organic certifications from APEDA-accredited agencies, subject to a maximum of ₹5 Lakh per unit.
Incentive to Provide Employment to Differently Abled Persons
Units providing employment to Persons with Disabilities (minimum 5% of total workforce) will be eligible for following incentives:
- 100% reimbursement of skill development expenses upto ₹5,000/- per employee for 3 months from date of joining.
- Employees PF/ESI assistance: Reimbursement of employee’s contribution- maximum ₹6,000/per month for 5 years. 6. Medical insurance premium reimbursement for 5 years
- Medical insurance premium reimbursement for 5 years
Power Tariff Reimbursement Power Tariff reimbursement of ₹1/unit shall be given to the units in this sector for a period of 5 years.
Mandi Fee Reimbursement 100% Mandi fee shall be reimbursed on procurement of agricultural produce for a period of 5 years or a maximum of 50% of investment in Plant & machinery (whichever is earlier or lower)
Incentive for Quality Certification Projects obtaining certifications like GMP, USFDA, ISO, ISI, BIS, FPO, AGMARK, Ecomark or any other national or international quality certification shall be given a subsidy of 50% of the total cost incurred for obtaining the certification or ₹5 Lakh, for the period of 5 years, whichever is lower or earlier
Basic Investment Promotion Assistance
Basic Investment Promotion Assistance for large units shall vary between 40% to 10% based on the below formula:
BIPA=IF(EFCI>2000, 200,IF(EFCI<=50, 0.4*EFCI,MIN(15 + 0.08*(EFCI-50) + (EFCI/12) * ((1/ (1+EXP(-5.9*(1 – EFCI/2490))))(1 – EFCI/2490)) + 9.3(1 – EFCI/2500),0.4*EFCI,200)))
Sample Values of BIPA are as follows:
Investment (in ₹ Crore) | Percentage | Amount (in ₹ Crore) |
50-85 | 40% | 20-33.6 |
100 | 36% | 35.9 |
125 | 32% | 39.7 |
150 | 29% | 43.4 |
175 | 27% | 47.2 |
200 | 25% | 50.8 |
225 | 24% | 54.4 |
250 | 23% | 58 |
300 | 22% | 65.1 |
350 | 21% | 71.9 |
400 | 20% | 78.6 |
500 | 18% | 91.4 |
600 | 17% | 103.6 |
700 | 16% | 115 |
1500 | 12% | 180.1 |
2000 | 10% | 200 |
Export Multiple
The Export Multiple shall vary from 1.0 to 1.3 for exports ranging from 25% to 75% of the total production.
ExportMultiple(EM)=IF(ExportPercentage<25%,1,IF(ExportPercentage)
Export % | Multiple |
25 | 1.00 |
30 | 1.03 |
35 | 1.06 |
40 | 1.09 |
45 | 1.12 |
50 | 1.15 |
55 | 1.18 |
60 | 1.21 |
65 | 1.24 |
70 | 1.27 |
75 | 1.30 |
FDI Multiple
The FDI Multiple will be applied to BIPA based on the percentage of FDI equity in the unit. For FDI equity between 26% and 50%, the multiple will range from 1.1 to 1.2, while units with more than 50% FDI equity will receive a fixed multiple of 1.2.
FDI Multiple =IF(FDI<=51, 1.1 + (FDI-26)*(0.1/(51-26)), 1.2))
FDI Equity % | Multiple |
20 | 1.000 |
25 | 1.000 |
30 | 1.116 |
35 | 1.136 |
40 | 1.156 |
45 | 1.176 |
50 | 1.196 |
51 | 1.200 |
