The Hindu Business Line : Exim Bank proposes 3 funds for food processing sector

THE Exim Bank of India has recommended three development funds for the expansion of the food processing sector. These include the Agro Export Infrastructure Development Fund (AIDF), Export Market Development Fund (EMF) and Fund for Organic Agricultural Products (FOAP).

As only two per cent of the total production of fruits and vegetables in the country is processed, the scope in this sector is immense, said Mr T. C. Venkat Subramaniam, Chairman and Managing Director, Exim Bank of India. He was speaking on Wednesday at the National Consultative Meet of Fruit and Vegetable Processing.

The AIDF, with a special focus on the processed food and vegetable sector, should give an impetus to export hubs. These hubs will act as aggregators for agricultural product export by providing both physical and market-related infrastructure. We also need to strengthen our storage infrastructure, especially multi-chamber containers, grading, labelling and packing facilities, Mr Subramaniam said. Under the fund, seed development should be given priority. EMF, he said, could be announced at the Union Budget with the appropriate allocation of funds. Interest reimbursement on term loans for financing investment in export-oriented projects should fall under the purview of this fund, he pointed out. "This fund should developed along the lines of Textile Upgradation Fund," Mr Subramaniam added.

The FOAP should also be created, as it will not only give support to the sector, but also help expand organic agriculture.

A two per cent `organic cess' on all sales of chemical fertilisers, pesticides and other inorganic agro chemicals could raise the initial corpus of the fund, he suggested.

Mr Subramaniam said that the FOAP could be operated as a grant and soft loan. The grant component could be up to 50 per cent on the expenditure incurred on testing, certification and research and development of products by the organic farmer. Soft loans could be made available to producers at the bank rate.

The interest differential between this rate and the normal interest rate of the lending institution could be reimbursed out of the fund.

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