Food companies need to meet sales, growth targets

Meenakshi Verma Ambwani New Delhi | Updated on April 10, 2021

EoI likely to be floated by Ministry by end of the month

Food companies will need to meet a minimum sales criteria and commit to a certain level of investments to become eligible to apply for the Centre’s production-linked scheme for the food processing sector. Selected companies will need to achieve increase in sales as per a prescribed annual growth rate to avail of fiscal benefits over the next six years under this scheme.

The scheme, with a budgetary allocation of ₹10,900 crore, is being rolled out for four categories, which include ready-to-eat or ready-to-cook including millet-based foods, processed fruits and vegetables-based products, marine products and mozzarella cheese.

Eligibility criteria

The eligibility criteria of minimum sales and investments will not be applicable to small and medium enterprises that make innovative or organic products in these segments.

According to the Food Processing Ministry, companies interested in applying for the scheme in the ready-to-cook and ready-to-eat segment must need to have minimum sales of ₹500 crore and will need to commit to making minimum investments of ₹100 crore; those in. In the processed fruits and vegetable food category, a minimum sales of ₹250 crore and minimum investments commitment of ₹50 crore In the marine product segment, minimum sales of ₹600 crore and minimum investments of ₹75 crore; has been set as the eligibility criteria. and companies in the the case of mozzarella cheese business , a company will need to must have minimum sales of ₹150 crore and make investments of ₹23 crore (10-mtpd plant).

An expression of interest (EoI) is expected to be floated by the Ministry by the end of this month to invite applications for the scheme. The selected companies will need to make these investments in the next two financial years. Investments made in the previous fiscal will also be considered.

According the Food Processing Ministry, the first component of the scheme has provision for fiscal incentives to “select large manufactures of food products” which commit to make the prescribed minimum investments and achieve increase in sales as per the prescribed growth rates in these segments. The Ministry will soon release guidelines with details, including the minimum CAGR that selected companies will need to meet to avail of benefits under the scheme.

The second component of the scheme will focus on providing incentives to small and medium enterprises that make innovative or organic products in these segments.

The third component will provide grants to companies for branding and marketing their food products in international markets.

Incentives for 6 years

“The incentives under the scheme would be paid for six years from 2021-22 to 2026-27 on incremental sales of base year,” the Ministry stated. The rate of incentives paid per year will differ depending on the category and time period.

Last week, many key players in the packaged food industry said that the scheme will promote investments in the sector, encourage agri-exports and pave the way for Indian brands to go global. However, a section of the industry also believes that provisions should be made to enable more and more small and medium enterprises to take benefits of the scheme. A senior industry player said the scheme will yield better results if medium and small enterprises that make products across wider range of categories can apply instead of only those that rather make innovative or organic products.

Published on April 09, 2021

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