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The Mega Food Parks Scheme And Investment Potential in Mega Food Park projects Ministry of Food Processing Industries Government of India.

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Presentation on theme: "The Mega Food Parks Scheme And Investment Potential in Mega Food Park projects Ministry of Food Processing Industries Government of India."— Presentation transcript:

1 The Mega Food Parks Scheme And Investment Potential in Mega Food Park projects Ministry of Food Processing Industries Government of India

2 2 Overview of Indias Food Processing Sector

3 3 The Context and Overview Food processing sector critical for achieving growth in the agricultural sector which in turn a pre-requisite for healthy growth of Indian economy Growth of sector essential to meet the twin national objectives of inclusive growth and food security. The 11th Plan- significant progress of the sector in terms of both approach and scale of the Government programmes, with stress on appropriate backward linkages and emphasis on synergy between production and processing.

4 4 Source: Annual Survey of Industries Growth of Food Processing Sector Capital Investment in Registered Units in Food Processing Sector (Rs. in Crore)

5 5 Contribution to GDP (% Growth) GDP at Prices Source : National Accounts Statistics 2011

6 6 Increasing Urbanisation - Lifestyle and Aspirations Increasing Nuclear Families and Working Women Increasing spending on processed food products Food Processing Demand Drivers Changing demographics – Rise in disposable incomes Demand for Functional Foods/ Neutraceuticals Growth of Organised Retail and Private Label Penetration Food Processing Sector– Growth Potential

7 7 Shift in Demographic profile: A largely untapped domestic market of 1 Billion Consumers with 65% of population below 35 years of age. Growing Middle Class- from its current size of 50 Mn to 583 Mn people by 2025 (Source: McKinsey & Co.) Higher Disposable income: Increase in per capita income and purchasing power. Increased consumer awareness towards quality and hygiene aspects of the Food Food Processing Sector– Demand Advantage

8 8 Supply Chain Institutional Gaps (procurement dependence on APMC markets ) Inadequate link between production and processing (lack of processable varieties) Supply Chain Infra Gaps (Lack of primary processing, storage and distribution facilities) Challenges for Food Processing Sector Lack of product development and Innovation Seasonality of operations and low capacity utilization Inadequate focus on quality and safety standards Food Processing Sector– Impediments

9 9 Source: A study by CIPHET, 2010 Wastage of Agriculture Produce CropCumulative Wastage (%) Cereals Pulses Oil Seeds6.0 Fruits & Vegetables Milk0.8 Fisheries2.9 Meat2.3 Poultry3.7 A nation wide study on quantitative assessment of harvest and post harvest losses for 46 agricultural produces in 106 randomly selected districts was carried out by CIPHET. Percentage of losses estimated for major produces-

10 10 Mega Food Park Scheme- The Need Food processing sector- a sunrise sector, is capital intensive with long gestation periods Hence, incentives from the Govt. required to promote private investment in the sector The Scheme conceptualized on an Industrial Park Model and customized to the need of food processing sector. Aim also to overcome the weakness plaguing the sector Grant assistance to be provided to entrepreneurs for setting up common infrastructure The common infrastructure to act as the feeder point for processing units to be set up in the periphery area

11 11 Overview of the Mega Food Parks Scheme

12 12 Mega Food Park Model: An Illustration Field Collection Centers Primary Processing Centers: Pre-cooling, Grading pulping Sorting, waxing, packing, Temporary storage Central Processing Center: Pulping, Aseptic packing, CA chamber, Cold Store QC lab, Logistics center etc Mega Mega Food Park CPC Importer Exporter Value added Product Domestic sales Fresh Products PPC Domestic Retail sales Farmer GroupsSelf Help Groups Individual farmers

13 13 Mega Food Park Scheme - Background MFPs to provide state-of-the art infrastructure facilities – to enable setting up of food processing units Setting up common facilities along with processing units in the periphery Expected to facilitate the achievement of the Vision 2015 of the Ministry-, i.e. to raise the processing of perishables in the country from the existing 6% to 20%, value addition from 20% to 35% and countrys share in global food trade from 1.5% to 3% Scheme formed to accelerate growth of food processing industry in the country Demand driven with focus on both backward and forward integration 30 Mega Food Parks to be set up during the11 th FYP

14 14 Envisaged Outcomes- Mega Food Parks Scheme Envisaged outcomes- Increased realization for farmers, Creation of high quality processing infrastructure including efficient supply chain, Reduction in wastage, Capacity building of producers and processors, Significant direct and indirect employment generation

15 15 Salient Features of the Scheme Enabling Infrastructure Creation along the supply chain Creation of CPC, PPCs and CCs Common Facilities and amenities to be assisted Leverage investments in food processing units Provision for Standard Design Factory and Plug & Play facilities for Micro and Small Enterprises Project to be implemented through a Special Purpose Vehicle (SPV): As private led initiative

16 16 Special Purpose Vehicle (SPV) SPV, to be a Body Corporate registered under the Companies Act, and can be constituted by stakeholders like infrastructure developers, FIs/Banks/PE Firms, Org. retailers, Food Processors, 3PL & other service providers, Farmer Orgs. etc… Each SPV to have At least three entrepreneurs / business units, with the entrepreneurs being independent of each other and business units with no common directors. At least one should be from the food processing sector with at least 26% equity in the SPV SPVs to bring in at least 20% of the eligible project cost, including the cost of land, as their contribution- 10% in case of Difficult, hilly & ITDP notified areas Eligible project cost- total project cost minus cost of land, pre-operative expenses and MMWC. Interest during Construction (IDC), a part of pre-operative expenses, shall be considered under eligible project cost.

17 17 SPV..Contd... Combined net worth of the shareholders of the SPV should not be less than Rs. 50 Cr- Food Processor should have at least Rs. 10 Cr of net worth Each member in the SPV must have a net worth of 1.5 times of their proposed equity contribution to ensure requisite contribution for the project Government agencies may also become shareholders in SPV, with maximum equity of 26% so as to ensure private sector character of the SPV

18 18 Salient Features of the Scheme.. Contd. Grant Assistance for creation of common infrastructure facilities and setting up of processing units Typical Project Cost envisaged – Rs Cr to Rs Cr. Assistance from Ministry- 50% of the eligible project cost limited to Rs crore in general areas 75% of eligible project cost limited to Rs crore in difficult & hilly areas and ITDP notified areas Cost of land, pre-operative expenses and margin money for working capital not eligible for grant under the Scheme The eligible project cost- total project cost minus cost of land, pre-operative expenses and margin money for working capital. However, Interest during Construction (IDC) is a part of pre-operative expenses and shall be considered under eligible project cost.

19 19 Eligible Project Components in MFP Core Processing Facilities Primary Processing Centers: Sorting and grading, dry warehouses, cold stores including pre-cooling, reefer vans, mobile pre-coolers and collection vans etc Central Processing Center: Sorting and grading, Packaging, Dry warehouses, Specialized storage facilities, Pre-cooling and Ripening chambers etc, IQF, Cold chain infrastructure, Irradiation facilities, Steam generation & sterilization units, Food incubation-cum-development centers, QC Lab etc. At least 35% of the eligible project cost shall be towards creation of above mentioned facilities

20 20 Project Components in MFP.. Contd. Factory Buildings Provision For MSEs – A maximum of 10% of total allotable area for setting up Standard Design Factory Sheds for MSEs Enabling Basic Infrastructure Roads, drainage, water supply, electricity supply including captive power plant, ETP & STP, weighbridges etc Non –core Infrastructure Admin buildings, training centers, canteen, workers hostel, trade/display center etc: Cost of non-core infrastructure facilities, not exceeding 10% of the eligible project cost, would be eligible for grant purpose

21 21 Investment Opportunities- Mega Food Parks Investment through Special Purpose Vehicle (SPV) in the Mega Food parks Opportunities to join project specific SPV as co-promoter/s: Investment in the form of equity participation 15 projects taken up in 1 st and 2 nd Phases and 15 projects in the 3 rd phase (status detailed in later slides) As partners in SPV, the members, collectively, would be responsible for development, implementation and management of common facilities to be created in the Project 100 percent FDI is permitted in Food Processing Sector: A USP The MFP would have plots of varying sizes that FP companies can take on lease and make use of the common facilities to manufacture processed food

22 22 Investment Opportunities.. Contd. Investment in the Processing Units in the Mega Food Parks 13 Mega Food Parks under implementation– each Park shall provide developed infrastructure for setting up about 25 to 30 processing units leading to a total of about units 17 more projects in the pipeline for approval- Shall provide for setting up of over 400 units Given leverage of investment envisaged, these 30 Parks expected to have a combined investment of over Rs crore. Overall, the 30 Mega Food Parks shall provide for setting up of about food processing including ancillary units A unique opportunity for investors, including foreign investors, keen to engage in/enter the food processing sector

23 23 Proposed Pattern of Assistance During 12 th Plan Mega Food Parks General Areas 35% of eligible project cost subject to a maximum of Rs. 25 crore per project. Interest 6% per annum subject to a maximum of Rs. 10 crore per project. Difficult Areas 50% of eligible project cost subject to a maximum of Rs. 25 crore per project. Interest 7% per annum subject to a maximum of Rs. 15 crore per project

24 24 Proposed Pattern of Assistance During 12 th Plan Mini Food Parks General Areas 35% of eligible project cost subject to a maximum of Rs. 15 crore per project. Interest 6% per annum subject to a maximum of Rs. 6 crore per project. Difficult Areas 50% of eligible project cost subject to a maximum of Rs. 15 crore per project. Interest 7% per annum subject to a maximum of Rs. 9 crore per project

25 25 Current Status of Mega Food Park projects

26 26 Current Status of Projects 11 th Plan proposed for setting up of 30 Mega Food Park Projects :- 10 projects approved by CCEA in projects approved by CCEA in projects approved by CCEA in

27 27 Current Status of Projects Out of 30 projects, Final Approval has been accorded to 13 projects Out of these 13 projects, 7 (Punjab, Assam, West Bengal, Tripura, Andhra Pradesh and Karnataka) are at advanced stages and rest are at different stages of implementation. 15 projects have been accorded In-principle approval in the month of September, 2012 whereas two projects accorded In-principle approval earlier are yet to complete formalities for final approval

28 28 Location of Mega Food Parks Projects accorded Final approval Projects accorded In-principle Approval (1 st & 2 nd Phase) Projects accorded In-principle Approval (3 rd Phase)

29 29 The National Mission on Food Processing The Ministry has launched National Mission on Food Processing (NMFP) w.e.f. 1 st April, 2012 in cooperation with State Governments during 12 th Five Year Plan. This is aimed at ensuring better outreach of various schemes / programmes of the Ministry and provide more flexibility to suit local needs. Applications are being received and processed by the State Governments

30 30 Schemes covered under the Mission (NMFP) Scheme for technology up-gradation, setting up/modernization/expansion of food processing industries Scheme for Modernization of Abattoirs Scheme for Human Resource Development Scheme for Promotional Activities Cold chain projects for non-horticultural products

31 31 Objectives of NMFP To propagate significance of food processing for enhancing agricultural productivity and farmers income in the Country To assist the State Govts. in creating requisite synergy between their agricultural plans and development of food processing sector To assist the State Governments in addressing both institutional and infrastructural gaps along the Value Chains and thus create efficient Supply Chains for agricultural produces To promote initiatives for skill development, training and entrepreneurship To assist MSMEs in setting up/modernization of processing units To assist food processing industry to meet requisite standards in terms of food safety laws and market demand, both domestic and international

32 THANK YOU


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