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

2. Overview of India’s Food Processing Sector

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

5. Contribution to GDP (% Growth) GDP at 2004-05 Prices
Source : National Accounts Statistics 2011

6. Food Processing Sector– Growth Potential
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

7. Food Processing Sector– Demand Advantage
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 (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

8. Food Processing Sector– Impediments
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

9. Cumulative Wastage (%)
Wastage of Agriculture Produce
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-
Crop
Cumulative Wastage (%)
Cereals
Pulses
Oil Seeds
6.0
Fruits & Vegetables
Milk
0.8
Fisheries
2.9
Meat
2.3
Poultry
3.7
Source: A study by CIPHET, 2010

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. Overview of the Mega Food Parks Scheme

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
Food Park
CPC
Importer
Exporter
Value added Product
Domestic sales
Fresh Products
PPC
Domestic
Retail sales
Farmer Groups
Self Help Groups
Individual farmers

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
country’s 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 the11th FYP

14. Envisaged Outcomes- Mega Food Parks Scheme
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. 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. 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. 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. 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. 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. 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. 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 1st and 2nd Phases and 15 projects in the 3rd 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. 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. Proposed Pattern of Assistance During 12th 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. Proposed Pattern of Assistance During 12th 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. Current Status of Mega Food Park projects

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

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

29. The National Mission on Food Processing
The Ministry has launched “National Mission on Food Processing” (NMFP) w.e.f. 1st April, 2012 in cooperation with State Governments during 12th 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. 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. 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