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Mega Food Parks Scheme 2012


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Mega Food Parks Scheme 2012

  1. 1.  The  Mega  Food  Parks  Scheme  And  Investment  Potential  in  Mega  Food  Park  projects      Ministry  of  Food  Processing  IndustriesGovernment  of  India
  2. 2. 2  Overview  of  India’s  Food  Processing  Sector  
  3. 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-­‐  signiCicant  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. 4  Source:  Annual  Survey  of  Industries  Growth  of  Food  Processing  Sector  Capital  Investment  in  Registered  Units  in  Food  Processing  Sector  (Rs.  in  Crore)  0   20000   40000   60000   80000   100000   120000   140000  1998-­‐1999  1999-­‐2000  2000-­‐2001  2001-­‐2002  2002-­‐2003  2003-­‐2004  2004-­‐2005  2005-­‐2006  2006-­‐2007  2007-­‐2008  Invested  Capital       Working  Capital       Fixed  Capital      
  5. 5. 5  Contribution  to  GDP  (%  Growth)      GDP  at  2004-­‐05  Prices  Source  :    National  Accounts  Statistics  2011  20.91  14.68   13.16  26.30  0.04  -­‐5.84  2.60  5.19  2.93  -­‐4.57  -­‐10.00  -­‐5.00  0.00  5.00  10.00  15.00  20.00  25.00  30.00  2005-­‐06   2006-­‐07   2007-­‐08   2008-­‐09   2009-­‐10  Registered  FPIs   Unregistered  FPIs  
  6. 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. 7   Shift  in  Demographic  proCile:  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. 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. 9   Source:  A  study  by  CIPHET,  2010  Wastage  of  Agriculture  Produce  Crop     Cumulative  Wastage  (%)  Cereals   3.9-­‐6.0  Pulses   4.3-­‐6.1  Oil  Seeds   6.0  Fruits  &  Vegetables   5.8-­‐18.0  Milk   0.8  Fisheries   2.9  Meat   2.3  Poultry   3.7    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. 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. 11  Overview  of  the  Mega  Food  Parks  Scheme  
  12. 12. 12  Mega    Food  Park  Model:  An  Illustration  Field    Collec4on  Centers  Primary  Processing    Centers:  Pre-­‐cooling,  Grading    pulping  Sor4ng,  waxing,    packing  ,    Temporary  storage    Central  Processing    Center:  Pulping,  Asep4c  packing,    CA  chamber,  Cold  Store  QC  lab,  Logis4cs  center    etc        Mega    Food  Park  CPC  Importer  Exporter    Value  added  Product  Domes4c  sales  Fresh  Products  PPC PPC PPCDomes4c    Retail  sales  Farmer  Groups   Self  Help    Groups      Individual  farmers  
  13. 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      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. 14. 14  Envisaged  Outcomes-­‐  Mega  Food  Parks  Scheme  Envisaged  outcomes-­‐     Increased  realization  for  farmers,     Creation   of   high   quality   processing   infrastructure   including  efCicient  supply  chain,     Reduction  in  wastage,     Capacity  building  of  producers  and  processors,     SigniCicant  direct  and  indirect  employment  generation  
  15. 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. 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  Difdicult,  hilly  &  ITDP  notidied  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. 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. 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.125.00  Cr  to  Rs.  150.00  Cr.      Assistance  from  Ministry-­‐   50%  of  the  eligible  project  cost  limited  to  Rs  50.00  crore  in  general  areas   75%   of   eligible   project   cost   limited   to   Rs.   50.00   crore   in   difCicult   &   hilly  areas  and  ITDP  notiCied  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. 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. 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. 21  Investment  Opportunities-­‐  Mega  Food  Parks    Investment   through   Special   Purpose   Vehicle   (SPV)     in   the   Mega  Food  parks    Opportunities  to  join  project  speciCic  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. 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  350-­‐400  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.  7000  crore.    Overall,   the   30   Mega   Food   Parks   shall   provide   for   setting   up   of  about  750-­‐800  food  processing  including  ancillary  units   A  unique  opportunity  for  investors,  including  foreign  investors,  keen  to  engage  in/enter  the  food  processing  sector  
  23. 23. 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   subsidy   @   6%   per   annum   subject   to   a  maximum  of  Rs.  10  crore  per  project.   Difdicult  Areas    50%   of   eligible   project   cost   subject   to   a   maximum   of    Rs.  25  crore  per  project.    Interest   subsidy   @   7%   per   annum   subject   to   a  maximum  of  Rs.  15  crore  per  project  
  24. 24. 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   subsidy   @   6%   per   annum   subject   to   a  maximum  of  Rs.  6  crore  per  project.   Difdicult  Areas    50%   of   eligible   project   cost   subject   to   a   maximum   of    Rs.  15  crore  per  project.    Interest   subsidy   @   7%   per   annum   subject   to   a  maximum  of  Rs.  9  crore  per  project  
  25. 25. 25  Current  Status    of      Mega  Food  Park  projects  
  26. 26. 26  Current  Status  of  Projects    11th   Plan   proposed   for   setting   up     of   30   Mega   Food  Park  Projects  :-­‐        10  projects  approved  by  CCEA  in  2008-­‐09    05  projects  approved  by  CCEA  in  2010-­‐11    15  projects  approved  by  CCEA  in  2011-­‐12  
  27. 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  Cinal  approval  
  28. 28. 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. 29. 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  Clexibility  to  suit  local  needs.     Applications  are  being  received  and  processed  by  the  State  Governments  
  30. 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. 31  Objectives of NMFP  To propagate significance of food processing for enhancing agriculturalproductivity and farmers income in the Country  To assist the State Govts. in creating requisite synergy between theiragricultural plans and development of food processing sector  To assist the State Governments in addressing both institutional andinfrastructural gaps along the Value Chains and thus create efficient SupplyChains 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 offood safety laws and market demand, both domestic and international
  32. 32. THANK  YOU