Sunday, September 11, 2011

Ministry of Food Processing Industries approves 15 mega food parks

Government has approved setting up of 15 Mega Food Parks under Infrastructure Development Scheme. The main features of the scheme are cluster based and demand driven approach. Availability of approximately 50 -100 acres of land and adequate quantity of raw materials are basic criteria for the selection of location for setting up of such Parks.

Setting up of 15 more Mega Food Parks have been proposed during the remaining period of 11th Five Year Plan.

The States for these projects have not been finalized.

This scheme is aimed at creating state of the art infrastructure facility for enabling setting up of food processing industries. Through backward linkages, Special Purpose Vehicle (SPV) of the Mega Food Park enters into an arrangement with farmers’ group in the catchment area for production of desired variety and quantity of farm produce to ensure regular supply of raw material to the Mega Food Park. This has facilitated clusterised farming on demand driven manner with market orientation. The farmers are assured of the market for their farm produce and get remunerative prices thereby increasing their income considerably.

Ministry has constituted District Coordination Committee under the Chairmanship of concerned District Collectors for coordinating various activities of the Mega Food Park.

This information was given by the Minister of State for Food Processing Industries, Dr. Charan Das Mahant in a written reply in the Lok Sabha today.

Background and Objectives of the Scheme

  • Based on extensive feedback and consultations with various stakeholders the earlier Scheme of Food Parks under the 10th Five Year Plan has been revised and reformulated as Mega Food Parks Scheme (MFPS) for the 11th Five Year Plan period.

  • MFPS is expected to facilitate the achievement of the Vision 2015 of Ministry of Food Processing Industries to raise the processing of perishables in the country from the existing 6% to 20%, value addition from 20% to 35% and the share in global food trade from 1.5% to 3% by the year 2015.

  • The primary objective of the MFPS is to provide adequate / excellent infrastructure facilities for food processing along the value chain from the farm to market. It will include creation of infrastructure near the farm, transportation, logistics and centralized processing centers. The main feature of the scheme is a cluster based approach. The scheme will be demand driven; pre marketed and would facilitate food processing units to meet environmental, safety and social standards.

  • The expected outcome is increased realization for farmers, creation of high quality rural processing infrastructure, reduction in wastage, capacity building of the producers and processors and creation of an efficient supply chain along with significant direct and indirect employment generation.

Salient Features of the Scheme

  1. The scheme aims to facilitate the establishment of a strong food processing industry backed by an efficient supply chain, which would include collection centers, primary processing centers and cold chain infrastructure. The food processing units, under the scheme, would be located at a Central Processing Centre (CPC) with need based common infrastructure required for processing, packaging, environmental protection systems, quality control labs, trade facilitation centers, etc.

  1. The extent of land required for establishing the CPC is estimated to be between 50-100 acres, though the actual requirement of land would depend upon the business plan, which may vary from region to region. CPC would be supported by farm proximate Primary Processing Centers (PPC) and Collection Centres (CCs) in identified locations based on a techno-feasibility study, adequate to meet the requirements of the CPC. The land required for setting up of PPCs and CCs at various locations would be in addition to land required for setting up CPC.

  1. It is expected that on an average, each project will have around 30-35 food processing units with a collective investment of Rs 250 crores that would eventually lead to annual turnover of about Rs 450-500 crores and creation of direct and indirect employment to the extent of about 30,000. However, the actual configuration of the project may vary depending upon the business plan for each Mega Food Park. The aggregate investment in CPC, PPCs and CCs should be proportionate and commensurate to the size of the total project keeping in view the economies of scale. The Scheme is co-terminus with the 11th Plan period. However, projects which have received the final approval under the scheme shall continue to receive the grant support and benefits of the scheme.

Pattern of Assistance:

  • The scheme envisages a onetime capital grant of 50% of the project cost (excluding land cost) subject to a maximum of Rs. 50 crores in general areas and 75% of the project cost (excluding land cost) subject to a ceiling of Rs. 50 crores in difficult

  • and hilly areas i.e. North East Region including Sikkim, J&K, Himachal Pradesh, Uttarakhand and ITDP notified areas of the States.

  • Considering the complexities of the scheme, the Ministry would engage a Program Management Agency (PMA) to provide management, capacity building, coordination and monitoring support. For meeting the cost of the above and also other promotional activities by the Ministry, a separate amount, to the extent of 5% of the overall grants available, is earmarked.
  • The project cost for the purpose of eligibility under this scheme would consist of the following components:

  1. Core Processing Facilities:

    1. Farm Proximate Collection Centers and Primary Processing Centers: which will have cleaning, grading, sorting and packing facilities (including equipments) dry warehouses, specialized cold stores including pre-cooling chambers, ripening chambers (including equipments), reefer vans, mobile pre-coolers, mobile collection vans etc.
    2. At the Central Processing Centers: buildings for common facilities like testing laboratory (including equipments), cleaning, grading, sorting and packing facilities (including equipments), dry warehouses, specialized storage facilities including Controlled Atmosphere Chambers, Pressure Ventilators, variable humidity stores, pre-cooling chambers, ripening chambers etc. (including equipments), cold chain infrastructure including reefer vans, packaging unit, irradiation facilities, steam sterilization units, steam generating units, Food incubation cum development centers etc.
    3. The above mentioned facilities are only illustrative and exact nature of the facilities may vary from project to project based on specific requirements. However, it is expected that at least 50% of the project cost (excluding land) would be towards creation of above mentioned core processing facilities.

2. Factory buildings:

It will consist of standard factory sheds for Micro and Small Enterprises (MSEs) which are built on a maximum of 10 per cent of the area of CPC as part of plug and play facilities for MSEs.

3.Enabling Basic Infrastructure:

It will include roads, drainage, water supply, electricity supply including captive power plant, effluent treatment, telecommunication lines, parking bay including traffic management system, weighbridges etc. at the PPC and CPC level. Enabling infrastructure should be commensurate / proportionate to support core activities.

4 Non-Core Infrastructures:

It will consist of support infrastructure such as administrative buildings, training center (including equipments), trade center/display center, crèche, canteen, workers hostel, offices of service providers, labour rest and recreation facilities, marketing support system, etc. However, the cost of non-core infrastructure facilities not exceeding 10% of the project cost, would be eligible for grant purpose.

5 Project Implementation Expenses:

This would include cost of hiring the services of domain consultants by the SPVs for preparation of DPRs, supply chain management, engineering/designing and construction supervision etc.

6 Land:

Land for the project shall be purchased / arranged by the SPV. The registered value of such land would be taken as part of the project cost and contribution/share of the SPV. The GOI grant shall not be used for procurement of land and will be 50% of non-land component of the project. Although the projects are expected to be formulated by the SPVs based on the felt needs, the projects with greater emphasis on establishment of core processing facilities and thereby directly enabling the establishment of food processing units would be given preference.

Role of State Government:

The role of the State Government is envisaged in the following areas:

i) Providing assistance to SPVs in procurement of suitable land.

ii) Providing all the requisite clearances, wherever needed, for setting up the

MFP and its components thereof and providing the necessary assistance for

Power, Water, Approach roads and other external infrastructure to the project

iii) Providing flexible and conducive labour environment and consider special

facilities like exemption of stamp duty, VAT/Sales Tax exemption etc. for the

MFP and the units located in the MFP.

While approving the Mega Food Park projects, preference would be given to

projects located in states, which have or are in the process of providing encouraging / conducive and enabling environment in terms of policy / regulatory framework (model APMC Act etc.), infrastructure and fiscal incentives for food processing sector.

Providing a fast track single window agency to facilitate clearances and

permissions required for the project

The State Government agencies like Infrastructure/Industry Development

Corporations can also participate in the projects by way of subscribing to the equity of SPV, if they so desire as per the norms stipulated in the Scheme.

The MFPs will be encouraged and assisted to seek approval of the projects under the Industrial Infrastructure Parks Scheme, 2002 and to avail of the benefits therein, provided the requisite conditions are met.

Dovetailing of Assistance

Considering the complexities and challenges associated with a supply chain linked infrastructure projects of this nature, the SPV may dovetail assistance available under various other schemes of Central and State Governments, which would improve the viability of the projects, subject to the condition that the contribution of SPV, including land, shall at least be 20% of the project cost. However, in case of difficult areas as mentioned in para 3.1, the minimum contribution of SPV shall at least be 10% of the project cost. While dovetailing such assistance, it will be ensured that there is no duplication of assistance for the same component/activity of the project.

Release of Funds:

Once the project receives the Final Approval of the Approval Committee, the grant support will be released by the Ministry to the SPV as per the following schedules subject to fulfillment of the related conditions stated below, by the SPV: First Installment of 30% of the total grant under the scheme will be released in two parts.

In the first phase 10% advance will be released within 15 days of Final

Approval, subject to fulfillment of following criteria:

i) Incorporation of SPV.

ii) Possession of land with SPV as per DPR requirements, and its conversion into industrial use, if needed.

iii) Execution of Share Subscription Agreement

iv) Establishment of Trust and Retention Account in a Schedule A Commercial Bank and signing of the TRA Agreement with the Bank

v) Appointment of a nominee from the Ministry on the Board of the SPV.

Tenure of the Ministry nominee will be co-terminus to the operationalization of the project.

vi) Final approval of the project by AC

vii)Proof of equity contribution of at least 10% by the SPV

viii) Proof of appointment of PMC by the SPV

ix) Recommendation of PMA confirming the above points (i) to (viii).

Second part of the first installment representing 20% of the total GOI

share will be released to the SPV subject to fulfillment of following


i) Utilization Certificate for the grant released in the 1st phase of First


ii) Details of the contribution of the SPV towards its share of the project cost.

iii) Sanction Letter for loan Component, in case SPV is taking term loans.

iv) Award of contracts worth at least equivalent to 30% of the total project cost, excluding the land cost.

The release will be made within 30 days of the SPV requesting the same, upon completion of aforesaid conditions.

Second installment of 30% of the total GOI share after the utilization of the

2nd phase of the first installment and after further proportionate expenditure

(equal to the GOI share released) has been incurred by the SPV on the project (excluding land cost). Utilization Certificate (UC) of the 1st Installment shall be submitted by the SPV at the time of making claim for the 2nd Installment.

The release will be made within 30 days of the SPV requesting the same, upon completion of aforesaid conditions.

Third installment of 30% of the total GOI share after the utilization of the

2nd installment and after further proportionate expenditure (equal to the

GOI share released) has been incurred by the SPV on the project (excluding land cost). Utilization Certificate (UC) of the 2nd Installment shall be submitted by the SPV at the time of making claim for the 3rd Installment.

The release will be made within 30 days of the SPV requesting the same, upon completion of aforesaid conditions. Ten percent of the total GOI share as final grant assistance will be released after successful completion of the project and operationalization of the common facilities in the CPC as mentioned in the DPR. The Utilization Certificate of the 3rd Installment shall also be submitted by the SPV at the time of making claim for the final Installment.

The release will be made within 30 days of the SPV requesting the same, upon completion of aforesaid conditions.

Separate accounts shall be kept by SPV for the funds released by GOI.

In the event of an SPV withdrawing from executing a project before utilizing the

Government assistance, then the SPV should immediately return the Government assistance together with the interest accrued thereon, in accordance with provision laid under GFR 19 of Government of India.

A format of the Utilization Certificate is given as per Annexure ‘C’

Time Schedule:

The time schedule for completion and successful operationalization of project will be 24 months from the date of release of first installment of the grant by the

Ministry or within the extended timeframe as granted by the IMAC.

The SPV shall make all possible efforts to complete the projects as per the time lines committed while seeking approval for the project. However, except in case of force de majeure or reasons beyond the control of SPV, any willful delay, not

attributable to valid reasons beyond the control of the SPV, the Approval

Committee may consider imposing appropriate penalty in terms of reducing the grant amount, on case to case basis.

Project Monitoring and Evaluation:

The Ministry will periodically review the progress of the projects under the scheme. The PMA would devise a suitable project monitoring system and shall furnish monthly reports/returns to the Ministry on the progress of the approved projects In so far as interpretation of any of the provisions of these guidelines is concerned, the decision of the Approval Committee (AC) shall be final.


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