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-­‐  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   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  

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  

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  

 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  

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   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  

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    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 PPC

Domes4c    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  

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  

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  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  

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.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  

           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  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  

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  

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  

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  

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  2008-­‐09    05  projects  approved  by  CCEA  in  2010-­‐11    15  projects  approved  by  CCEA  in  2011-­‐12  

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  

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  Clexibility  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

THANK  YOU