PLI for Food Processing Sector

April 1, 2021

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In News

Recently, The Union Cabinet approved a ?10,900 crore-production linked incentive (PLI) scheme for its food processing industry.

Key Highlights

Implementation
- This scheme will be implemented over six years till 2026-27 and the government expects it to aid the expansion of production capacities to generate processed food output worth ?33,494 crores.

Coverage
- This scheme aims to incentivise the manufacturing of products in four segments — ready-to-cook and ready-to-eat, processed fruits and vegetables, marine products, and mozzarella cheese.
- Innovative or organic products of small and medium-sized enterprises (SMEs) will also be eligible for this scheme.
A portion of the subsidies has also been allocated to support the branding and marketing activities of Indian brands to help them gain wider acceptance in international markets.

Significance

The scheme for food processing would contribute to the government’s efforts to increase farmers’ incomes through better processing of agricultural produce and attract huge foreign investments in the high-potential sector.
The scheme will create jobs for 250,000 people and attract investments from global and domestic companies in the food processing sector.
It is aimed at helping farmers get better prices and also at reducing farm produce wastage.

About Production Linked Incentive

It was introduced in March 2020, to boost domestic manufacturing and cut down on import bills.
The scheme for mobile and allied equipment was notified on 1st April 2020, the guidelines for pharmaceutical ingredients and medical devices were notified on 1st July 2020.
The total incentives under the PLI schemes, covering sectors including telecom, electronics, auto part, pharma, chemical cells and textiles, stood at Rs 1.97 lakh crore over a five-year period.
The scheme has been rolled out for mobile and allied equipment as well as pharmaceutical ingredients and medical devices manufacturing.
On 17th February 2021, Cabinet approved the PLI scheme for telecom equipment.
Recently, the Union Cabinet has approved the Production Linked Incentive (PLI) Scheme for the pharmaceuticals and IT hardware sectors, entailing an outlay of Rs. 15,000 crore and Rs. 7,350 crore, respectively.

Aims and Objectives

To give companies incentives on incremental sales from products manufactured in domestic units.
To invite foreign companies to set shop in India.
To encourage local companies to set up or expand existing manufacturing units.
The goal is to make India more compliant with the World Trade Organisation (WTO) commitments and also make it non-discriminatory and neutral with respect to domestic sales and exports.