PLI scheme for Food Processing Companies and what it means?

PLI scheme for Food Processing Companies and what it means?

by 5paisa Research Team Last Updated: Dec 11, 2022 - 12:36 pm 43.9k Views

Production Linked Incentive (PLI) scheme of the government of India is one of the most ambitious schemes sponsored by the central government to boost domestic production, enhance self-sufficiency and to also eventually emerge as a production base where global companies can manufacture in India and use India as an export hub.

In the latest round of approvals, the government has given the go ahead for PLI benefits to several food processing companies. A total of 60 companies had applied across the food processing value chain including fruits, vegetables, marine products, cheese production etc. The companies that have got approval read like a virtual who’s who roster of the food processing industry.

Some of the companies to immediately benefit from the production linked incentive (PLI) scheme for the food processing industry are names like Britannia, Haldiram, Amul and ITC, among others.

The total outlay for the PLI scheme for the food processing industry alone is pegged at a whopping Rs.10,900 crore and is expected to have a multiplier effect on production in India. 

The incentives offered under the PLI scheme are linked to domestic production and sale of food products. The government believes that this one of the sectors where India can build a global competitive edge.

After all, names like Amul and Haldiram are purely home grown names which have become globally accepted brands. This project will eventually assist the launch of Indian brands in the global markets. 

The PLI scheme for the food processing sector broadly covers 4 segments as under.

1) Ready-to-cook or ready-to-eat foods
2) Processed fruits and vegetables
3) Marine products
4)  Mozzarella cheese.

To begin with, the government has only granted approvals to Category 1 players, which hare essentially the large players in the food processing category that can undertake branding and marketing activities on their own. To avail of the PLI incentives, the collateral investments in plant and machinery have to be done in FY22 and FY23.

According to the media release put out by the Ministry of Food processing, the implementation of the scheme will facilitate expansion of processing capacity to generate food output worth Rs.33,494 crore. It is also expected to generate over 2.5 lakh jobs over the next 6 years. The scheme has been rolled out on an all-India basis.

The incentives under the scheme will be paid for 6 years till FY27 completion. Maximum incentives payable to beneficiary will be approved in advance by the Project Management Agency and even the cost structures for companies will be approved in advance. The scheme will be implemented over a 6-year period from 2021-22 to 2026-27.

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