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PM Formalization of Micro Food Processing Enterprises (PM-FME)

Relevance: GS Paper 2 – Government policies and interventions for development in various sectors, GS Paper 3 – Food Processing and related Industries



The scheme PM Formalisation of Micro Enterprises (PM-FME) has completed one year on 29th June 2021.


Key Features of the scheme

  • In 2020, as a part of Aatmanirbhar Bharat Abhiyan, the government launched the scheme for micro food processing industries for the unorganised sectors.
  • It is a centrally sponsored scheme under the Ministry of Food Processing and Industries.
  • It has a total corpus of Rs. 10,000 crores and its funding pattern are 90:10 in Himalayan and North Eastern states, 60:40 in other states and UTs with the legislature, and 100% for other UTs, between central and state governments.
  • The scheme will run for a period of 5 years—2020-21 to 2024-25.
  • It is currently being implemented in 35 states/UTs.
  • 2 Lakh micro food enterprises will be provided with a credit-linked subsidy of 35% of the eligible project cost up to 10 lakhs.
  • The beneficiary contribution would be 10% of the eligible project cost
  • 4 lakh seed capital will be provided to Self Help Groups (SHGs) or 40,000 per member of the SHGs for working capital and purchase of small tools.
  • It follows a one district one product approach, whereby states would identify the unique products in the districts and push their products.
  • The focus would be more on perishable products like fruits and vegetables.
  • The beneficiary should be 18+ in age and should have passed class 8th to be eligible for this scheme.

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  • Employment: The scheme is expected to employ 9 lakh people both in the category of skilled and semi-skilled jobs.
  • Formalisation: The unorganised food processing sector, in our country, provides around 75% employment in the overall food processing sector. The scheme will help them formalize and hence become more competitive.
  • Credit: The financial support would help them in expanding their business to a new height.
  • Equity-based: The scheme has a special focus on women entrepreneurs and entrepreneurs of aspirational districts. It has the potential to decrease the inequality among the social strata.



  • Lack of access to modern technology: Our enterprises are primitive and the technological advancements have not yet penetrated well to the grassroots level.
  • Lack of training: Formalization would require basic training in grading, processing, packaging etc. Micro enterprises need to standardise their products.
  • Lack of marketing skills: The micro-enterprises are unaware of these marketing skills and need to be supported.


Way Forward

  • A forum should be made available, where the needs of micro-enterprises should be discussed with the research and development institutions of our country. An organisation like ATMA (Agricultural Technology Management Agency) would be a welcome step.
  • Regular training should be provided to the micro-enterprises for a continuous upgrade.
  • NGOs should be enrolled to encourage micro-enterprises to avail the benefits.
  • JAM (Jan Dhan- Aadhar- Mobile) trinity should be used for beneficiary identification.

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