ASSIGNMENT ON POLICY REVIEW TOPIC: SMALL & MEDIUM ENTRPRISES FOCUS AREA: FOOD PROCESSING INDUSTRY

1. ASSIGNMENTONPOLICY REVIEWTOPIC: SMALL & MEDIUM ENTRPRISESFOCUS AREA: FOOD PROCESSING INDUSTRY LG-1 LG-1

2. Structure • Introduction • Food Processing Industry – An Introduction • Review of tenth plan • Proposal of 11th five year plan • Policies affecting FPI • SWOT Analysis • Rapid Farmework • Conclusion LG-1

3. Introduction • Small & Medium Enterprise - Any industrial unit with a total investment in its fixed assets or leased assets or hire-purchase asset up to Rs10 million is considered as a SSI unit and investment up to Rs. 100 million is considered as a medium unit. • Includes range of industrial products such as food products, beverage, tobacco and tobacco products, cotton textiles, wool etc LG-1

4. Food Processing Industry • Currently India produces 50 million tonnes of fruits and 90 million tonnes of vegetable out of which only 2% is processed. • Lack of processing and storage of fruits and vegetables results in huge wastages estimated at about 35%, the value of which is approximately Rs.33, 000 Crores annually • Food processing industry not only reduces the wastage but also provides new avenues to farmers for income generation and good returns. LG-1

5. 10th Plan – A Review The MFPI has been implementing several schemes for the development of food processing in the country which are as follows: • Scheme for Infrastructure Development • Scheme for Technology Upgradation /Establishment /Modernization of Food Processing Industries • Scheme for Quality Assurance, Codex Standards and Research & Development • Scheme for Human Resource Development • Scheme for Strengthening of Nodal Agencies LG-1

6. Loop holes – • Against a physical target of 25 Parks during the 10th Plan, 18 Parks have been sanctioned so far out of which, only 8 Food Parks may be said to be operational. • Only one project has been supported under the Scheme for Modernization of Abattoir during the current Plan. • 18 projects were supported under cold chain facilities and five under Value Added Centers, but only four Cold Storages and two Value Added Centers are currently operational. LG-1

7. 11th Plan – Proposed strategies Important elements of the proposed strategy are: • Project selection, development and implementation should be done in a wise and effective manner visualizing the extent of benefit. • Decentralized cluster based development, particularly for creation of infrastructure and fostering linkages to retail outlets. • Industry led capacity building and upgradation of standards • An integrated food law and science based food standards. • Strategic intervention with redesigned schemes and strong implementation arrangements. • Importantly, the Ministry has to be strengthened appropriately, to meet the challenges in implementing various new initiatives proposed for energizing the food processing sector in the country. LG-1

8. Policies affecting FPI • Land policies • Agricultural policies • Licensing, monitoring and controls • Financial policies • Import-export policies LG-1

9. Impact of Industrial policies on the development of the sector – • industrial licensing was abolished across the food sector • Permission was given for foreign technology agreements in selected high priority areas, where investments of up to Rs10 million were expected • The role of the public sector was restricted to essential infrastructure, goods and services • MNCs were allowed to participate in the equity base of small companies which is up to a level of 24 percent • No product was to be reserved exclusively for the public sector LG-1

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11. Rapid Framework • Key Stakeholders-Central Government, State Governments, Private organizations, Public sector, Research Institutes, Educational organizations, Local and small enterprises. • New idea of research – 1. Need of governmental and institutional support to this sector through incentives and infrastructure facilities 2. New strategy based on cluster development that offers a holistic and integrated approach to SME’s sector development 3. Government plans for a policy package for stepping up credit to SME’s that would help double credit flow in this sector. LG-1

12. New Initiatives – 1.Setting up of a statutory National Board for Micro, Small and Medium Enterprises 2. Old age pension would be provided to all citizens above the age of 65 • Main research priorities and Mechanisms – 1. Financial Services 2. Business Development Services 3. Improved Environmental and Labour Standards 4. Research and Policy Advocacy LG-1

13. Conclusion • FDI in food processing sector is low, constituting only 4% of the total FDI in the period 1991-2004. • Implementation agency for the Scheme needs to have considerable experience and expertise in the area of food processing, enterprise promotion and income generation activities. • Acts and policies such as Cooperatives Act and State Warehousing Corporation Act need to be amended to allow private banks to finance cooperative societies and Central and State Warehousing Corporation respectively. LG-1

14. THANK YOU LG-1