Mega food parks scheme now more in sync with the market

The government has incorporated certain modifications to the mega food parks scheme, in order to streamline their operations and to cater to the more perishable among agricultural commodities. The modifications also address the need for infrastructure development for supply chain management needs of the food processing industries.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved certain modifications to the mega food park scheme guidelines relating to infrastructure development for food processing. These modifications are intended to streamline and smoothen the process of implementing the mega food parks scheme.

The government expects these modifications to trigger further investment in the food processing sector and ensure smooth implementation of the scheme, particularly projects at initial phases of the scheme's implementation.

The scheme will be implemented in a market driven manner commensurate with both global and national demands and hence innovative supply chain management will be key to implementation of the scheme.

Also, project proposals focusing on the processing and preservation of perishable food products will be given weightage in the selection.

Each mega food park is expected to generate the following financial outcomes:

  • Expected to benefit 6,000 farmers / producers directly and about 25,000 farmers indirectly;
  • Estimated investment in each project will be about Rs100 crore in common facilities and will leverage an additional investment of about Rs250 crore;
  • Expected annual turnover of each project will be Rs500 crore;
  • About 30 food processing units are expected to be set up in each project.

The modification will also bring central government agencies on par with the state government agencies by removing the restriction of a maximum 26 per cent on their equity holding in the special purpose vehicle (SPV) and allowing all government agencies to become shareholders in the SPV without any restriction on their shareholding.

The infrastructure development scheme for mega food parks aims at providing modern infrastructure facilities for food processing industries along the value chain from farm to market. As per the scheme, ownership and management of the mega food parks vest with an SPV in which organised retailers, processors, service providers, etc, may be the equity holders or there could be an anchor investor along with its ancillaries, associated companies and other stakeholders.

The farmer organisations are encouraged to participate in the SPV. The anchor investor in the SPV holding a majority stake of at least 51 per cent, with or without other promoters of the SPV, will be required to set up at least one food processing unit in the park at an investment of at least Rs10 crore. However, state government / state government entities and co-operatives applying for projects under the scheme are not required to form a separate SPV and set up processing unit(s) in the park.

In case, the central government agencies become shareholders in the SPV, their equity has been restricted to a maximum 26 per cent.