With the primary objective of providing adequate and excellent infrastructure facilities for food processing along the value chain from the farm to the market, the MoFPI launched MFPS under the 11th Five Year Plan (2007-12). It was a part of the ministry's Vision 2015.
The Vision 2015 was formulated by the MoFPI in 2005 during the term of the first UPA government. Through this vision, the MoFPI intended to create one crore jobs by 2015 at a total investment of Rs 1 lakh crore from public private partnership. It also mentioned that the ministry aimed to establish about 30 mega food parks, set up integrated cold chains, modernise abattoirs, set up quality control laboratories, research and development (R&D) units, and upgrade quality and hygiene of street food.
This scheme was introduced under former food processing minister Subodh Kant Sahai, who is now holding the tourism portfolio. Later, the food ministry's target of setting up 30 MFPs by the end of the 11th Five Year Plan was also reduced by the finance ministry to 10 MFPs.
"The MFPS was a flop show. There were myriad reasons, where not only medium & small-scale food processors but also country's top F&B companies like Britannia, Nestle, ITC, Parle, PepsiCo, and Coca Cola didn't show any interest for it. The scheme was too Centralised. In addition, many medium-sized food parks in India are not running in full swing and few are non-operational as well," S Siddiqui, an F&B industry analyst, told F&B News.
"Mega Food Park was the most ambitious scheme of the ministry of food processing industries with a focus on public-private partnership. However, absence of very large private sector companies, problems of land availability, and lack of forward and backward linkages and cluster-farming also led to failure of the MFP scheme earlier," he added.
12th FY Plan, fine-tuning
In the current financial year (2012-13), the food processing ministry has decided to continue the MFPS during the 12th Five Year Plan period (2012-2017) with a changed pattern of financial assistance and keeping the scheme open-ended. "Recently, MoFPI had called for ideas, suggestions and comments from its delegates and stakeholders on new policy framework for Mega Food Parks Scheme," one of the senior officers from MoFPI said.
As per the new proposed framework, MFPS envisages providing a capital grant at 50% of eligible cost in general areas and 75% in difficult and hilly areas subject to maximum of Rs 50 crore per project. "The scheme has been designed on hub and spokes method having a Central Processing Centre (CPC), Primary Processing Centre (PPC) and Collection Centres (CC). The minimum requirement of land for a Mega Food Park is 50 acres for CPC and 2 to 3 acres for PPC and CCs," the MoFPI stated in its suggestive framework paper for MFPS during 12th Five Year Plan.
While sketching the 12th Five Year Plan, Planning Commission of India, said, "The 11th Plan marked a significant progress for the food processing ministry in terms of both approach and scale of its programmes, with sufficient stress on appropriate backward linkages and emphasis on synergy between production and processing. The approach to the 12th Plan takes into consideration learning and experiences during implementation of the 11th Plan programmes. While the emphasis on infrastructure development continues during this Plan, equal emphasis is given to institution building and skill development. Above all, decentralisation may be considered the Central theme of the 12th Plan, aimed at making food processing a truly national initiative."
Mini Food Park
For the 12th Five Year Plan, the food processing ministry has also coined the "Mini Food Park" theme for small and medium sized processors. The Mini Food Park will require a minimum of 30 acres of land for CPC. The Mini Food Park may or may not have PPC and CC.
In case of mini food parks, the capital grant will be at 35% of the eligible cost subject to a maximum of Rs 20 crore as upfront subsidy and Rs 6 crore as interest subvention in 3 years for general areas and Rs 20 crore as upfront subsidy and Rs 9 crore as interest subvention in 5 years for the term loan availed from banks / financial institutions in Northeast, difficult and notified ITDP areas.
SPV mandatory
The MFPS proposed framework also encompasses implementation procedure for mega and mini food parks. The food ministry seeks projects implementation through a Special Purpose Vehicle (SPV) which would be promoted by the food processors / agri business operators / infrastructure development either alone or with other independent business entities. The SPV will be required to be registered under the Companies Act which will own and operate the food park. No outright sale of the developed plots / factory shades in the food park will be allowed.
Further, the weak response to the scheme from large corporates of the sector has been discussed extensively during recent months and it has been found that the requirement of the scheme, in terms of at least 3 independent entities (initially it was 5 entities), discouraged large food processors. It has been suggested that any business entity, proposing to invest around Rs 50 crore (through equity/debt) in such projects, would not like to be constrained by conditions such as inclusion of at least 2 more equity partners in SPV.
"It has also been seen that many projects under implementation have suffered due to lack of trust and coordination among various equity holders. In some cases, such conflicts have even endangered the projects, as various entities seek to have control over the Board of Directors of SPVs. In other cases, it has been found that this mandatory requirement has encouraged related and associate entities, though with no direct evidence of such relationships, to pose as independent to be eligible under the scheme, thus nullifying the proposed advantages of a collective structure," the ministry said.
"In view of the above, it has been proposed to revise the scheme under 12th Plan, so that even one business entity may be eligible to promote a SPV for setting up a Mega Food Park project. Considering other requirements of the scheme, in terms of minimum equity of 26% and minimum net worth of Rs 10 crore for a food processing company, the proposed revision would ensure that only a food processing/agri-business operator may be in a position to promote such SPV on its own," MoFPI stated in its latest MFPS paper.
Project Monitoring Mechanism & Time Schedule for Implementation
"The grant will be linked to achieving prescribed milestones; periodical review will be undertaken by the ministry to monitor the implementation status. The Programme Management Agency (PMAs) will assist the ministry in monitoring the project implementation through periodic field visits and technical norms in the project implementation," the ministry added.
While analysing MoFPI's performance during the 11th Plan, the Planning Commission also noted that the process of approval for MFPs' projects has often become long and even progress of the projects under implementation has been found to face some serious challenges.
For fast and quick clearance of projects, the food processing ministry has also announced to provide a fast-track single window agency to facilitate clearances and permissions required for the project.
"At present, MFPS provides for a two-stage approval process comprising in-principle approval and final approval. The approval process, as per existing guidelines, may take up to around 10 months to accord final approval to a project," MoFPI claims in an array of documents.
Further, the project will be required to be implemented within 30 months from the date of final approval.
15 Mega Food Parks likely to get final nod
As per the latest notification issued by the Mofpi, last month on July 24, a meeting of Inter-Ministerial Approval Committee (IMAC) was called under the chairmanship of Rakesh Kacker - secretary of the ministry, to discuss the representations received from various food processors to setup 15 new Mega Food Parks across the country.
"While the progress of MFPS has been rather slow initially, it is expected to gain momentum gradually. Some of the projects under implementation in the first phase, after initial small & big issues, it have started showing better progress and are likely to be completed by next year," the senior MoFPI officer added.
Pratap Deshmukh, director, Devap Mega Food Park, at Prabhani district in Marathwada region of Maharashtra state, said, "Through one consultancy, we have also applied to set up a Mega Food Park in our region and sure that the food ministry will revert positively."
