10 Feb 2014

Proposal for modification in the scheme of Infrastructure Development for Food Processing: Mega Food Parks

The Cabinet Committee on Economic Affairs has approved modifications in the Mega Food Park Scheme guidelines of infrastructure development for food processing. These modifications are envisaged to streamline the implementation of the scheme while retaining its basic nature.
Each Mega Food Park is expected to generate the following outcomes:
i.                    Expected to benefit 6000 farmers / producers directly and about 25,000 farmers                                         indirectly.

ii.              Estimated investment in each project will be about Rs. 100 crore in common                                                     facilities and will leverage an additional investment of about Rs. 250 crore.

iii.                Expected annual turnover of each park will be Rs. 500 crore.

iv.                In each project, about 30 food processing units are expected to be setup.

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. According to the Scheme, ownership and management of the Mega Food Park vests with a SPV in which organized retailers, processors, service providers etc may be the equity holders or there may be an anchor investor along with its ancillaries, associated companies and other stakeholders. 
Farmer organisations were encouraged to participate in the SPV. In case, Government/Government agencies become shareholders in the SPV, their equity has been restricted to a maximum 26 percent to ensure the private character of the SPV.
The modification aims at changing the nature of the Special Purpose Vehicle (SPV). The criteria of maximum 26 percent equity by the State Govt./ State Govt. entities/ Co-operatives has been removed. Anchor investor in the SPV holding majority stake, with or without other promoters of the SPV, will be required to set up at least one food processing unit in the park with an investment of not less than Rs. 10 crore. 
However, State Government/State Government entities and co-operatives applying for projects under the scheme, will not be required to form a separate SPV and set up processing unit(s) in the Park. These modifications are expected to trigger further investment in the food processing sector.
The scheme will be implemented in a market driven manner commensurate with both global and national demands. Innovative supply chain management will be the key to its implementation. Project proposals for focusing on the processing and preservation of perishable food products will be given weightage in selection.

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