What is the Govt Scheme for Food Processing industry in India?

1. A registered person is sending semi-cooked food from his manufacturing unit at Gurugram to his branch in Delhi. Is he required to pay any tax?

Branches in various States shall be treated as separate persons in compliance with the provisions of Section 25(4) of the CGST Act, 2017. Furthermore, as per Schedule I, this constitutes a supply made between separate persons in the course or promotion of business, even if made without consideration. The registered entity is expected to pay IGST, as it is an inter-State supply.

2. What is the Food Safety and Standards Act, 2006, and why this Act is needed?

Food Safety and Standards Act 2006 is an Act enacted to comply with evolving time requirements and to consolidate food laws and create India's Food Safety and Standards Act. The Act was mandated to create a single regulatory body for food laws, setting requirements and regulations such that there is one entity to deal with and no uncertainty due to the multiplicity of food laws in the minds of buyers, traders, producers, and investors. 

3. What is the National Livestock Mission?

An initiative of the Ministry of Agriculture and Farmers Welfare is the National Livestock Mission. The mission, which started in 2014-15, was planned with a view to the sustainable development of the livestock industry. NABARD is the channeling agency for subsidies under the National Livestock Mission Entrepreneurship Creation & Employment Generation (EDEG) portion.

This involves 1) PVCF (Poultry Venture Capital Fund). 2) Small Ruminants and Rabbit Integrated Production (IDSRR). 3) Development of the Pig (PD). 4) Male Buffalo Calves (SRMBC) Salvaging and Rearing.

4. What is interest subvention to Small and Marginal Farmers against Negotiable Warehouse Receipts?

In 2011-12, the Government of India (GoI) launched a scheme for extending concessional loans to farmers against Negotiable Warehouse Receipts in order to prevent distressed sales of produce by farmers and to allow them to store their goods in warehouses against Negotiable Warehouse Receipts. For a period of up to six months, post-harvest loans against Negotiable Warehouse Receipts (NWR) issued by banks to Small and Marginal Farmers (SF / MF) with Kisan Credit Cards will be liable for interest subsidies at the same rate as the available rate for crop loans. SF / MF, who have not used the banking system for crop loans, will not be liable. Under the program, no more subsidy for prompt repayment, as is applicable for crop loans, is envisaged.

4. Can foreign investors, private equity arms of foreign firms become members in Special Purpose Vehicle and invest in the creation of a common infrastructure in form of equity?

Yes, these companies will join hands with Indian promoters to form the Special Purpose Vehicle and, by contributing equity, invest in the project. It should also be noted here that foreign direct investments in the food processing sector are permitted in India on an automated road. However, the EOI plan must be presented with appropriate documentation with regard to net worth and other related financial information in relation to such firms.

6. What types of industries/units are permitted in Mega Food Parks?

Mega Food Parks are authorized to create only food processing industries/units that make food products suitable for human and animal consumption. Packaging facilities for food goods would also be eligible for establishment in the Mega Food Parks as ancillary to the food processing industries. The establishment of an alcoholic beverage unit as an anchor unit would, however, not is permitted.

7. What is ’eligible project cost’ in Mega food parks?

The 'qualified project cost' is the overall cost of the project, but excludes land costs, pre-operational expenditures, and working capital margin cash. However, up to 2 percent of the accepted grant will be considered under qualifying project cost interest during construction (IDC) as part of preoperative expenses and charge to PMC.

8. For Mega food parks do the land needs to be changed from Agricultural to Industrial?

Yes, Land Use Reform (CLU) is mandatory. In the event that the land is already in a designated industrial area, CLU is not needed.

9. What is the minimum land requirement for setting-up Mega food parks?

The minimum land needed to set up Mega food parks is 50 acres of contiguous land and free of any encumbrance of any sort. A land selection must be justified in terms of the accessibility and availability of basic infrastructures, such as road access, electricity, water, etc., as well as the availability of raw materials/markets.

10. What are the commodities under the Warehousing development and negotiable warehouse receipts?

The authority approved 115 commodities for the issuance of negotiable warehouse receipts, including cereals, pulses, oilseeds, spices, rubber, tobacco, coffee, etc., and also 26 perishable cold storage commodities.

11. What are the major activities of Central Warehousing Corporation (CWC)?

In addition to providing storage and warehousing services for more than 400 goods, Central Warehousing Corporation provides storage and warehousing services for a wide variety of customers, including public and private organizations, cooperatives, merchants, producers, importers/exporters, etc. In addition to providing storage and warehousing services, Central Warehousing Corporation also carries out the following activities: Providing customer-friendly Pest Control Services

Including general pest control, aircraft disinfestations, rail coaches, container/ship fumigation, and anti-termite treatment before and after construction, etc. ii) providing facilities to sustain the EXIM trade, such as CFSs / ICDs / Air Freight Complexes / Freight / ICP Terminal, etc.

(iii) Providing, at the request of depositors, handling, and transport facilities. iv) Warehouse design consulting and warehousing related operations. (v) Educating and assisting farmers in obtaining cheap institutional credit for the safe storage of food grains at the farm level.

12. How much grant-in-aid is provided for storage infrastructure under Scheme for Cold Chain, Value Addition, and Preservation Infrastructure under Pradhan Mantri Krishi Sinchai Yojana?

Grant-in - aid @ 35 per cent for General Areas and @ 50 per cent for the North East States, Himalayan States, ITDP Areas & Islands will be given for storage facilities including packhouse and the pre-cooling unit, ripening chamber and transport infrastructure, of the total cost of plant & machinery and technical civil works.

13. How much grant-in-aid is provided for value addition and processing infrastructure under Scheme for Cold Chain, Value Addition, and Preservation Infrastructure under Pradhan Mantri Krishi Sinchai Yojana?

Grant-in-aid @ 50 per cent for General Areas and @ 75 per cent for North East States, Himalayan States, ITDP Areas & Islands, for value addition and processing facilities, including frozen storage / deep freezers associated and integral to the processing.

14. How much grant-in-aid is provided for irradiation facilities under Scheme for Cold Chain, Value Addition, and Preservation Infrastructure under Pradhan Mantri Krishi Sinchai Yojana?

Grant-in-aid will be given for irradiation installations @ 50 per cent for General Areas and @ 75 per cent for North East States, Himalayan States, ITDP Areas & Islands.

15. How much Foreign Direct Investment is allowed in the food processing sector?

(a) 100 % Foreign Direct Investment is permitted in the food processing industry under the Automatic Route; (b) 100 % Foreign Direct Investment is permitted to trade in food products imported or imported in India through the Government Approval Route, including through e-commerce.

16. What is Operation Greens Scheme?

The MoFPI is introducing a Central Sector Scheme with a total budget allocation of INR 500 crore for the Integrated Production of the Tomato, Onion, and Potato (TOP) Value Chain. As per the guidelines of the scheme, the scheme has a two-pronged strategy as under I) Short term: price stabilization steps (Transportation & Storage-50 percent subsidy): Evacuation of surplus output from the manufacturing region to the consumption centers will be carried out during the glut situation at the time of harvest. II) Long-term: integrated value chain development projects (grant @ 50 percent {70 percent for FPOs & SC / ST} of the eligible project cost subject to maximum INR 50 crore): Pilot projects for the development of the integrated value chain will be carried out in selected 3 to 4 clusters for each TOP crop in major producing States. Production cluster farmers will be grouped into FPOs to handle production, post-harvest, value-adding, and marketing activities for TOP production. Components of Integrated Value Chain Development Projects Training & Capacity Building of FPOs Quality Manufacturing Post-harvest processing facilities-At Farm Gate Post-harvest processing facilities-At Main Processing Site Agri-Logistics Marketing / Consumption Points The last date for the submission of a proposal to set up an integrated value chain development project

Extension to 30.09.2020.

17. Why was the Operations Green Scheme extended from TOP to Total?

As part of the Atamnirbhar Bharat Package Announcements, Operation Greens has been expanded to ALL fruits and vegetables (TOTAL) from Tomato, Onion, and Potato (TOP) to include 50 percent transportation and storage subsidies.

18. How will farmers benefit under the Operations Green Scheme?

Individual farmers or groups of farmers meeting the necessary criteria of the Scheme may, after carrying out the transport and/or storage of qualified fruits and vegetables in compliance with the provisions of the Guidelines, be directly registered under the Scheme and submit an online claim. Small farmers who do not fulfill the necessary criteria may apply for subsidies under the Scheme through the Farmers' Association, FPO, Co-operatives, and Federation / Board of State Marketing. The farmers should have stored their produce for a few months with the subsidy of storage to avoid the selling of distress. Similarly, if they are unable to sell at APMC / Mandies, buyers such as producers, retailers, exporters, etc. will come directly to them to purchase their crops under the scheme to benefit from subsidies.

19. How will food processors benefit under the Operations Green Scheme?

As one of the qualifying organizations to conduct intervention under the program, food processors are appointed. Their qualifying crop procurement quantities for subsidy purposes will be limited by reference to the installed capacity of their processing plants. Subsidies for the transport and/or storage of raw materials would decrease the cost of the food processor's production of its goods. Competitive in the industry and appealing.

20. Which are eligible entities under the Operations Green scheme?

Food Processors, FPO / FPC, Co-operative Societies, Individual Farmers, Farmers Association, Licensed Commission Agent, Exporters, State Marketing / Co-operative Federation, Fruit, and Vegetables Processing / Marketing Retailers, etc

21. Whether Traders are allowed as an eligible applicant for claiming subsidy under the Operations Green Scheme?

No, it is obvious from the Operations Green Scheme Guidelines that the names of qualifying persons do not include traders. Registered Commission agents, exporters, and retailers are, however, qualifying organizations under the Operations Green Scheme to demand subsidies.

22. How can people apply under the Operations Green Scheme?

People can register under the Operations Green Scheme by visiting the Ministry’s website. Upon effective registration, they will be guided to the page where the essential documents such as guidelines for the program, list of qualified crops, output clusters, trigger price, and prototype for online application are provided. After convincing themselves that the critical requirements of the scheme have been met, they can directly conduct transportation and/or storage activities without the prior approval of the Ministry and apply to the Ministry an online claim for the grant.

23. What is the minimum quantity of crop to be procured and transported/ stored under the Operations Green Scheme?

The minimum quantity to be procured and transported/stored per applicant (may consist of one or more notified crops) is as follows: 50 MT for individual farmers; 100 MT for FPO / FPC, Cooperative, Farmers Group; 500 MT for Food Processor, Exporter, Licensed Commission Agent; 1,000 MT for Retailers, State Marketing / Co-operative Federation;

24. What is the minimum distance for transportation from production to consumption centers under Operations Green Scheme?

Minimum distance (by road, rail or air) from the notified production clusters to the point of sale, processing plant, retail outlet, or port/airport / ICD / CFS in India, as the case may be: 100 Km for Food Processor, FPO / FPC, Co-operative, Individual / Farmer's Party, Licensed Commission Agent, Exporter; 250 Km for Retailers, State Marketing / Co-operative Federation;

25. What is the Trigger Price for intervention under the Operations Green Scheme?

Prices in the notified output clusters are subject to one of the following conditions: prices fall below the average market price for the preceding three years at the time of harvest; prices fall by more than 15% compared to the market price for the preceding year at the time of harvest; prices fall below the benchmark procurement price, if any, set by the State / Central Government for a defined duration. The real selling price for being eligible for a subsidy should be equal to or less than the trigger price. Here you can find a list of qualifying crops, production clusters, and the trigger price.

26. Which are major fruits and vegetables that are covered under Operations Green Scheme?

Fruits: mango, banana, guava, kiwi, lychee, papaya, moussambi, orange, kennel, lime, lemon, pineapple, jackfruit, apple, almond, canola, passion fruit, and pear; vegetables: french beans, bitter gourd, brinjal, capsicum, carrot, cauliflower, green chilies, okra, cucumber, peas, garlic, onions, potatoes, and tomatoes.

27. From whom should the crops be procured by the eligible entities under Operations Green Scheme?

Procurement from farmers, FPO / FPC, Co-operative Society, or Authorised Commission Agent to be made directly and payment should only be made via the banking channel.

28. Whether crops can be procured from aggregators/local traders under Operations Green Scheme?

No, purchase must be made directly from producers, FPO / FPC, Cooperative Society or Approved Agent of the Commission and payment should only be made through the banking channel.

29. Is payment in cash for procurement, transportation/storage admissible under Operations Green Scheme?

No, payments can only be made through the banking system for procurement, transportation, and storage fees.

30. Where can the crops be stored (under Operations Green Scheme)?

Crops can be stored in any appropriate storage facility, such as a licensed warehouse or cold storage facility, located in recorded output clusters, in consumption centers, or in any on-the-road consumption center.

31. Whether purchases are done before 11 June 2020 will also be allowed (under Operations Green Scheme)?

No, it is mandatory to apply for subsidy registration on the portal, which began on 11 June 2020.

32. Whether it will be extended after 6 months (under Operations Green Scheme)?

On the basis of the impact assessment of the scheme, a decision on its extension will be made.

33. What is the maximum amount of subsidy under the Operations Green Scheme?

For the entire span of 6 months, the maximum permissible subsidy amount per applicant will be INR 1 crore.

34. Is submission of Weighbridge Receipt at only the origin place is admissible for the subsidy claim (under Operations Green Scheme)?

The Weighbridge Receipt is mandatory at both sites, i.e. origin & destination. In the event of the weighbridge being unavailable, the applicant may apply the Weighbridge Receipt produced in close proximity to the place of origin and destination.

35. Is submission of the geotagging photograph at only the origin place is admissible for the subsidy claim under Operations Green Scheme?

Photography of Geotag is compulsory at both sites, i.e. origin & destination. In the event of a mobile network problem, the applicant may apply a Geotag photograph created in the immediate vicinity of the place of origin and destination.

36. Whether sourcing from contract farming is allowed as a mode of procurement of crops under Operation Greens scheme?

Yes, crop procurement can be accomplished by contract farming.

37. Whether part payment of transporter and part payment to truck owner towards transportation charge is admissible under the Operation Greens Scheme?

If the transport invoice will create a relationship between the two, that is, the carrier and the owner of the transport, and both payments are made through the banking channel.

38. Whether storage in the ripening chamber of crops such as banana/mango etc., will be treated at storage in cold storage for subsidy purpose under Operation Greens scheme?

The subsidy is allowable for transport and storage only, not any incidental or ancillary activities such as loading, unloading, pre-cooling, ripening, etc.

39. Whether taxes, such as GST and/or other taxes levied at State/Central Level admissible for subsidy under Operation Greens scheme?

No, for the purposes of the grant, taxes such as GST and/or other taxes imposed at the State / Central Level will not be considered.

40. Whether new crop and/or new production cluster can be added to the list under the Operation Greens scheme?

Yes, the same will be considered by the Ministry with the recommendation of the State Government concerned, along with the necessary production details and average price data during the peak harvesting period for the last three years.

41. Whether the FASTag account statement can be submitted in place of toll tax receipts under Operation Greens Scheme?

FASTag account statements can be submitted in place of toll tax receipts due to the prevalence of the FASTag facility at toll places.

42. Whether transport from farm gate to collection center/packhouse (within-cluster/outside the cluster) and then to consumption center/ market is eligible transportation subsidy under the Operation Greens Scheme?

Transportation from the farm gate to the collection center/packhouse can also be considered regardless of their location within or outside the cluster, given that the minimum distance requirements are also met separately.

43. Whether the transport of fresh onion from Container, which is loaded in Port, will be treated as transport by referring van under Operation Greens scheme?

No, the transportation cost for fresh onions will be limited to the usual truck transportation fee.

44. Whether the applicant can undertake activities prior to registration but after the date of notification of the Operation Greens Scheme?

The scheme requires prior portal registration. This may, however, be considered for certain categories of applicants, namely individual farmers, farmers' associations, the FPO, cooperatives, and the State Marketing Board.

45. Whether exporter, the required supporting documents should be minimized, particularly requirement of Weighbridge receipt and Geotagged photo at destination place should be removed under Operation Greens Scheme?

Receipts for the Geotag photo and weighbridge are required documents. In the event of the weighbridge being unavailable, the applicant may apply the Weighbridge Receipt produced in close proximity to the place of origin and destination. Similarly, in the case of a mobile network issue, the applicant may apply a Geotag photograph created in the immediate vicinity of the place of origin and destination.

46. Whether transportation by individual farmers from their farm gate to the Mandies in the production clusters, which meets the minimum distance of 100 KM requirement, is eligible for subsidy under Operation Greens Scheme?

Subject to compliance with the minimum distance requirement for all categories of applicants, transport inside clusters are available.

47. Whether a single railway receipt, which is being issued against the transport of crops by few farmers together, can be accepted as supporting documents for subsidy claim under Operation Greens scheme?

Usually, a whole rack consisting of 40 wagons is booked by one party, which aggregates the crops from various transport parties. Only one name for the sender is authorized by Railway and thus only one name for the consignee appears in Railway Receipt. In such a case, the claim can be acknowledged with the following supporting documents: agreement/MoA between the applicant and the recipient according to the RR showing the details of the crops, proportionate payment for rail freight, including bank details; transaction voucher-demand raised by the recipient according to the RR to the applicant for payment of proportionate freight amount; bank statement showing payment for disadvantages