ASSIGNMENT ON POLICY REVIEW TOPIC: SMALL

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ASSIGNMENTONPOLICY REVIEWTOPIC SMALL
MEDIUM ENTRPRISESFOCUS AREA FOOD PROCESSING
INDUSTRY

• LG-1

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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

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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

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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.

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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

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• 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.

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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.

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Policies affecting FPI

• Land policies
• Agricultural policies
• Licensing, monitoring and controls
• Financial policies
• Import-export policies

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• 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

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Strengths Growing Consumer Class Investment environment in India Rising Disposable Income Changing Life styles of People Population Increasing Availability of Credit Weakness Post harvest losses. Requirement in Indian food chain to procure raw material from open market Focus entirely on the processing Large number of intermediaries Lack of knowledge and expertise
Opportunities Investment friendly policy initiatives Growing Consumer Class in Urban India Food Retailing Packaged Food/Agricultural Products Cold Storage Facilities Organized Food Retailing Threats Lack of Infrastructure Facilities Wastage during Transportation Backward-forward integration
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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
  SMEs sector development
• 3. Government plans for a policy package for
  stepping up credit to SMEs that would help
  double credit flow in this sector.

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• 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

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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.

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