India has selected as many as 60 consumer goods firms, including Hindustan Unilever Ltd., ITC Ltd., Nestle India Ltd., Britannia Ltd., Gujarat Cooperative Milk Marketing Federation Ltd. and Dabur India Ltd., for production-linked incentives worth Rs 10,900 crore as part of the government's efforts to boost local manufacturing.
The companies can avail the incentives based on their sales and investments over a six-year period from 2021-22 to 2026-27, according to a notification on the Ministry of Food Processing Industries’ website. Similar schemes were approved for automakers and drugmakers earlier this year.
The ministry said it received applications from 91 consumer goods companies in response to the invitation for expressions of interest between May and June. Investment details of each company, however, were not disclosed.
The companies can avail incentives under four major segments—ready-to-cook or ready-to-eat food; processed fruits and vegetables; marine products; and mozzarella cheese. It also provides for grants to the entities for branding and marketing.
The list released by the government showed that as many as 12 applications received approval in the ready-to-eat and ready-to-cook segment; 33 under the fruits and vegetables category; 11 under processed marine products; and four under mozzarella cheese. Companies, including HUL, GCMMF—which owns the Amul brand—and ITC have secured approvals under multiple categories.
In March this year, the Union Cabinet approved a PLI scheme for the food processing sector which it said will help create 2.5 lakh jobs by 2027, boost exports and ensure availability of a wider range of value-added products for consumers. The objectives also include increasing employment opportunities for off-farm jobs and ensuring remunerative prices of farm produce and higher income to farmers. The scheme, it said, would help widen capacity to generate processed food output of Rs 33,494 crore.
Selected applicants will be required to undertake investment, as quoted in their application, in plant and machinery in the first two years—2021-22 and 2022-23. Investments made in 2020-21 will also be counted for meeting the mandated investment.
The incentives, ranging from 4% to 10% and up to a predetermined maximum amount, on various product categories will be paid out on incremental sales.
Approval has been accorded under PLI Scheme for the food processing industry for Category 1, the ministry notified on its website on Monday. Executives said the scheme will help in accelerating domestic growth, aid in creating jobs, expedite significant shift from unbranded to packaged foods, and catalyse exports.
“The production linked incentive scheme has been crafted to promote domestic manufacturing and would lead to creation of large-scale manufacturing capacity besides promoting job creation in a critical sector like food processing,” said Dabur India chief executive Mohit Malhotra.
The allocation is for a five-year period, and includes incentives on a variety of processed foods categories. The PLI scheme for the food processing sector has three broad components. The first of these is incentivising manufacturing of ready-to-cook, ready-to-eat, processed fruits and vegetables, marine products and mozzarella cheeses. The scheme also incentivises organic products of small and medium enterprises, and thirdly supports branding and marketing in overseas markets to accelerate emergence of strong Indian brands globally.
“This is the first time such a scheme which combines incentives on investments and sales has been announced. Not only will this help us fuel growth domestically, it will also help us become more competitive in the exports market,” said RS Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF), owner of India’s largest dairy brand Amul, which sells milk, cheese, butter and ice-cream.
The PLI scheme is part of the Indian government’s announcement of Atmanirbhar Bharat Abhiyan for diverse sectors including processed foods, white goods and pharmaceuticals.
The food processing sector has been seeing significant investments over the past three-four quarters as companies anticipate higher demand and consumption revival after severe supply disruptions soon after the outbreak of the Coronavirus pandemic. Nestle has committed fresh investments of Rs 2,600 crore over the next three to four years, while Britannia increased investments from Rs 300 crore to Rs 550 crore in Tamil Nadu.
Analysts said the incentives are positive for packaged foods companies with gains across the value chain, and benefit manufacturers with economies of scale and consumers who could get more competitive prices.
You must be logged in to post a comment.