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Published on: Nov. 9, 2020, 8:12 a.m.
What delays our food parks?
  • Food parks: still in implementation mode

By Rakesh Joshi. Executive Editor, Business India

In 2008, the UPA government launched the Mega Food Park Scheme (MFPS) to provide a mechanism to link agricultural production to the market by bringing together farmers, processors and retailers. The idea was to maximise value addition, minimise wastage, increase farmers’ income and create employment opportunities, particularly in rural sector. 

MFPS envisaged creation of state of the art support infrastructure in a well-defined agri/horticultural zone, the scheme was aimed at setting up of modern food processing units in the industrial plots provided in the park with well-established supply chain. 

Mega food parks typically consist of supply chain infrastructure, including collection centres, primary processing centres, central processing centres, cold chain and 25-30 fully developed plots for entrepreneurs to set up food processing units. 

The project is implemented by a Special Purpose Vehicle (SPV), registered under the Companies Act. Subject to fulfilment of the conditions of the Scheme Guidelines, the funds are released to the SPVs.

Under MFPS, the UPA announced a maximum grant of Rs50 crore (excluding land cost) to food park developers to help them set up a cluster-based facility that would include collection centres, primary processing centres and basic infrastructure such as cold chains, packaging, quality control labs, bottling units and pulping lines. 

The money was to be sanctioned in four instalments. After the BJP came to power in 2014, the Ministry of Food Processing Industries identified 17 such developers and cancelled their approvals. 

Akali Dal’s Harsimrat Kaur Badal, the minister in charge, who recently quit the government, had told Business India: “It seemed that most developers were interested in the Rs50 crore grant and in getting the change in land use from agricultural to industrial and wait for land prices to appreciate. They never seemed to have the intention to put up an MFP. We are now allotting projects to people who seem to have the intention to build these parks.” 

Badal recast the scheme as a sub-scheme under the Pradhan Mantri Kisan Sampada Yojana (PMKSY), as per the guidelines of which, the time schedule for completion of projects was 30 months from the date of issue of the final approval letter to these project proposals. 

  • The ministry claims to have identified major bottlenecks impeding the implementation of the projects and has modified the scheme guidelines

However, by the government’s own admission now, the project implementation hasn’t made much progress. Of the 37 Mega Food Park projects have that been accorded final approval, just 20 projects are operational. The ministry recently told Rajya Sabha that major reasons for the delay in implementation of 17 projects include time taken to issue various statutory clearances by the state governments, changes in project components midway through a revision in DPR and changes in shareholding pattern and bank approval thereon.

Among other reasons for the delay are revalidation and disbursement of a term loan, GST on leasing of plots in private industrial parks, as compared to no GST on government-owned industrial parks and funds constraints with promoters, etc.

Many states had got approval for the project in 2014, but they are still in the implementation mode. Andhra Pradesh, Maharashtra and Punjab have three projects each, out of which two each are operational in AP and Maharashtra and one in Punjab. No project has started yet in Bihar, Chhattisgarh, Haryana and Kerala as per the data presented by the ministry.

The ministry claims to have identified major bottlenecks impeding the implementation of the projects and has modified the scheme guidelines. Release of grant instalment has been linked to proportionate physical progress on all project components including Primary Processing Centres, Standard Design factory sheds and leasing of land to set up food processing units. Appropriate penalty is being imposed for delays. But without a full-time minister at the helm, will the strategy work? Only time will tell.

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