NBFC to fund Indian food processing sector

June 8, 2018

 

The Ministry of Food Processing Industries is creating a financial institution that will cater exclusively to the credit and lending needs of the food processing sector. The Ministry expects to bring out an RFP (request for proposal) by July for the Agro-Processing Financial Institution, which will be a non-banking financial institution.

This is being done as the existing banks and financial institutions do not fully understand the risk assessment of food processing companies and the sector loses out in terms of loans.

Minister of Food Processing Harsimrat Kaur Badal, said that this is an unprecedented initiative to create a financial institution that will completely focus on providing credit to agro-processing enterprises. This will be driven by the private sector. There is keen interest among both national and international companies for the same.

The government is likely to hold a minority stake in this NBFC, while the majority equity will be held by a private company. The Ministry is also working on an initiative called Operations Greens, which was announced in the Budget in February. Under this, ₹500 crore has been earmarked with a focus on preventing distress sale by tomato, potato and onion farmers.

Badal said the Ministry would focus on a cluster-based approach to create direct linkages between farmers of these crops and food processing companies. She said that a framework for this scheme is being prepared and this scheme is expected to be launched by July-end. Under this scheme, the focus will be on growing varieties of onions, tomatoes and potatoes that can be processed and clusters will be developed by creating infrastructure and logistics linkages between farmers and food processing companies. This is aimed at controlling price fluctuations and enhancing incomes of these farmers.

Badal said that the food processing sector is set to become the most robust sector, which will be crucial in doubling farmers’ income by 2022. She said India has found its place on the global food map.

She said 25 mega food parks will become operational by 2018. Out of the 42 mega food parks sanctioned, 15 have become operational. Another 15 are expected to become operational by 2019.

 

 

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