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Investment in Cold Chains



Investment in Cold Chains 
To attract investment in cold chain infrastructure, the Ministry of Food Processing Industries is implementing the Central Sector Scheme of Cold Chain, Value Addition and Preservation Infrastructure since 2008-09. The scheme has provision for providing financial assistance for setting up of integrated cold chain infrastructure for arresting post harvest losses of horticulture& non-horticulture produce.
The scheme is primarily private sector driven wherein financial assistance @ 50% of the total cost of plant & machinery and technical civil works in general areas and 75% for NE region and difficult areas (North Eastern states, Sikkim, J&K, Himachal Pradesh and Uttarakhand) subject to a maximum grant-in-aid of Rs 10 crore per project is provided for setting up the cold chain infrastructure in the country. Integrated cold chain and preservation infrastructure can be set up by individuals, groups of entrepreneurs, cooperative societies, Self Help Groups (SHGs), Farmer Producer Organizations (FPOs), NGOs, Central/State PSUs, etc.

In addition, National Horticulture Mission (NHM), National Horticulture Board (NHB), and National Cooperative Development Corporation (NCDC) under Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture& Farmers Welfare and Agricultural and Processed Food Products Export Development Authority (APEDA) under Department of Commerce, Ministry of Commerce and Industries, Government of India are also providing assistance for setting up cold storages under their respective schemes. Various other incentives provided by the Government to promote this sector are as below:

• Services of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables have been exempted from Service Tax in Budget 2015-16.

• Loans to food & agro-based processing units and Cold Chain have been classified under Agriculture activities for Priority Sector Lending (PSL) as per the revised RBI Guidelines issued on 23/04/2015.

• Under Section 35-AD of the Income tax Act 1961, deduction to the extent of 150% is allowed for expenditure incurred on investment for (i) setting up and operating a cold chain facility; and (ii) setting up and operating warehousing facility for storage of agricultural produce.

• Government has extended Project Imports’ benefits to cold storage, cold room (including for farm level pre-cooling) or industrial projects for preservation, storage or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat. Consequently, all goods related to Food Processing, imported as part of the project, irrespective of their tariff classification, would be entitled to uniform assessment at concessional basic customs duty of 5%.

• Refrigeration machineries and parts used for installation of cold storage, cold room or refrigerated vehicle, for the preservation, storage, transport or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat under Tariff Head: Chapter 84 are exempted from Excise Duty.

• Construction, erection, commissioning or installation of original works pertaining to post-harvest storage infrastructure for agricultural produce including cold storages for such purposes are exempted from Service tax.

• Capital investment in the creation of modern storage capacity has been made eligible for Viability Gap Funding scheme of the Finance Ministry. Cold chain and post-harvest storage has been recognized as an infrastructure sub-sector.

This information was given by Minister of State for Food Processing Industries Sadhvi Niranjan Jyoti in a written reply in Lok Sabha today. 
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Food Processing Industries 
The Ministry of Food Processing Industries was implementing the Centrally Sponsored Scheme of National Mission on Food Processing (NMFP) in 12th Plan (2012-17) through State/UT Governments. Under the Scheme of Human Resources Development in the NMFP, financial assistance was provided to set up Food Processing and Training Centres (FPTC) and to conduct Entrepreneurship Development Programmes(EDP) in the States/UTs to impart training to the farmers and prospective entrepreneurs /unemployed youth.

Central / State Government Organizations, Educational and Training Institutions, ITIs, NGOs and Co-operatives were eligible for grant-in-aid to set up FPTC. For a single product line centre, maximum grant-in-aid of Rs. 6.00 lakh for purchase of plant and machinery and Rs. 3.00 lakh as revolving seed capital was admissible. For a multi-product line centre, grant-in-aid of Rs. 15.00 lakh for purchase of plant and machinery and Rs. 5.00 lakh as revolving seed capital was admissible.

Central/State Government Organisations, Institutions, Universities, National level Institutes like NIFTEM, IICPT, CFTRI, Professional Institutes, State level consultancy organisations of State Governments, reputed NGOs etc. were eligible for grant-in-aid to conduct EDPs. Grant-in-aid for an EDP was provided upto Rs. 3.00 lakh per programme. The trainings were provided free of cost to the trainees.

The applications for setting up Food Processing Training Centres and conducting EDPs under NMFP were received, sanctioned and funds were released by the respective State/UT Governments.

However, Government has de-linked NMFP in the States from Central Government support with effect from 01.04.2015.The State Governments may decide to continue NMFP scheme or otherwise out of their increased resources resulting from the recommendation of the 14th Finance Commission. However, NMFP is being supported by the Central Government in UTs.

A Nation–wide study on quantitative assessment of harvest and post-harvest loss for 45 agricultural produces in 107 randomly selected districts was carried out by CIPHET, Ludhiana. The study revealed that the wastage of agricultural produce are in the range of 4.58% to 15.88% in various crops. The highest loss has been occurring in Fruits & Vegetables. The harvest and post-harvest losses of major agricultural produces at national level was of the order of Rs. 92,651 crore per annum at 2014 wholesale prices.

Foreign Direct Investment is permissible in food processing sector up to 100 per cent on automatic route.

To improve infrastructure of food processing industries in the country, the Ministry is implementing a Central Sector Scheme of Infrastructure Development for Food Processing with the components of (i) Mega Food Park (ii) Cold Chain, Value Addition and Preservation Infrastructure and (iii) Setting-up/Modernization of Abattoirs.

Under the scheme, financial assistance in the form of grant-in-aid is provided @ 50% of the project cost (excluding land cost) in general areas and @ 75% of the project cost (excluding land cost)in difficult areas and ITDP notified areas of the States, subject to a maximum of Rs. 50 crore per project for setting up a Mega Food Park.

The scheme also envisages financial assistance in the form of grant-in-aid @ 50% of the total cost of plant and machinery and technical civil works in General areas and @ 75% for NE region and difficult areas, subject to a maximum of Rs.10 crore per project for setting up Cold Chain infrastructure.

Financial assistance in the form of grant-in-aid is also provided for setting-up/ modernization of abattoirs to Local Bodies and State Government organisations@ 50% of the cost of plant and machinery and technical civil work and other eligible items in general areas and @ 75% of the cost of plant and machinery and technical civil work and other eligible items in difficult areas, subject to a maximum of Rs. 15.00 Crore per project.

An allocation of Rs. 2800.00 crore has been made for the Scheme of Infrastructure Development for Food Processing during 12th five year plan.

This information was given by Minister of State for Food Processing Industries Sadhvi Niranjan Jyoti in a written reply in Lok Sabha today. 


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