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Food Processing Industry

Scenario of Food Processing Industry in India

The Indian food industry is poised for huge growth, continuously raising its contribution in world food trade every year. In India, the food sector has emerged as a high-profit sector on the back of the scope it offers for value addition, particularly with the food processing industry getting recognised as a high-priority area by the government.

The food processing industry is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. The total food production in India is likely to double in the next 10 years with the country’s domestic food market estimated to reach US$ 482 billion by 2020.

The role of the Indian government and the cohesive support of state governments have been instrumental in the growth and development of this industry. The Ministry of Food Processing Industries (MoFPI) under Central government is making all efforts to encourage investments in the sector.

Opportunities of Food Processing Industry in Bihar

Bihar is endowed with an excellent climate, fertile soil and abundant water which make it ideal for cultivation of a diverse range of food grains, fruits and vegetables. It is a significant producer of rice, maize, pulses and a variety of fruits and vegetables. It is also the largest producer of Litchis and Makhana (Fox Nuts) in the country.

Major attractions for food processing in Bihar are :

CROPS	TYPES OF POTENTIAL PROCESSING
Rice	Rice Mills: Variants Of Milled Rice (Polished Rice, Unpolished Rice, Puffed Rice, Pressed Rice, Rice Flour, Broken Rice), Starch, Bran Oil, Silica, Husk Based Power Generation
Maize	Maize Based Feed Units, Food Products, Starch Manufacturing Unit , Corn Oil, Corn Flakes, Corn Flour, Starch
Pulses	Modern Mills, Flour
Oilseeds	Edible Oil, Oil Cake
FRUITS
Mango	Pulp, Juice, Beverages, Nectar, Mango Powder, Pickle, Jam, Jelly, Juice, Candies, Packing Material
Litchi	Pulp, Juice, Nectar, Beverages, Jam, Jelly
Guava	Juice, Beverages, Jam, Jelly, Nectar
Banana	Pulp, Baby Food, Banana Fibre, Packing Material, Banana Flower Vegetables
Makhana	Makhana Pops, Flavoured Or Roasted Makhana Snacks, RTC Kheer, Baby Food
Amla	Ayurvedic Medicine, Murabba, Dry Amla Powder, Hair Oil, Dry Amla Fruit, Mouth Freshener
VEGETABLES
Tomato	Juice, Paste, Puree, Ketchup & Soup
Potato	Chips, Stacks, Vegetables(Ready To Eat), Powder, Starch, Wine, Alcohol, Snacks
Chilli	Paste, Ayurvedic Medicine, Dry Chilli, Chilli Powder
Peas	Vegetables (Ready To Eat)
DAIRY	Milk, Ghee, Butter, Curd, Paneer, Ice Cream, Sweets
POULTRY AND FISH	Fresh, Chilled, And Frozen Fish, Fish Fillets And Pieces, Edible Offal Of Poultry, Dried Eggs
BEES	Natural Honey Processing

Cultivation Statistics

Industry Policy highlights 2016

HIGH PRIORITY SECTORS

Food Processing Maize Processing, Fruits &Vegetable (F&V) Processing, Poultry and Fish Processing Services IT, IT enabled Services (ITeS) , Electronic System Design and Manufacturing (ESDM) Sector Textile, Apparel, Leather Sector Weaving/ Knitting/Stitching, Production of Apparel, Banana/Jute Fibre, Leather/ Artificial Leather/ Leather substitute material

Nature of Incentive	Benefits
Reimbursement of Stamp duty/ Registration	100% Reimbursement
Land Conversion Fee	100% Reimbursement
Interest Subvention on Term Loan from the Bank/Financial Institution registered under RBI/SEBI	Rate of interest @10% or actual, whichever is lower Maximum of 50% of approved project cost subject to a maximum of Rs 20 Cr.
Tax Incentives	100% of SGST admitted for a period of 5 years subject to maximum limit of 100% of approved project cost
Employment Cost Subsidy	50% reimbursement for male workers and 100% for female workers of contribution towards ESI and EPF for a period of 5 years for employees who are domicile of Bihar Maximum limit of Rs. 1,000 for Sc/ST and women and Rs. 500 for general employees per month.
Skill development Subsidy	Rs 20,000 per employee or BSDM rates, whichever is lower Minimum period of employment is 1 year

Read the full notification

NOTE : The industrial units can be categorized into High Priority provided :

Textile & Leather Sector A unit in which (i) Investment in Fixed Asset and Plant and Machinery (excluding Land) is more than Rs 5 Crore, and (ii) creating direct employment of at least 50 core workers (excluding support staff such as Drivers, Guards etc.).
For IT and ITeS Sector A unit in which (i) Investment in Fixed Asset and Plant and Machinery (excluding Land) is more than Rs 5 Crore, and (ii) creating direct employment of at least 50 core workers (excluding support staff such as Drivers, Guards etc.).
Food Processing Sector A unit in which investment in Fixed Asset and Plant and Machinery (excluding Land) is more than Rs 5 Crore

PRIORITY SECTORS:

Food Processing Food-grains (Cereals and pulses) and oilseed , Milk Processing and Dairy Product Manufacturing , Honey Processing , Meat Processing, Spice and Herbs Processing, Tea Processing, Other edible preparations, Sugarcane Processing, Warehousing, General/ Business Development Services related to food processing sector

Manufacturing Small Machine Manufacturing Sector, Electrical and Electronic Hardware Manufacturing Sector, Textile Sector, Plastic & Rubber Sector

Tourism Sector, Renewable Energy Sector, Healthcare Sector, Technical Education Sector

Nature of Incentive	Benefits
Reimbursement of Stamp duty/ Registration	100% Reimbursement
Land Conversion Fee	100% Reimbursement
Interest Subvention on Term Loan from the Bank/Financial Institution registered under RBI/SEBI	Micro & [email protected]% or actual, whichever is lower Others @10% or actual, whichever is lower Overall limit of 30% of approved project cost subject to maximum of Rs 10 Cr For SC/ST/Women/Differently Abled Person/War Widow/Acid Attack Victim/Third Gender Micro & [email protected] % or actual whichever is lower Others @11.5% or actual whichever is lower Overall limit will be 34.5% of approved cost for priority sector subject to maximum limit is Rs. 11.5 Cr.
Tax Incentive	Tax benefits subject to 100% of approved project cost Micro & Small Units/Solar power generation or Renewable energy generation unit for commercial purpose –additional 30% of approved project cost 80% VAT/ CST/Entry Tax reimbursement for five years ( GST notification still pending) 100% reimbursement on electricity duty for five years. Not eligible, if captive power exported to entities other than BSPHCL. For SC/ST/ Women /Differently Abled Person/War Widow/Acid Attack Victim/Third Gender 92% VAT/ CST/Entry Tax reimbursement for five years with maximum limit of 115% of approved project cost for Priority Sector
Private Industrial Park	Interest subvention of 10% or actual which is lower, maximum up to 30% for non priority /35% for priority sector units or Rs. 50 Cr. whichever is lower

NON PRIORITY SECTORS:

Nature of Incentive	Benefits
Reimbursement of Stamp duty/ Registration	100% Reimbursement
Land Conversion Fee	100% Reimbursement
Interest Subvention on Term Loan from the Bank/Financial Institution registered under RBI/SEBI	Micro & [email protected]% or actual, whichever is lower Others @10% or actual, whichever is lower Overall limit of 15% of approved project for non priority sector subject to a maximum of Rs. 10 Cr. For SC/ST/Women/Differently Abled Person/War Widow/Acid Attack Victim/Third Gender Micro & [email protected] % or actual whichever is lower Others @11.5% or actual, whichever is lower Overall limit will be 17.25% for non priority sectors Maximum limit is Rs. 11.5 Cr.
Tax Incentive	Tax benefits subject to 70% of approved project cost for Non Priority sectors Micro & Small Units/Solar power generation or Renewable energy generation unit for commercial purpose –additional 30% of approved project cost 80% VAT/ CST/Entry Tax reimbursement for five years ( GST notification still pending) 100% reimbursement on electricity duty for five years. Not eligible, if captive power exported to entities other than BSPHCL. For SC/ST/ Women /Differently Abled Person/War Widow/Acid Attack Victim/Third Gender 92% VAT/ CST/Entry Tax reimbursement for five years with maximum limit of 80.50% of approved project cost
Private Industrial Park	Interest subvention of 10% or actual which is lower, maximum up to 30% for non priority /35% for priority sector project or Rs. 50 Cr. whichever is lower

Read the full policy

General Conditions

1. All the above mentioned incentives shall be post production except interest subvention scheme, which shall be linked with the repayment schedule of the Term Loan.

2. No capital subsidy is available

3. No MMG/AMG benefit is available

Annexure II - Negative list of industries

1. The following units will not be eligible for any support under this policy:
                a. Units manufacturing narcotic drugs
                b. Units manufacturing alcoholic beverages
                c. Tobacco based industries
                d. Units manufacturing asbestos
2. The State Government shall have the right to decide whether a unit falls under the negative list and can modify the above list accordingly.
3. As a general principle, any industry which impacts the environment adversely will be discouraged by the State Government for investment. Such industries will not be eligible for any incentive under this policy and be placed in the above mentioned negative list.

Bihar Startup Policy 2017

Benefits for Start-Ups

1. Startups will be exempt from licensing/registration required for operations under various State Acts for a period of 5 years. However, Statutory licenses (such as Drug License, FSSAI, Building Plan, Fire Fighting) shall be obtained by the startup if its nature of business/activity may lead to potential threat to life and safety in which case the government shall bear the cost of the license(s).

2. Startups have to be certified by the Nodal Agency.

3. Startups should be given preference by the State Government Departments/PSUs in the procurement process for products/services.

4. Startups must be registered with an incubation centre to have reserved and free cost of space.

5. Seed grant upto Rs. 10 lakh per startup as an interest free loan will be given by the State Government for a period of 10 years. The financial assistance shall be provided for validation of idea, prototype development, assistance towards travelling costs and carrying out field/ market research/ skill training/ marketing, initial activities of setup etc. The financial assistance shall only be provided to the Startup once it achieves milestones and performance parameters as defined by the Incubation Center and the Trust (Nodal Agency of the State), where 5% of the seed grant shall be contributed by the Incubatee into the Startup.

6. Success fee for fundraising: If the startup successfully mobilizes investments from State registered Angel Investors, the State Government shall provide the startup a success fee of 2% of the investment.

7. Filling Cost: The State Government will bear all costs associated with the filing of domestic patents and reimburse the filing fees for awarded foreign patents.

Benefits for Incubators

1. Incubators will be reimbursed the cost of incubating a startup, with a maximum limit of Rs. 2 lakh per incubatee.

2. Incubators will receive a fiscal incentive of 2% of the investment received by the incubatee from SEBI registered AIFs (Alternate Investment Funds).

3. Incubators will receive a fiscal incentive of 3% of the investment received by the incubatee from SEBI registered AIFs (Alternate Investment Funds) or Grant received from Government of India for promoting Technology based (IPR) startups.

4. Incubators will receive a fiscal incentive of 5% of the investment received by the incubatee from SEBI registered AIFs (Alternate Investment Funds) for promoting Startups in the social sector that provide solutions in areas like health, education, nutrition etc.

State Contribution in the Fund

1. The Trust (Bihar Startup Trust) may participate in SEBI registered AIFs (Alternate Investment Funds) and Venture Capital Funds, with a ceiling of 25% as Limited Partner. The so created Venture Capital Fund shall invest at least 50% (i.e. equal to twice the contribution made by trust in the VC Fund) into Bihar based Startups.

2. Venture Capital Fund shall invest at least 50% (i.e. equal to twice the contribution made by trust in the VC Fund) into Bihar Based Start-ups.

Read the full policy

Startup India & DPIIT (Department for Promotion of Industry and Internal Trade)

Support to Start-up Ecosystem

Startup India is the flagship initiative of the Government of India (launched January 2016), with the intent of building a strong eco-system for nurturing innovation and Startups in the country which will in turn drive sustainable economic growth and generate large scale employment opportunities.

The government announced the Startup India Action Plan to address all aspects of the Startup ecosystem with the hope of accelerating spreading of the Startupthis movement. It is segmented in the following parts:

Simplification and Handholding
Funding Support and Incentives
Industry-Academia Partnership and Incubation

1) Simplification and Handholding

Startup India Hub
Rolling out of Mobile App and Portal
Legal Support and Fast-tracking Patent Examination at Lower Costs
Relaxed Norms of Public Procurement for Startups
Faster Exit Options for Startups

2) Funding support and incentives

Providing Funding Support through a Fund of Funds with a Corpus of Rs 10,000 Ccr
Credit Guarantee Fund for Startups
Tax Exemption on Capital Gains
Tax Exemption to Startups for 3 years
Tax Exemption on Investments above Fair Market Value
Organizing Startup Fests for Showcasing Innovation and Providing a Collaboration Platform

3) Industry-Academia partnership and Incubation

Harnessing Private Sector Expertise for Incubator Setup
Building Innovation Centres at National Institutes
Promoting Startups in the Biotechnology Sector
Launching of Innovation Focused Programs for Students
Annual Incubator Grand Challenge

An entity shall be recognised as a Startup by DPIIT if it fulfils all of the following criteria

1. Period of existence and operations should not exceed 10 years from the Date of Incorporation
2. It is incorporated as a Private Limited Company, Registered Partnership Firm or a Limited Liability partnership (entity should not have been formed by splitting up or reconstruction of an already existing business)
3. Annual Turnover for any of the financial years has not exceeded Rs 100 Ccr, and
4. It is working towards innovation, development, deployment or commercialization of new products, processes or services potential of employment generation or wealth creation.

Eligibility Criteria for Tax Exemption under Section 56(2)(viib) of the Income Tax Act:

The entity should be a DPIIT recognized Startup
Consideration of shares received is exempt up to aAggregate amount of paid up share capital and share premium of the Startup after the proposed issue of shares (if any) does not exceed Rs 25 Cr.
Investment into eligible Startups by Accredited Investors, non- residents, AIFs (Category I) & listed companies with a net worth of more than Rs 100 Cr or turnover more than Rs 250 Cr shall be exempt.

Startup India: 80- IAC Tax exemption:

Post getting DPIIT recognition, a - Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Eligibility Criteria for applying to Income Tax exemption (80IAC):

The entity should be a recognized Startup
Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC
The Startup should have been incorporated after 1st April, 2016

Filing of Patents

Fast tracking of patent application.
Panel of facilitators to assist in filing of IP applications.
100% of the fee of facilitator for filing applications for Patent/ Trademark/ Design shall be borne by Central Govt. However, statutory fee has to be paid by the Startup.
80% rebate in patent filing fee to the Startup.

Easier Public Procurement Norms

Easier registration on government e-Marketplace (GeM) - an online procurement platform and largest marketplace for govt. departments to procure products & services.
Exemption to Startups in the manufacturing sector from the criteria of “prior experience/turnover” without any compromise on quality standards or technical parameters.
Startups are exempted from submitting Earnest Money Deposit (EMD) or Bid Security while filling governments tender.

Easy winding up of Company

As per IBC code 2016, after meeting certain criteria, Startup companies can be wounded up within 90 days of filing an application for insolvency.

References:

startup-india

High Priority Sectors

Coming soon

Scenario Of Food Pocessing

Million Tonnes

Wheat

Maize

Rice

Dairy

Scenario of Food Processing Industry in India

Opportunities of Food Processing Industry in Bihar

Major attractions for food processing in Bihar are :

Cultivation Statistics

Industry Policy highlights 2016

Bihar Startup Policy 2017

Startup India & DPIIT (Department for Promotion of Industry and Internal Trade)

High Priority Sectors