UPSC DAW Mains Answer Writing 2025 4th September

UPSC DAW Mains Answer Writing 2025 4th September

Question

Examine the scope Micro Food Processing Enterprises (MFPEs) in India. Elaborate on the measures taken by the government for their formalisation and employment generation. (15 marks, 250 words)  

Model Answer

Introduction: 

  • Micro Food Processing Enterprises (MFPEs) form the backbone of India’s food economy, with nearly 25 lakh units, mostly unorganised and family-run, employing 74% of the sectoral workforce (one-third women). They contribute 12% of output and 27% of value addition in food processing, yet remain constrained by low investment, poor infrastructure, and limited access to credit and markets. 

 Scope of MFPEs in India 

  • Large Untapped Agricultural Raw Material Base: 

  • India’s vast agricultural production provides a strong raw material base for MFPEs. Despite being the largest producer of milk, pulses, and spices and second in fruits and vegetables, only about 10% of produce is processed.  

  • Rising Market Potential and Exports: 

  • India’s food processing sector is projected to reach USD 535 billion by 2025–26. Micro units contribute substantially to local and regional food supply chains, like Odisha’s organic food enterprises under Pradhan Mantri Formalisation of Micro Food Processing Enterprises(PMFME). 

  • Government Support and Infrastructure Development: 

  • Schemes like PMFME provide credit-linked subsidies (35%), capacity-building, and technological upgrades to micro units.  

  • E.g. Over 1.44 lakh micro food processing units have received support under PMFME by mid-2025, including technical assistance and loan facilitation to boost their competitiveness and sustainability. 

  • Promotion of Local Food Specialties and Rural Livelihoods: 

  • The One District One Product (ODOP) initiative promotes district-specific micro food products, enhancing branding and marketability.  

  • E.g. Bihar’s makhana processing and Lucknow’s traditional snacks, generating rural jobs in processing, packaging, and marketing tied to local culture and resources. 

      Challenges Facing MFPEs 

  • Credit Constraints: 

  • MFPEs are often excluded from formal credit systems, with limited share in institutional finance, forcing reliance on informal sources. 

  • E.g. Jaggery units in Uttar Pradesh face delays in receiving loans under PMFME, limiting their ability to modernise production. 

  • Infrastructure Gaps: 

  • Lack of cold chains, storage, and logistics facilities leads to high wastage and inefficiency. Perishable produce is most affected. 

  • E.g. In Bihar, absence of cold storage results in over 30% wastage of fruits like litchi, reducing farmers’ profitability. 

  • Low Technology Adoption: 

  • Most MFPEs use outdated techniques, with modern machinery investment at just 7%, which hampers productivity and product standardisation. 

  • Compliance Burden: 

  • Compliance with FSSAI and global standards requires costly testing, certification, and packaging, which small units cannot afford. 

       Government Measures for Formalisation & Employment 

  • Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (2020–26): 

  • Under PMFME, 35% subsidy is offered with a ceiling of ₹10 lakh per unit, ensuring affordable capital access.  

  • E.g. Ruby Fresh Snacks in Kerala expanded from groundnut laddoos to a wider product range after availing a ₹3 lakh PMFME loan in 2021, doubling its production and turnover to ₹32 lakh. 

  • Seed Capital for SHGs: 

  • Each SHG member is eligible for up to ₹40,000 seed capital for working capital and tools, directly empowering rural women entrepreneurs. 

  • E.g. Women SHGs in Maharashtra improved income via pickle & papad unit. 

  • Common Infrastructure Support: 

  • Funding is provided for cold storage, assaying labs, and One District One Approach(ODOP)-based common processing units to reduce operational costs. 

  • Branding & Marketing Assistance: 

  • The scheme extends marketing and branding assistance to ODOP products, helping MFPEs penetrate larger retail chains. 

      Conclusion: 

  • MFPEs hold immense potential for rural employment, women empowerment, and export growth. Strengthening credit access, technology upgradation, skill training, and market linkages can unlock their competitiveness. A coordinated push under PMFME, ODOP, and digital marketplaces will ensure India’s micro enterprises transition from informal survival units to globally competitive players, driving inclusive and sustainable growth.