Content

1. PRADHAN MANTRI FORMALISATION OF MICRO FOOD PROCESSING ENTERPRISES (PMFME) SCHEME
2. THE HEALTH SECURITY SE NATIONAL SECURITY CESS BILL, 2025

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PRADHAN MANTRI FORMALISATION OF MICRO FOOD PROCESSING ENTERPRISES (PMFME) SCHEME

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WHAT IS PMFME?

• Centrally Sponsored Scheme under MoFPI.
• Launch year: 2020 (part of Atmanirbhar Bharat).
• Objective: Formalisation + Competitiveness + Modernisation of India’s unorganised micro food processing sector (~25 lakh units, 74% unregistered).
• Implementation model: One District One Product (ODOP) approach.
• Target beneficiaries: Individual micro-enterprises, FPOs, SHGs, Cooperatives.

Relevance

• GS-III | Economy – MSMEs & Food Processing: Formalises unorganised micro units, strengthens value addition, ODOP clusters, supply chains, and rural non-farm growth.
• GS-III | Inclusive Growth: Empowers women-led SHGs, expands credit access, reduces rural vulnerability, supports micro-entrepreneurship.
• GS-II | Governance & Implementation: Demonstrates convergence (PMKSY, PLISFPI, NRLM), highlights gaps in capacity building, digital literacy, market linkages.

 

WHY IS THIS IN NEWS?  

• MoFPI reported the latest progress up to 31 October 2025 on PMFME scheme performance.
• Multiple PIB releases (food processing, renewable technologies, MSME support, PLISFPI linkages) highlight policy push for micro-enterprise formalisation + green technologies + rural employment.
• Parliamentary replies confirm high uptake, massive SHG participation, and integration with PMKSY + PLISFPI.

 

KEY PERFORMANCE HIGHLIGHTS

A. Loans & Subsidies

• 1,62,744 loans sanctioned under credit-linked subsidy.
• Total loan amount sanctioned: ₹13,234.90 crore.

B. SHG Empowerment

• 3,65,935 SHG members approved for seed capital.

C. Infrastructure Creation

• 101 Common Infrastructure Facilities (CIFs) sanctioned.
• 76 Incubation centres approved.

D. Market Access

• 27 Branding & Marketing proposals approved.

E. Central Share Released to States/UTs

• Steady fund release over last 5 years (exact annual figures not disclosed in PIB).

SCHEME COMPONENTS

Support to Individual / Group Micro Enterprises

• 35% credit-linked capital subsidy, max ₹10 lakh.
• Covers new units + upgradation.

Support to SHGs

• ₹40,000 per SHG member as seed capital for tools and working capital.
• Max ₹4 lakh per SHG federation.

Common Infrastructure Support

• 35% subsidy, cap ₹3 crore.
• For FPOs/SHGs/Cooperatives/Govt agencies.
• Facilities open for public use on hiring basis → reduces cost barriers.

Branding & Marketing Support

• Up to 50% grant to FPOs/SHGs/Cooperatives/SPVs.
• Essential for ODOP value chain integration.

Capacity Building

• Entrepreneurship Development Program (EDP+)
• Product-specific skilling
• Training of trainers, DRPs, incubation support.

PROGRESS & PERFORMANCE NATIONWIDE

Formalisation Momentum

• SHG seed capital uptake (3.66 lakh members) shows deep penetration in rural areas.
• High loan sanction numbers reflect strong credit linkage via banks/NBFCs.

ODOP Integration improving clusters

• Establishment of CIFs + incubation centres strengthens local value chains.
• Reduces entry barriers for first-time entrepreneurs.

Employment & Income Growth

• Micro food processing units generate off-farm rural employment → stabilises incomes, reduces distress migration.

Women-led Enterprise Growth

• SHG-driven participation is a major success → aligns with Lakhpati Didi, NRLM, Aatmanirbhar Bharat goals.

Convergence with PMKSY & PLISFPI

• PMFME upgrading micro-units, while PLISFPI scales large/medium units → integrated value chain development.

CAPACITY BUILDING & ECOSYSTEM SUPPORT

MoFPI Interventions

• National & State campaigns: newspapers, radio, expos, fairs, buyer-seller meets.
• Awareness drives targeting women collectives & SHGs.

NIFTEM-K & NIFTEM-T Support

• Handholding, mentoring.
• Pilot plants, incubation services, NABL labs.
• Access to R&D, market linkages, packaging technology.

Green Technology Push (related PIB note)

• Incentives for solar, biomass, wind energy → up to ₹35 lakh per project (PMKSY).
• Mandatory CTO (Water & Air) for grant release.
• Promotion of Non-ODS, low-GWP refrigerants for cold chain.

Sustainable Packaging Innovation

• Biopolymers: PLA, starch, nanofibers.
• Low-waste packaging systems → crucial for export competitiveness.

FINANCIAL SUPPORT STRUCTURE

Component	Support	Target Group
Capital Subsidy	35% (max ₹10 lakh)	Individual/Group MFPEs
SHG Seed Capital	₹40,000 per member (max 4 lakh per federation)	SHGs
Common Infrastructure	35% (max ₹3 crore)	FPOs/SHGs/Coops/Govt agencies
Branding & Marketing	Up to 50%	FPOs/SHGs/Coops/SPVs
Capacity Building	EDP+, Skilling, ToT, DRPs	Entrepreneurs, SHGs, FPOs

STRENGTHS OF PMFME

• Modernises the unorganised food processing sector (~74% unregistered units).
• Reduces credit constraints through capital subsidies.
• Empowers women SHGs → major socio-economic impact.
• ODOP creates specialisation, branding and export potential.
• Facilitates common facilities, reducing costs for small entrepreneurs.
• Strong convergence with NRLM, PMKSY, PLISFPI.

CHALLENGES & GAPS

• Slow pace of on-ground utilisation of CIFs relative to sanction numbers.
• Need for stronger market linkages beyond local markets.
• Limited digital literacy among micro-entrepreneurs → affects compliance & formalisation.
• Fragmented value chains in certain ODOP regions.
• Credit access still depends heavily on bank willingness.

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THE HEALTH SECURITY SE NATIONAL SECURITY CESS BILL, 2025

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WHAT IS THIS BILL?

• A new capacity-based excise cess introduced via a dedicated legislation.
• Purpose: Create a predictable, rule-based revenue stream for
  • National Security, and
  • Public Health expenditure.
• The cess is levied on machinery or processes used for manufacturing specified goods.
• Initially applies to pan masala, but Government may extend it to other notified goods.

Relevance

• GS-III | Economy – Taxation & Fiscal Policy: Introduces rule-based, capacity-based excise system to ensure predictable revenue for national priorities.
• GS-II & GS-III | Public Health: Uses corrective taxation on harmful products; channels revenue to strengthen health security systems.
• GS-II | Governance: Establishes structured compliance, audit, enforcement, and multi-tier appeals—enhances transparency and accountability.

WHY IS THIS IN NEWS?

• Government introduced a new statutory framework for a special excise cess to strengthen funding for two critical national priorities—health security and national security.
• Bill formalises a capacity-based taxation system for high-risk/ high-revenue products.
• Seeks to improve compliance, monitoring, enforcement and stable revenue mobilisation.

OBJECTIVES OF THE BILL

A. Fiscal Stability

• Create predictable and reliable revenues for national security & public health.

B. Administrative Clarity

• Provide a structured, transparent, rule-based framework for levy, assessment, monitoring, enforcement, and appeal.

C. Corrective Taxation

• Ensure certain products (starting with pan masala) contribute fairly to socio-economic needs.

D. Plug Revenue Leakages

• Prevent evasion common in high-margin goods produced on semi-automatic/hybrid machines.

WHAT GOODS ARE COVERED?

• Pan Masala (initial coverage).
• Government empowered to add any other goods to Schedule I.

WHO IS LIABLE TO PAY THE CESS?

• Any person who owns / operates / controls machines or processes used for manufacturing the notified goods.
• Liability independent of income tax/GST status.

NATURE OF LEVY

• Capacity-based monthly excise cess.
• Levied in addition to existing taxes/duties.
• Applied on:
  • Machines installed, or
  • Manual processes undertaken.

BASIS OF CALCULATION

A. Machine-Based Production

• Computed using:
  • Maximum rated speed (pouches/tins/containers per minute).
  • Weight per pack.
• Example rate:
  • ₹101 lakh per month for machines up to 500 packs/min (up to 2.5 g pack weight).

B. Manual Process

• ₹11 lakh per month flat cess.

ABATEMENT RULE

• If operations remain shut for 15+ continuous days, prorated abatement applies.
• Ensures fairness and prevents liability during genuine downtime.

FLOW OF FUNDS

• Cess proceeds credited to Consolidated Fund of India (CFI).
• To be used specifically for:
  • National Security,
  • Public Health Systems.

REGISTRATION, RETURNS & COMPLIANCE ROADMAP

Step 1: Registration

• Mandatory for any person possessing machines/processes for notified goods.

Step 2: Self-Declaration of Machinery

• Maximum speed, weight per pouch, number of machines, type of process.

Step 3: Verification

• Officers may verify/calibrate parameters.
• Opportunity of being heard before final determination.

Step 4: Cess Computation

• Based on declared/verified capacity.

Step 5: Monthly Payment

• Pay cess by 7th of each month (pre-payment model).

Step 6: Monthly Return Filing

• Mandatory return with details of machines, operations, cess paid.

Step 7: Audit & Scrutiny

• Audit of returns, records, declarations.

ENFORCEMENT ARCHITECTURE

A. Monitoring Tools

• Scrutiny of returns
• Inspection
• Search
• Seizure
• Real-time monitoring of machinery/process

B. Offences

• Non-declaration of machines
• Undeclared operations
• Falsification of records
• Evasion or short payment
• Obstruction of officers
• Fraudulent refund claims

C. Penalties

• Monetary fines
• Confiscation of goods/machinery
• Graded imprisonment depending on severity
• Arrest for serious contraventions

D. Inter-Agency Coordination

• Collaboration with police, customs, railways, revenue departments.

APPEALS MECHANISM

Multi-tier appeal structure:

1. Appellate Authority
2. Appellate Tribunal
3. High Court
4. Supreme Court

Ensures due process, fairness, and judicial review.

GOVERNMENT POWERS UNDER THE BILL

• Increase cess up to 2× in public interest.
• Exempt specific persons/units under prescribed conditions.
• Notify additional goods for inclusion under the cess system.
• Set rules and procedures for all aspects of levy & administration.

POLICY SIGNIFICANCE

A. Strengthening Health Security & National Security Financing

• Dedicated revenue channel ensures non-disruptive funding for critical sectors.

B. Capacity-Based Taxation = Anti-Evasion Tool

• Pan masala, gutkha, tobacco products often evade tax via under-reporting.
• Machine-capacity levy bypasses quantity reporting manipulation.

C. Rule-Based, Transparent Framework

• Reduces discretionary power and increases administrative predictability.

D. Aligns with Public Health Priorities

• Sin-goods/product categories that impose public health costs help fund health systems.

E. Fiscal Federalism Neutrality

• Cess → goes to CFI, not divisible pool → strengthens Union fiscal space.

CHALLENGES & RISKS

• Industry may shift to undeclared/illegal production to avoid cess.
• Monitoring capacity at ground level (especially for semi-automatic units) is crucial.
• Risk of litigation due to capacity assessment disputes.
• Potential for regressive impact if extended to essential goods (unlikely but permitted by law).