Food processing sector to get its own bank

Food processing sector to get its own bank

Union Minister for Food Processing Industries Harsimrat Kaur Badal addresses a press conference in New Delhi on Monday. PTI

With the food processing sector facing problems in accessing credit, the government is all set to launch a dedicated financial institution for the industry.

"We are in the process of creating a new financial institution that will exclusively fund food processing projects and create a capacity building in the field of risk assessment and lending to the food processing sector," Minister for Food Processing Harsimrat Kaur Badal told reporters here.

Food Processing secretary Jagdish Prasad Meena said the corpus for the non-banking financial institution — tentatively called the agro-processing financial institution — will be Rs 2,000 crore with the government contributing 20% or Rs 400 crore.

The balance will be raised from the private sector, Meena said, adding that the government would issue the 'request for proposal' for setting up the financial institution next month.

Due to the high risks involved, the food processing sector finds it difficult to access credit for various projects.

Harsimrat Kaur said India processes only 10% of its total farm produce and that wastage due to lack of food processing units and cold storage facilities runs to the tune of Rs 1 lakh crore every year.

The new financial institution could provide specific products for food processing projects with an easy repayment schedule that could give a boost to the small and medium enterprises sector.

The institution was announced by Finance Minister Arun Jaitley in the Union Budget this year.

At present, India produces 307 million metric tonnes of horticulture products of which only 2% are processed, she said. The government is committed to operationalising 25 mega food parks by the end of this year, the minister said.

The government is ready with the draft policy on 'Operation Green' scheme which will be launched next month. Under this scheme, a group of farmers would be encouraged to form clusters in key growing areas to boost production and marketing of tomato, onion and potato, she said.