Background and Policy Context
The scheme is a component of the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), designed to strengthen the agri-food value chain and reduce post-harvest losses.
Its primary focus is on building infrastructure rather than factory-level processing units, so that raw material can move efficiently from farm gate to retail or export markets.
Core Objective and Rationale
Seamless Integration
Provide effective and seamless backward and forward integration for the processed food industry by plugging gaps in the supply chain.
Key Benefits
Ensure continuous supply of quality raw material, reduce wastage of perishables, and help farmers realize remunerative prices for their produce.
What are Backward and Forward Linkages?
Backward Linkages
Infrastructure that connects the market or processor back to the farmer and production areas.
Help aggregate and preserve produce near the farm.
Forward Linkages
Facilities that move produce and processed food from collection or processing centres to wholesale, retail, and consumer markets.
Help distribute produce and processed products to buyers in time and in good condition.
Eligible Activities and Infrastructure
🏭 Backward Linkages Infrastructure
- Primary processing centres or collection centres at the farm gate
- Sorting, grading, washing, waxing, and packing facilities
- Ripening chambers, pre-cooling units, and cold rooms
- Milk chilling centres and bulk milk coolers
- Infrastructure for dairy, meat, poultry, fish, and other perishables
🚚 Forward Linkages Infrastructure
- Modern retail outlets for perishable foods
- Cold rooms at distribution points
- Insulated or refrigerated transport (reefer vans)
- Refrigerated containers for connectivity
- Integrated pack houses with cold storage and transport networks
Coverage of Products and Sectors
The scheme is applicable to perishable horticultural and non-horticultural produce:
Eligible Organizations and Beneficiaries
Implementation is open to a wide range of agencies:
Technical Agencies may be engaged to assist farmer groups and FPOs in preparing business plans, DPRs, and capacity-building.
Pattern of Assistance and Financial Structure
Grant Assistance
General Areas: Up to 35% of eligible project cost
Difficult Areas: Up to 50% (NE, Himalayan states, ITDP, islands, SC/ST projects)
Maximum: ₹5 Crore per project
Grant Release Pattern
Released in three instalments:
- 25% - First instalment
- 40% - Second instalment
- 35% - Final instalment
Against proof of promoter's contribution and term loan investment
Credit Linkage
Projects must be credit-linked:
- Sanctioned term loan required (often ≥20% of project cost)
- Minimum equity contribution from promoter mandatory
- Bank appraisal and financial closure needed
Application, Approval, and Implementation
Application Filing
Submit through MoFPI's online SAMPADA system with DPR, bank appraisal, financial closure documents, and statutory clearances.
Approval Process
After scrutiny and appraisal, receive sanction letter specifying eligible cost, grant amount, timelines, and release conditions.
Implementation
Complete civil works and machinery installation within stipulated period. MoFPI conducts inspections before each grant instalment release.
Documentation
Grant release requires utilisation certificates, CA certificates, and site inspection reports confirming fund deployment.
⚠️ Current Status and Relevance
The backward and forward linkages component under PMKSY was formally discontinued for sanction of new projects from 1 April 2021, though committed liabilities for already approved projects are still being honoured.
However, the concept of creating an integrated cold chain and market linkages remains central to India's food processing policy, and similar objectives are now being supported through other schemes and interventions of MoFPI and allied ministries.