PM FME Scheme: Subsidy, Eligibility and How to Apply
Reviewed by: WeCredit Research Team
The PM FME scheme (Pradhan Mantri Formalisation of Micro Food Processing Enterprises) gives eligible micro food processing units a credit-linked capital subsidy of 35% of the eligible project cost, up to Rs. 10 lakh per unit. You put in at least 10% of the cost yourself and the balance comes as a bank loan.
Quick answer: you apply with the help of the state and district resource persons, and a District Level Committee recommends eligible applicants for the credit-linked subsidy, which a bank then links to your loan. WeCredit does not sanction government scheme loans. Confirm current details on the official PM FME portal (pmfme.mofpi.gov.in) and with your bank before you apply.
Status note: The latest official validity is September 2026, as stated by the Press Information Bureau on 22 May 2026, and that date has now passed. A continuation for 2026-31 has been reported as proposed, but it is not confirmed on an official notification. Check the official portal and ask your bank whether new applications are being taken before you start a project report.
PM FME Scheme at a Glance
| Item | What the official sources say |
|---|---|
| What it is | A central scheme to formalise and upgrade micro food processing enterprises, with an outlay of Rs. 10,000 crore |
| Subsidy for individual units | Credit-linked capital subsidy of 35% of the eligible project cost, maximum Rs. 10 lakh per unit |
| Your contribution | Minimum 10% of the project cost; the balance through a bank loan |
| Common infrastructure | 35% credit-linked subsidy up to Rs. 3 crore for FPOs, SHGs, cooperatives and government agencies |
| Seed capital for SHG members | Rs. 40,000 per member for working capital and small tools, up to Rs. 4 lakh per SHG federation |
| Branding and marketing | Grant of up to 50% for groups of FPOs, SHGs, cooperatives or an SPV |
| Who it covers | New and existing micro food processing enterprises, with priority to One District One Product (ODOP) units |
| Scale so far | 1,96,270 individual units supported as on 22 May 2026, with more than 40% women entrepreneurs |
What the Scheme Pays For
PM FME has several parts, and you should pick the one that matches who you are. An individual micro enterprise looks at the 35% capital subsidy. A group such as an FPO or SHG can look at common infrastructure, branding support or seed capital. The scheme also pays for training.
- Individual units: money to set up a new micro food processing unit or upgrade an existing one, with the subsidy linked to a bank loan.
- Common infrastructure: shared facilities set up by FPOs, SHGs, cooperatives or government agencies, which other users can use on a hiring basis for a substantial part of the capacity.
- Seed capital: working capital and small tools for SHG members engaged in food processing, routed through the state and urban livelihood missions.
- Branding and marketing: grant support for groups, including help with trademark registration, packaging and e-commerce for ODOP brands.
- Training: an entrepreneurship development programme (EDP) for applicants recommended by the District Level Committee.
If raw material credit is your gap, NSIC raw material assistance is a separate option.
Who Can Apply (Eligibility)
- Individual micro food processing enterprises, whether you are setting up a new unit or upgrading an existing one.
- Groups: farmer producer organisations (FPOs), self-help groups (SHGs), producer cooperatives. For branding and marketing grants, a special purpose vehicle of micro enterprises can also apply.
- Government agencies, for common infrastructure.
- For new enterprises, the product must be one identified under the One District One Product approach. Capital investment is prioritised for ODOP units, and states identify products, with priority to perishables such as fruits, vegetables, spices and fisheries, and traditional foods such as honey and turmeric.
A minimum age and a turnover limit are not specified for the scheme, so ask your State Nodal Agency or bank for any extra conditions that apply to your unit.
How the 35% Subsidy Works
The subsidy is credit-linked. That means it attaches to a bank loan for your project, rather than arriving as a standalone grant. The scheme funds 35% of the eligible project cost, and the amount for one unit cannot exceed Rs. 10 lakh. You must bring at least 10% of the project cost yourself, and the balance comes through the bank loan. Interest rates, security and the exact way the subsidy is adjusted against your loan are set by the lending bank, so ask for them in writing.
Worked Example: Subsidy and Own Contribution
This example uses only the scheme rules: 35% subsidy, Rs. 10 lakh cap, and a minimum 10% own contribution. Your actual loan terms come from the bank.
| Eligible project cost | 35% of cost | Subsidy you can get (cap Rs. 10 lakh) | Minimum own contribution (10%) |
|---|---|---|---|
| Rs. 10 lakh | Rs. 3.5 lakh | Rs. 3.5 lakh | Rs. 1 lakh |
| Rs. 20 lakh | Rs. 7 lakh | Rs. 7 lakh | Rs. 2 lakh |
| Rs. 40 lakh | Rs. 14 lakh | Rs. 10 lakh (capped) | Rs. 4 lakh |
The cap starts to bind once the eligible project cost passes about Rs. 28.6 lakh. Above that point, a bigger project does not raise the subsidy, so size your project with the cap in mind.
Seed Capital for SHG Members
Members of self-help groups engaged in food processing can get seed capital of Rs. 40,000 per member for working capital and the purchase of small tools. The ceiling is Rs. 4 lakh per SHG federation, and the money is given at federation level and passed to members as a repayable loan. It is run through the state rural and urban livelihood missions, and groups working on ODOP products get priority. For wider group credit, read about self-help group loans.
Documents You Will Need
The one document the scheme requires in detail is the detailed project report (DPR). Banks add their own KYC and loan documents, so ask for the list before you apply.
- Detailed project report: the DPR should cover the product profile, strategy, quality control, aggregation of produce, packaging and branding, pricing, promotion, storage and marketing channels, with a flow chart and a five-year plan.
- Bank documents: KYC, business and loan application documents. The bank sets this list, so ask for it in writing.
- Recommendation by the District Level Committee: applicants for the subsidy are recommended by this committee.
How to Apply: Step by Step
- Check that your product and unit fit the scheme, and whether your district has an ODOP product that matches.
- Contact the state or district resource persons. They guide applicants through registration, submission of the application, compliances and standardisation.
- Prepare the detailed project report with their help.
- Register and submit the application with their guidance, then wait for the District Level Committee to recommend it.
- Approach a bank for the linked loan. The bank appraises the project and decides the loan.
- Take up the entrepreneurship development training that the scheme provides for recommended applicants.
- After sanction and disbursement, the credit-linked subsidy is linked to your loan as the bank and scheme rules provide.
PM FME Compared With Related Options
| Feature | PM FME | Mudra loan | NSIC raw material assistance |
|---|---|---|---|
| What it is | Credit-linked capital subsidy plus a bank loan for micro food processing units | Loan category for small non-farm businesses | Raw material on credit of up to 180 days for MSMEs |
| Best for | Setting up or upgrading a food processing unit | General small business funding | Buying raw material |
| Subsidy | 35% of eligible cost, up to Rs. 10 lakh per unit | Not a subsidy scheme; a loan category | Not a subsidy; raw material on credit |
| Who can apply | Micro food processing enterprises, FPOs, SHGs, cooperatives | Non-corporate, non-farm small businesses | MSMEs |
Is PM FME Right for You? A Quick Checklist
- Your business makes or plans to make a processed food product at micro scale.
- Your product is an ODOP product, or you are upgrading an existing unit.
- You can put in at least 10% of the project cost.
- You can prepare a DPR with the help of your district resource person.
- Your project fits within the Rs. 10 lakh subsidy cap in a way that still makes business sense.
- You have confirmed on the portal or with your bank that new applications are being taken.
Points to Check Before You Apply
| Point to check | What to do |
|---|---|
| Product is not an ODOP product for a new unit | Check your state’s ODOP list before you plan the unit |
| Weak or incomplete project report | Cover the product, quality control, packaging, pricing, storage and marketing channels, with a flow chart and five-year plan |
| No District Level Committee recommendation | Keep in touch with the district resource person and track the committee’s decision |
| Own contribution missing | Plan for the minimum 10% own contribution before you approach the bank |
| Bank does not sanction the loan | Ask the bank for the reason, fix the gap and ask the district resource person about other lenders |
Common Mistakes
- Treating the subsidy as a standalone grant. It is linked to a bank loan.
- Planning a project far above Rs. 28.6 lakh and expecting a bigger subsidy. The cap is Rs. 10 lakh per unit.
- Skipping the resource persons. State and district resource persons are there to guide you through registration, submission and compliances.
- Using old figures from blogs. Confirm the subsidy and the scheme status on the portal and with your bank.
For other options, see the government loan schemes hub.
Frequently Asked Questions
What is the subsidy under the PM FME scheme?
35% of the eligible project cost for an individual micro food processing unit, up to Rs. 10 lakh. It is credit-linked, so it goes with a bank loan.
Who is eligible for PM FME?
New and existing micro food processing enterprises, FPOs, SHGs, producer cooperatives and government agencies for common infrastructure. For new enterprises, the product must fall under the One District One Product approach.
How much do I need to invest myself?
At least 10% of the project cost. The balance comes through a bank loan.
Is the PM FME scheme still open?
The latest official statement, from the Press Information Bureau on 22 May 2026, says the scheme was extended till September 2026, and that date has passed. A continuation for 2026-31 has been reported as proposed, but it is not confirmed on an official notification. Check the portal and your bank.
How do I apply for PM FME?
Work with the state and district resource persons, prepare a detailed project report, get registered and apply with their guidance, get the District Level Committee’s recommendation and then approach a bank for the linked loan.
What is seed capital under PM FME?
Rs. 40,000 per SHG member in food processing for working capital and small tools, up to Rs. 4 lakh per SHG federation, given through the livelihood missions as a repayable loan to members.
Does WeCredit sanction PM FME loans?
No. WeCredit does not sanction government scheme loans. We explain how schemes work and compare options. Confirm current terms with the bank and on the official portal.
