Karnataka Udyog Mitra - Industrial Policy

The Policy initiatives to promote Agro-Food Processing Industry

a)	Single Window clearances for permitting production of agriculture raw material for captive consumption;
b)	Provide for long-term contractual agreement between the industry and farmers for supply of right variety of raw material;
c)	Declare the Industry as a seasonal industry to make them eligible for relief from payment of minimum charges of electricity and water during closure period;
d)	State Government to review their Agriculture Produces Market Act and consider giving benefits for setting up of regional commodity exchanges, auction houses and terminal market as part of the agri infrastructure to ensure reduction/elimination of middle men between the framers and consumers with a view to provide better return to the farmer.
e)	Strengthen and promote establishment of cold storages at appropriate locations;
f)	Formulate a package of incentives including exemption from payment of conversion fine, assistance from Technology Upgradation Fund, incentive for captive power generation etc.
g)	Development of world-class infrastructure for Agro Food Processing Industries through establishment of Agro Food Technology Parks.
h)	Agricultural and horticultural farms which are located within a radius of 80-100 Km from the proposed Food Agro Technology Parks would be linked to these parks so that these farms could not only be used to produce the seeds required by the farmers, but also for demonstration, nurseries and more importantly to conduct Agri Expositions.
i)	Creation of proper environment for the industry to obtain raw materials required by it on a continuous and permanent basis with guaranteed prices and quality.
j)	Encouragement to Private Sector initiatives in different segments of the Industry to bring in the latest technology and professional management skills.

Top

All proposals and their implications were examined by the Government at the highest level. CFTRI, Mysore were also consulted and their suggestions have also been considered and taken into account. The Government has bow approved the policy document and has decided to notify it.

Hence, this order.

Order No. CI 29 SPI 2002, Bangalore, dated 28th June 2003

Government is pleased to approve and notify the new Industrial Promotion Policy for Agro Food Processing Industries - 2003, as detailed in Annexure-I.

The Policy will come into effect immediately and would be valid, subject to such orders/amendments as may be notified, until such time as it is withdrawn or replaced by a new policy.

Unless so specified or reference / context refers to the contrary, Industrial Promotion Policy for Agro Food Processing Industries - 2003 will continue to be governed by the General Industrial Policy, in matters not provided in this policy.

10.

This order issues with the approval of FD vide No. FD 1047 Exp-I/2003 dated 25th June 2003.

By order and in the name of the Government of Karnataka

[K.G.Rajashekarappa]

Under Secretary to Govt.[ID]

Commerce & Industries Dept.

Top

To
1.	The Accountant General in Karnataka, Bangalore-1
2.	The Chief Secretary, Govt. of Karnataka, Vidhana Soudha, Bangalore-1
3.	The ACS/ACS & Development Commissioner and Principal Secretary, Commerce & Industries Dept./Home & Transport Dept.
4.	All the principal Secretaries to Govt./Secretaries to Govt.
5.	The Secretary to Hon'ble Chief Minister
6.	The Private Secretaries to all Ministers & Ministers of State
7.	The Commissioner for Industria Development and Director of Industries & Commerce, Kanija Bhavan, Bangalore-1
8.	The Commissioner for Commercial Taxes, Gandhi Nagar, Bangalore-9
9.	The CMD, KPTCL, Cauvery Bhavan, Bangalore-9
10.	The MDs of Bangalore Electricity Supply Co., Mangalore electricity Supply Co., Gulbarga Electricity Supply Co & Hubli Electricity Supply Co
11.	The Chairman, KSBPE, Vivesvaraya Centre, Bangalore-1
12.	All the Deputy Commissioners of Districts.
13.	The Director, CFTRI, Mysore
14.	The Director of Agriculture, Seshadri Road, Bangalore-1
15.	The Director of Horticulture, Lal Bagh, Bangalore-27
16.	The Director of Fisheries, Mahaveer Complex, K.G. Road, Bangalore-9
17.	The Registrar of co-operative Societies, 1 Ali Asker Road, Bangalore-52
18.	The Director of Animal Husbandry & Veterinary Services, V.V.Mini Tower, Bangalore-1
19.	The CEO & EM, KIADB, 14/3 Nrupathunga Road, Bangalore-1
20.	The MD, Karnataka Udyoga Mitra, Kanija Bhavan, 49 Race Course Road, Bangalore-1
21.	All the Joint Directors of District Industries Centres
22.	Guard File/Spare copies Top

ANNEXURE - 1

Industrial Promotion Policy for Agro Food Processing Industries - 2003
[Annexure to G.O. No. CI 29 SPI 2002 dated 28th June 2003]

1. Preamble

The State Government had formulated an extensive industrial promotion policy for Agro Food Processing Industries in the year 1999 vide Government Order No. CI 20 SPI 1999 dated 13th April 1999. This Policy had provided for certain amendments in the Land Reforms Rules in respect of the purchase of agricultural lands by and for Agro Processing Industries; its utilitsation for captive cultivation of raw materials; delegation of powers to the Deputy Commissioners of districts to grant approval for the purchase of agricultural lands by such industrial units and also sales tax incentives on par with the Information Technology Industry. Since the sales tax incentives were withdrawn from 1st January 2000, the Government re-examined the entire policy and by issue of another order No. CI 20 SPI 1999 dated 23rd March 2001, brought the Agro Food Processing Industries also under General Industrial Policy of the State of 1996-2001. The State Government has taken a number of initiatives to increase production and productivity in Agriculture, Horticulture and all other related segments. Government is convinced that an accelerated promotion and development of food processing industry is an inevitable part of these efforts. Government of India has also brought out recently an Approach Paper to the National Food Processing Policy and has requested the State Governments for their comments, suggestions, etc. The objective of Government of India is to increase the processing level of food products from the existing 2% to 10% within 10 years.

Substantial quantity of agro food materials is lost during harvesting, transportation, storage and distribution. The extent of wastage varies between 5% and 40% from cereals to horticultural produce. This loss is very high compared to the figures of the developed countries.

In India, it is estimated that around 2% of the total production is processed into value added products as compared to 50-80% processed by developed countries.

The extent of value addition during processing is minimal as majority of the products are processed at the primary processing level only. A study conducted by the Government of India in this regard has indicated that an estimated investment of Rs. 1,40,000Cr would be required to achieve this objective. This study has also indicated that Karnataka has a potential to attract investments of approximately Rs. 10,000 Cr. In the next 10 years.

Various technologies available in R&D institutions are not being effectively tapped by farmers and food processing Industries. Hence lab to land conversion of the knowledge base has to be focused.

Government of India had recently organized a National Level Seminar to discuss the proposed National Policy on Agro-Food Processing Industry and also a special Act for the Food Processing Sector. Among other things the draft policy has suggested the following initiatives to promote Agro-Food Processing Industry:

1.	Single Window clearances for permitting production of agriculture raw material for captive consumption;
2.	provide for long term contractual agreement between industry and farmers for supply of right variety of raw material;
3.	Declare Agro-Food Processing Industry as a seasonal industry to make them eligible for relief from payment of minimum charges of electricity and water during closure period;
4.	State Government to review their Agriculture Produces Market Act and consider giving benefits for setting up of regional commodity exchanges, auction houses and terminal market as part of the agri infrastructure to ensure reduction/elimination of middle men between the farmers and consumers, with a view to provide better return to the farmer.
5.	Strengthen and promote establishment of cold storages in appropriate locations;
6.	Formulate a package of incentives for sales tax concession, concession from Stamp Duty & Registration Charges, incentive for captive power generation etc.

One of the major thrusts given by Government of India for development of World class infrastructure for Agro Food Processing Industries is establishment of "Agro Food Technology Parks" for which financial assistance of Rs.4 Crores per Park would be available from Government of India. The State has proposed to establish 6 such parks in Malur, Bagalkot, Belgaum, Maddur, Jewargi and Chitradurga. Project proposals in respect of these Parks have already been forwarded to Government of India, seeking approval and sanction of financial assistance. Government of India has already approved 3 Food Agro Technology Parks at Malur, Bagalkot, and Jewargi and approval of the remaining 3 parks is being pursued.

Top

The main objective of establishing Food Agro Technology Park is to promote Agro Food Processing Industries in clusters in areas where there is predominant production of processable agriculture and horticulture products. These Parks will also provide the required Infrastrctural and common facilities, which are essential for sustenance of these industries. The common facilities would include uninterrupted power and water supply, quality assurance laboratories, warehousing including cold storages, common effluent treatment plants, etc. Another important aspect of the Food Agro Technology Parks is creating awareness among the farmers and producers of agricultural and horticultural products about the advantages of cultivating/growing the right varieties of primary products which are amenable for processing and thus ensure that the twin objectives of assuring a better return to the farmers and assured supply of raw materials to the processor are achieved. To achieve this, it is proposed that agricultural and horticultural farms which are located within a radius of 80-100 Km from the proposed Food Agro Technology Parks be linked to these parks so that these farms could not only be used to produce the seeds required by the farmers, but also for demonstration, nurseries and more importantly to conduct Agri Expositions. It is proposed that such agri expositions are held in potential locations on an annual basis to create awareness among the farmers regarding the advantages of processing agricultural products, the need for increasing productivity and improving quality and the potential such products have both in the domestic and export markets. Such expositions would attract R & D institutions, technology suppliers, machinery manufacturers, financial institutions and more importantly those involved in the business of promoting processed foods; and thus help in creation of new collaborations and ventures.

The State Government has realized that the establishment of these Agro Food Technology Park is only one step in the direction of promotion and development of food processing industry to grow has to be created particularly in relation to contract farming, whereby the industry can obtain the raw materials required by it on a continuous and permanent basis with guaranteed prices and quality. The State Government is also of the firm opinion that the Private Sector has to take initiatives in different segments of the Food Processing Industry and has a to being in the latest technology and professional management skills to these segments. The State Government has therefore felt that there is a need to formulate a comprehensive policy for promotion of Agro Food Processing Industries.

Top

2. Objectives of Industrial Promotion Policy for Agro Food Processing Industries

The main objectives of the Industrial Promotion Policy for Agro Food Processing Industries would be:

a)	To ensure a better return to the growers and farmers of agriculture and horticulture produce;
b)	To avoid wastage of primary agricultural-horticultural produce in all stages namely pre-harvest including transport and storage;
c)	To make available well balanced and nutritious processed food products to the people;
d)	To tap the full potential of the rich bio-diversity of the State;
e)	Augment exports of both primary and processed food products
f)	To encourage technology Upgradation in all stages of food production.
g)	The State will strive to create brand image for unique agro food products of Karnataka.
h)	To encourage farmers enterprise in all aspects of policy implementation.

Top

3. Strategy:
The following strategy is proposed to be adopted to fulfil the above objectives:

a)	To promote comprehensive and integrated agro food technology parks in important locations in the State by creating common facilities to attract investments for establishment of Agro Food Processing Industries;
b)	To establish agri-export zones for those crops which are predominantly cultivated in the different agro-climatic zones and which have further potential for growth;
c)	To encourage the concept of "contract farming" so that the benefits of increased consumption of agricultural and horticultural products are shared equitably by the growers/farmers and the processors; and
d)	To improve the general infrastructure facilities in areas where food-agro technology parks and agri export zones are to be set up with a view to providing quick access to these parks/zones both for movement of primary raw materials and processed products.
e)	To promote and encourage use of processed foods in the State
f)	To encourage networking of organization involved in development of technologies for agro food processing sector.
g)	To take up with Govt. of India for harmonization of food laws to achieve standardization.
h)	To encourage existing food technology base and information available at Institutions like CFTRI, DFRL etc. in the State.

Top

4. Policy Initiatives

a)	Agricultural & Horticultural farms located within 100 Km of the proposed agro food technology parks shall be earmarked as dedicated/captive farms to these parks;
b)	Agro Food Processing Industries will be permitted to utilize upto a maximum of 25% of their lands for captive cultivation of the required raw materials;
c)	Agro Food Processing Industries will be encouraged to utilize thte latest technologies through bio informatics and biotechnology;
d)	R & D activities undertaken in the Agricultural Universities and other institutions would be fully tapped for promotion and growth of Agro Food Processing Industries.
e)	R & D institutions in the Agro Food Processing Sector namely CFTRI, IHRI, UAS, CIMAP, will be encouraged to develop appropriate human resources through design of appropriate technical and diploma courses [to meet the shop floor requirements of technical personnel] and also degree courses to meet the growing needs of the Agro Food Processing Industries Sector.
f)	Government will encourage establishment of Food Processing Parks in every district.
g)	Encouragement will be given to the private sector for promotion of Agro Food Processing Industrial Parks.
h)	Conduct of Agro Food Exposition will be made a permanent feature similar to the IT.Com Exhibition & Seminar.

Top

5. Action Plan:
The following programmes will be taken up in a time bound manner to effectively implement the policy initiatives:

a)	Agro Food Technology Parks:
	Six comprehensive and integrated agro food technology parks will be established in the next 3 to 5 years time in the locations identified at Malur, Bagalkot, Belgaum, Maddur, Jewargi and Chitradurga. While financial assistance from the State and Central Govts. Will be made available for these projects through the KIADB, private sector would be encouraged to establish and manage these parks. The parks will have all necessary infrastructure and common facilities including R & D; Warehousing, Cold Storages, Quality Assurance Laboratory; Common Effluent Treatment Plant etc.
b)	Establishment of Agri Export Zones:
	In order to tap the export potential for primary agricultural-horticultural products, Agri Export Zones will be established in potential locations. To begin with Agri Export Zones will be established at Chitradurga, Kolar, Bangalore, Tumkur & Bijapur to tap the export potential in Mango, Grapes, pomegranate, Acid Lime, Gherkins & Bangalore Rose Onion. Karnataka State Agricultural Produce Processing & Export Corp. Ltd. Will be the Nodal Agency to establish and manage these Agri Export Zones with assistance from APEDA. Private Sector participation will also be encouraged in establishment and management of these Agri Export Zones.

Top

c)	Infrastructure:
	A comprehensive Infrastructure development Plan will be drawn up and implemented within 5 years to provide speedy access to the Agro-Food Parks/Agri Export Zones from the nearest State-National Highway; Marketing Centres and nearest Airport.
d)	Power Supply:
	Power Supply to the Food-Agro Technology Parks and Agri Export Zones will be arranged through dedicated feeders by the KPTCL/ESCOMs.
e)	Human Resource Development:
	The State Government will introduce Food Engineering Management as a specialized subject in the Engineering Colleges in the State. It will also establish, with assistance of the industry and in collaboration with other universities and institutions in developed countries and in association with the F.A.O., world class food processing industrial technology institutes which will conduct specialized courses in different streams of the Food Processing Industry and Processing Technologies and cater to the needs of the industry in specialized skills, technical manpower and managerial capacities. State Govt. will also update and upgrade the syllabus of Food Sciences in the Degree and Post Graduate Degree Courses, with the objective of meeting the dynamic needs of the food processing industry.
f)	Information Dissemination:
	The State govt. will also enable conduct of International Seminars & Technology Summits every year in different segments, covering all aspects of the industry.
g)	Creating Linkages:
	The State Govt. has also decided to dovetail its efforts on watershed development, minor irrigation tank development and to encourage long term contractual agreement between the farmers and the processors for supply of right variety of raw material and agricultural marketing to the needs of the food processing industry by creating appropriate linkages.
h)	Market Development:
	Joint venture company, Food Karnataka Ltd., will be the nodal agency to develop markets for the primary and processed food both within and outside the country. Food Karnataka Ltd., will also provide appropriate market intelligence bothe to farmers and processors.
i)	The facility of single window agency clearance as is available to other industries will also be extended to the industries in the agro food processing sector.

Top

Policy Implementation & Monitoring: A Task Force on Agro Food Processing Industries has already been constituted under the Chairmanship of the Hon'ble Minister for Agriculture and Principal Secretary/Secretary (Agro Processing and Post Harvest Technology) as Member Secretary. This empowered committee will be renamed as Food Processing Monitoring Council (FPMC) comprising of the following members:

-	Research institutes;
-	Food processing industries;
-	Universities and academia;
-	Government of Karnataka (various monitoring depts.)
-	Financiers.

This council will have the following terms of reference:

-	to set up norms;
-	to advise and for setting up of food processing industries;
-	to hold seminars and interact with Government Departments and industries for monitoring with a focused approach;
-	to advise Government bodies on various aspects of research, development, formulation and implementation, regulations and monitoring sector wise food processing system;
-	to advise on quality related aspects such as food laws and food safety;
-	to advise and encourage the food processing industry to adopt eco-friendly technologies and create pollution free environment.

This FPMC will closely monitor the implementation of all policy initiatives and action plans under this policy. FPMC will also periodically review the financial and other implications of the policy in practice so that the benefits under the policy are measurable and could be suitably modified in the light of the experience gained. At the field level, a Nodal agency comprising representatives of the Agriculture & Horticulture Dept. and the Industries dept. will be set us to take care of day today monitoring of the implementation.

Top

Incentives and concessions: Govt of India in the Ministry of Food Processing Industries has formulated a number of schemes for extending assistance in the form of grant, subsidy and soft loan to agro food processing industries and allied infrastructural facilities established by public, private and joint sector industries as also co-operatives and NGOs. Efforts will be made to fully utilize the benefits available under the schemes of Govt of India.

In order to give an impetus for promotion of Agro Food Processing Industries, the following incentives and concessions will be extended to the Agro Food Processing Industries as listed in Annexure-2.

a)	Agro Food Processing Industries will be declared as "Seasonal industry" for the purpose of Labour Act. These industries will also be exempt from payment of minimum demand charges to the KPTCL, during closure period of more than 90 days at a time.
b)	100% exemption from payment of Electricity Tax and levy of concessional ST of 4% on liquid fuel used for Captive Power Generation, without any time limit, except for the units located in Bangalore Urban and Bangalore Rural districts.
c)	All Agro Food Processing Industries which purchase fruits and vegetables directly from the farmers on contract farming basis would be exempt from payment of Market Fee/Cess under the APMC Act.
d)	All Agro Food Processing Industries will be exempt from payment of Conversion Fine when they purchase agricultural lands for establishing the industry/Food Park. This benefit will be available in all Agro Food Technology Parks without any restrictions on the Parks, the benefit will be available only for a maximum of 100 acres of land in each case;
e)	Agro Food Processing Industries will be encouraged to participate in national and international exhibitions and seminars for which purpose an appropriate incentives scheme will be formulated separately.
f)	The incentives available under the New Industrial Policy for obtaining ISO and other international certification will be extended for Agro Food Processing Industries in respect of HACCP and other similar safety related regulations and processes.
g)	All Agro Food Processing Industries listed in Annexure-2 will be eligible for incentives as per the new Industrial Policy 2001-2006 vide Government Order No.CI 167SPI 2001 dated 30th June 2001.
h)	Reimbursement of technology transfer fee, consultancy fee/contract research fee, if the technology is transferred through a R & D Institutions like Central Food Technological Research Institute, Defence Food Research laboratory etc. subject to a ceiling of Rs. 25,000/- or 25% of technology fee whichever is lower from the Technology Upgradation Fund.

Top

Annexure - 2

Unless specified otherwise, Agro Food Processing Industries
are defined to include the following:

1.	Fruit & Vegetable processing, including grading/packing;
2.	Food grain milling/processing, using modern technology and equipment to be specified separately by the directorate of industries & Commerce;
3.	Dairy products [including milk processing and milk based products];
4.	Processing of poultry, eggs, meat and meat products;
5.	Fish processing;
6.	Bread, Oilseed meals [edible], breakfast foods, biscuits, confectionery[including cocoa processing and chocolate oil expellers and refining, malt extract, protein isolates, high protein foods, weaning foods, extruded/other ready to eat food products and all other processed foods [excluding non-packed food items served in Hotels & Restaurants of all categories];
7.	Fruit based ready to serve beverages;
8.	Tissue Culture Laboratories, Green houses, Green House Nurseries & Seed Production Units, based on modern scientific methods to meet industry standards;
9.	Floriculture;
10.	Cold Storage Units;
11.	Refrigerated Transport Vehicles/Containers [excluding second hand refurbished vehicles/containers];
12.	Units manufacturing food-grade packaging materials for Food Processing Industry;
13.	Units engaged in packaging, canning and bottling of processed foods,
14.	Units manufacturing additives, preservatives, colours and fragrant for the Processed Food Industry;
15.	Bio-technology and Bio-informatics industries.
16.	Commodity grading and packaging industry;
17.	Processing of plantation crops including tea and coffee, forest produce such as herbal, medicinal and aromatic plants, coconut based products and Arecanut/Arecanut based products.
18.	sugar Industry [excluding Molasses/Alcohol]

Note:
Any ambiguity/difference of opinion in interpretation of the above definition will be decided upon by the FPMC as detailed in Para No.6 of Policy Implementation & Monitoring.

Top