UT-Level Food Processing Program for Development of Clusters for Specific Products of J&K (HADP Project 22)

What is HADP Project 22?

The UT-Level Food Processing Program for Development of Clusters for Specific Products of J&K is Project 22 of the all-round Agriculture Development Programme (HADP) of the Agriculture Production Department, Government of Jammu and Kashmir. It is the largest single project in the 29-project package by money committed per beneficiary entity.

Project 22 replicates the Cluster Development Programme of the Ministry of Agriculture and Farmers Welfare at Union Territory level. A cluster is defined in the guidelines as a regional or geographical concentration of a targeted agriculture, horticulture or allied sector product that offers scope for specialisation in production, post-harvest management, marketing and exports. Based on the ODOP theme of the PM Formalisation of Micro Food Enterprises (PMFME) scheme of the Ministry of Food Processing Industries, the Government of Jammu and Kashmir has identified 7 clusters across 17 districts for the pilot launch, with scale-up to other potential clusters planned on the basis of the pilot's results.

The problem statement in the guidelines is blunt. Primary processing of fruit and vegetables in Kashmir is under 1 per cent. Around 30 per cent of the total fruit produced in Jammu and Kashmir is wasted for want of packaging and processing facilities, and post-harvest losses run at 15 to 20 per cent because of inadequate infrastructure, poor storage, transport and electricity. Existing private milk and food processing capacity sits under-utilised.

Who can be an Implementing Agency?

Eligible entities are:

• Farmer Producer Organisations (FPOs) and Farmer Producer Companies (FPCs), and their federations
• Cooperatives and societies
• Partnership firms and proprietorship firms
• Companies
• State Agriculture and Marketing Boards and Federations
• Other public sector entities of central or state governments

Eligibility conditions:

• Net worth of at least two times the proposed equity contribution as per the latest audited balance sheet. Where a new entity is formed, each shareholder must individually meet that test, every shareholder must hold at least 10 per cent equity, and the lead promoter must hold at least 26 per cent and cannot be changed during the project period.
• At least 20 per cent of eligible project cost as promoters' contribution.
• At least 20 per cent of eligible project cost as a term loan from a scheduled commercial bank or RBI-approved FI, with an in-principle or final sanction letter and bank appraisal note dated after publication of the Call for Proposals.
• Relevant experience as an agri, horti, dairy, pisci or livestock input supplier, producer, aggregator, trader, food processor, exporter, retailer or logistics provider, matching the vertical applied for.

Who is not eligible:

• Individual farmers, growers or traders applying for a personal subsidy. Project 22 has no individual benefit component. Individual assistance for farming inputs, machinery or orchard development sits under other HADP projects and under MIDH.
• An entity that has defaulted on its debt obligations in the last three years, appears in the RBI list of wilful defaulters or a similar list, or has been classified as a non-performing asset.
• An entity proposing to buy reconditioned or refurbished plant, machinery or equipment, which is expressly excluded.
• Any applicant claiming reimbursement of expenditure incurred before project approval, which is not eligible.

How much assistance is given?

Clusters are classified by production of the focus product in the identified and adjoining districts:

Actual assistance for each vertical is decided from the Cluster Gap Assessment and the DPRs submitted. A maximum of 40 per cent of total financial assistance may be used within a single vertical, a limit that may be relaxed for an integrated project by a single Implementing Agency, but the cluster ceiling itself does not move.

Cost norms follow MoFPI, NHB or MIDH norms, or any other applicable norm: MoA&FW norms for FPO formation and farm-level interventions, and MoA&FW, MoFPI or APEDA norms for post-harvest, value addition, logistics and marketing.

What are the three project verticals?

1. Pre-production and production; FPO formation and capacity building, awareness campaigns and exposure visits, hi-tech nurseries and tissue culture labs, quality control labs, import and distribution of quality planting material, area expansion, Good Agricultural Practices, MRL, INM and IPM, micro-irrigation, farm mechanisation, high-density plantation, drones, IoT, blockchain traceability, remote sensing, weather stations and farm management software.
2. Post-harvest management and value addition; collection centres, reefer vans, integrated pack houses, ripening chambers, pre-cooling units, cold rooms, primary, secondary and tertiary processing units, packaging and value addition units, and multi-temperature or controlled-atmosphere cold storage.
3. Logistics, marketing and branding, transport and cold chain from farm gate to market and export exit point, multi-modal transport leveraging Krishi Udan, Kisan Rail and inland waterways, market linkages, distinct cluster brands, e-commerce and digital marketing, sea protocols for long-distance transport, and GI tagging.

How to apply under HADP Project 22

1. Wait for the composite Call for Proposals floated by JKHPMC, the Jammu and Kashmir Horticultural Produce Marketing and Processing Corporation, acting as Cluster Development Agency. The Call follows the Cluster Gap Assessment Report prepared by the Cluster Development Cell headed by JKHPMC's Managing Director.
2. Identify the vertical you will bid for — pre-production and production, post-harvest management and value addition, or logistics, marketing and branding, and confirm you have matching sector experience.
3. Arrange your finance before you bid. Secure an in-principle or final term loan sanction with a bank appraisal note dated after the Call is published, and confirm your net worth is at least twice your proposed equity.
4. Prepare the Detailed Project Report against the Cluster Gap Assessment Report, covering the cluster map, area under the focus product, value chain assessment, area coverage targeted, components and cost, and timelines.
5. Submit the proposal to JKHPMC within the Call's deadline. Proposals are technically evaluated against the laid-down eligibility and scoring criteria, and the Evaluation Committee's recommendation goes to the UT Level Approval Committee for final selection.
6. Complete the pre-disbursement conditions after approval, open a Trust and Retention Account with a scheduled bank and sign the TRA agreement, complete PFMS (CGA) registration, and file the surety bond on Rs 100 non-judicial stamp paper.
7. Draw the money in four instalments against milestones, and upload a monthly progress report with photographs and videos on the portal.

How are the instalments released?

The first instalment requires the TRA agreement, the final term loan sanction letter, the surety bond, PFMS registration, invoices for at least 30 per cent of eligible project cost, a bank certificate confirming 30 per cent of the term loan disbursed, TRA statements, minimum coverage of 30 per cent of targeted production per the approved DPR, a statutory auditor certificate, and a PMU recommendation based on a site visit. The second instalment requires a GFR-19 utilisation certificate for the first, EAT MIS uploads, and a bank certificate confirming 60 per cent of term loan disbursement.

The UT Government releases 30 per cent of approved assistance into an escrow account of JKHPMC on project approval, and further tranches against utilisation certificates and physical and financial progress.

Timelines, penalties and monitoring

Total project completion and operationalisation is fixed at 48 months from the date of the final approval letter, in four 12-month stages. For each month of delay beyond schedule, except force majeure or reasons beyond the IA's control. A penalty of 1 per cent of the instalment due applies, capped at 10 per cent of that instalment. The project may be cancelled for non-adherence unless the UT Level Approval Committee extends the timeline.

A UT Level Monitoring Committee chaired by the Financial Commissioner (Additional Chief Secretary), Agriculture Production Department meets at least once a quarter to review progress and clear bottlenecks.

Where to ask questions

• JKHPMC, as Cluster Development Agency, for the Call for Proposals, the Cluster Gap Assessment Report and evaluation queries
• Agriculture Production and Farmers Welfare Department, Jammu: 0191-2505201, email devagri-jk@jk.gov.in
• Agriculture Production and Farmers Welfare Department, Kashmir: 0194-2310265
• HADP portal: hadp.jk.gov.in

An Implementing Agency cannot draw assistance for the same project component from any other central or state ministry, department or agency, though it may dovetail assistance from other schemes for different components and remains eligible for financing under the Agriculture Infrastructure Fund.