Agro Based Processing Policy

The State Government had promulgated 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 utilization 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 sales tax incentives. Since the sales tax incentives were
withdrawn from 1st Jan. 2000, the Government re-examined the entire policy and vide
order No.CI 20 SPI 1999 dated 23rd March 2001, brought the Agro Food Processing
Industries also under General Industrial Policy of the State for 1996-2001.

2. 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 accelerated promotion and development of food processing industry should
be an integral part of these efforts. The Approach Paper to the National Food Processing
Policy of Govt. of India aims at increasing the processing level of food products from the
existing 2% to 10% within 10 years.
3. Substantial quantities of afro food produce ranging from 5% to 40% is lost during
harvesting, transportation, storage and distribution and presently only around 2% of the
total production is processed into value added products as compared to 50-80% in
developed countries. Technologies available in R&D institutions are to be effectively
tapped and lab to land transfer of the knowledge base needs to be expedited. it is
estimated that Karnataka has a potential to attract investments of approximately
Rs.10,000 Cr. In the next 10 years in food processing industry.
4. 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.

5. 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.
6. 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
7.
Food Processing Industries - 2003, as detailed in Annexure-I.
The Policy will come into effect immediately and would be valid, subject to such
8. 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
9. for Agro Food Processing Industries - 2003 will continue to be governed by the General
Industrial Policy, in matters not provided in this policy.
This order issues with the approval of FD vide No. FD 1047 Exp-I/2003 dated 25th June
10.
2003.
By order and in the name of the Government of Karnataka

[K.G.Rajashekarappa]
Under Secretary to Govt.[ID]
Commerce & Industries Dept.
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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