The northeast region witnessing rising food production and narrowing the demand-supply gap reflects targeted interventions in agriculture and allied sectors. Yet, low levels of processing and value addition allowing significant post-harvest losses to persist reveals a structural weakness. Underutilisation of funds allocated for food processing with relaxed norms for the region when post-harvest losses persist is a paradox that exposes how weak processing capacity of the region blunts the agricultural gains. Official data speak volumes about persistent underutilisation of funds, and it certainly paints a grim picture of the critical gap between policy intent and the region’s capacity to implement various central government-sponsored schemes and projects on the ground. Budgets Estimates (BE), Revised Estimates (RE) and utilisation under the Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PMFME) Scheme, for instance, show that the initial allocation in BE for 2025-26 for the region was Rs 200 crores. The amount was reduced to Rs. 150 crores in the RS stage, while the expenditure of even the reduced allocation was abysmally low at 27% (Rs. 40.36 crore). Similarly, under the Scheduled Caste Sub Plan component, which is earmarked for the socio-economic and livelihood development of SC communities, the expenditure was only around 45% of the RE – the reduced allocation. In the case of the Tribal Sub Plan component, the utilisation was the lowest at just 23% of RE, with the total amount used for food processing under this component being only Rs. 15.12 crore. Ironically, the routine explanation for such underutilisation of funds despite availability is a shortage of sufficient eligible proposals under the NER, SCSP and TSP categories. The low volume of eligible proposals from the region indicates that efforts to increase food processing facilities in the region must go beyond routine reminders to the states about the availability of funds and the submission of more proposals. The primary challenge that remains is to identify the actual reasons behind reluctance among farmers and entrepreneurs from the region to avail the special concession provided to the region under the scheme. This calls for serious stakeholder consultations to find out the critical gaps. The Ministry of Agriculture, Animal Husbandry and Food Processing maintains that the States are regularly sensitised to prioritise identification and submission of proposals under NER, SCSP and TSP categories. If the number of eligible proposals from the region continues to be low despite the Ministry conducting regular review meetings, targeted follow-ups, and close monitoring to track progress, expenditure approvals, and address bottlenecks, then the first impression about the whole process derived is that the actual reasons are yet to be identified and acted upon. Facilitation at the district level for preparation of detailed project reports, credit linkage and compliance with regulatory norms is laudable, but it is not enough. Availability of robust and updated data on surplus production of a food item, the status of the cold chain in the case of perishable food products from the production hub to processing centres and markets, and availability of storage capacity are crucial to boost confidence among food-processing entrepreneurs to think of setting up a unit and prepare a DPR. While incentives and subsidies can moderate the initial investment burden, sustainability of a food processing unit eventually depends on the availability of the required quantity of raw food products for running the unit at capacity utilisation, increasing profit margins for the final product to absorb price volatility in raw materials, and banks willing to provide more credit for modernisation and expansion of processing units. A strong market linkage, therefore, remains crucial to ensure that surplus production is absorbed efficiently by the processing units and end-markets to create viable opportunities for food processing enterprises with reduced risks and greater predictability. This calls for adopting a professional approach to motivate young entrepreneurs to take advantage of the scheme benefits but not as mere beneficiaries of the scheme but as entrepreneurs who are ready to tap potential business opportunities in the agriculture and allied sectors. The region registering significant growth in dairy business, organic spices, rice milling, mustard oil extraction, poultry feed, ready-to-serve beverages, etc. demonstrates the capacity of local entrepreneurs in the food processing sector. Underutilisation of funds earmarked for food processing schemes, therefore, is baffling. Food processing adds value to farm produce and delivers additional gains to farmers by expanding market opportunities and improving price realisation. Improved connectivity within and to the region has unlocked new business opportunities. Organic agricultural and horticultural food produce have already gained demand across states and in global markets, as reflected in rising shipments of farm foods from the region to these destinations. Unlocking the markets of processed food in the Northeast has the potential to create new livelihood avenues in the region in digital marketing, packaging and branding. A shift in mindset is essential for both government officials and entrepreneurs to view scheme benefits as enablers of the food processing ecosystem, not just subsidy windows.