A Simple Guide to NABARD Subsidies for Agri-Projects

Agriculture is the backbone of many economies, but farmers and entrepreneurs often face financial hurdles when trying to expand or improve their operations. That’s where NABARD subsidies come in! These schemes are designed to provide crucial financial support for a wide range of agriculture-based projects, helping to reduce costs and boost profitability.

What Exactly is the NABARD Subsidy Scheme?

NABARD, which stands for National Bank for Agriculture and Rural Development, focuses on developing the agriculture sector and rural areas. The specific scheme we’re talking about here is officially known as the Agriculture Marketing Infrastructure Scheme (AMIS). It’s a crucial sub-scheme of the Integrated Scheme for Agricultural Marketing (ISAM), implemented by the Ministry of Agriculture and Farmers’ Welfare, Government of India.

This scheme aims to support the development of storage facilities and other essential infrastructure projects in agriculture. It also helps to minimize post-harvest losses and improve food security by encouraging proper processing of agricultural produce. The AMIS scheme is applicable all over India and covers over 36 types of agri-based businesses.

Why Value Addition is Key in Agriculture ?

Traditionally, many farmers sell their produce raw, limiting their income. Value addition is the process of transforming raw agricultural goods into higher-value, more marketable products. This can involve cleaning, grading, packaging, or even processing.

Benefits of Value Addition:
Reduces post-harvest losses.
Increases income for farmers and rural entrepreneurs.
Creates employment opportunities in rural areas.
Ensures better prices in the market.
Supports food processing industries and new agri-businesses.
Example: Raw turmeric might sell for ₹25/kg, but processed turmeric powder can fetch ₹120/kg or more.

Primary Processing Units:

These handle the initial cleaning and conditioning of raw farm produce to get it ready for market or storage.

◦Examples: Cleaning, sorting, grading, drying, de-husking, ripening chambers, simple packaging, blanching, and cooling units for fruits, vegetables, grains, oilseeds, and more.

◦These are often located near farms to reduce transportation losses.

Secondary Processing Units:

These units add further value by converting raw or semi-processed produce into finished products.

◦Examples: Making jaggery from sugarcane, oil from groundnut, powder from dried chilies or turmeric, cashew roasting, desiccated coconut manufacturing, and virgin coconut oil extraction.

◦They enhance shelf-life and open up new markets for branded retail products.

Key Benefits of the NABARD Subsidy Scheme :

The subsidy makes it easier for agri-entrepreneurs to set up or expand their businesses by reducing the initial investment burden.

1. Capital Subsidy: You can get a subsidy of up to 30 lakhs (with updated guidelines)

In North Eastern states and certain Union Territories, the maximum subsidy is 33.33% of the project cost or ₹30.00 Lakhs.

For SC/ST individuals, women, and Self-Help Groups (SHGs) across India, it’s also up to 33.33% of the project cost or ₹30.00 Lakhs.
For other categories (partnerships, firms, companies, individual proprietorships), the subsidy is up to 25% of the project cost or ₹25.00 Lakhs.

2. Interest Subsidy under AIF: Projects eligible under the National Agriculture Infrastructure Fund (AIF) can also receive an interest subsidy of 3% on the term loan for a maximum of seven years, up to a loan limit of ₹2 crore.

3.Credit Guarantee Coverage: Eligible borrowers can also get collateral-free funding up to ₹2 crore under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, with the government paying the fee.

Land Requirements:

The project site should ideally be owned by you. If leased, the lease must be for a minimum of 15 years via a registered lease deed.

◦Ensure clear land title documents, free from disputes.

◦ If agricultural or residential land needs conversion to commercial use, ensure this is completed, or obtain a No Objection Certificate (NOC) if outside controlled areas.

◦ The cost of land acquisition (or lease payments) can be included in your promoter’s minimum 20% contribution, up to a maximum of 10% of the total project cost.

◦Ensure the site has no existing loans or pledges with other banks.