AIF Updates: New Opportunities & Benefits

If you are planning to invest in the agricultural sector and secure bank funding, the Agricultural Infrastructure Fund (AIF) offers a great opportunity. This fund is specifically designed to assist agriculture-based businesses by providing easy bank loans, interest subsidies, and collateral-free funding. In this blog, we will discuss the recent changes in the fund and how you can take advantage of it.

What Benefits Does AIF Offer?

Launched in 2020, the Agricultural Infrastructure Fund (AIF) aims to support agriculture-based businesses by providing financial assistance. The key benefits under this fund include:

Easy Bank Loans: Availability of bank loans for agriculture-based businesses.
3% Interest Subsidy: An interest subsidy of 3% on loans.
Collateral-Free Loans: Collateral-free loans of up to ₹2 crore.

Additionally, the Indian government has extended this fund until 31st March 2026. This means if you plan to start any agriculture-based business and take a loan before this date, you can avail the benefits of the AIF.

Recent Changes in the AIF:

There have been some significant changes in the AIF as of 2024. These changes not only broaden the scope of the fund but also provide more opportunities for businesses to benefit from it.

1. Coverage of Primary and Secondary Processing:

Earlier, the AIF only covered primary processing of agricultural crops (such as wheat cleaning, storage, sorting, etc.). Now, secondary processing has also been included. For example, if you process wheat and then use it to make biscuits or other food products, this will now also be covered under the AIF.

Here are some other examples:

Cotton: Previously, cotton ginning and cleaning were covered. Now, if you make fiber from cotton, it will also be covered under the AIF.
Oil: If you extract oil from oilseeds and also refine it, that business will now be covered under the AIF.

This change is a huge opportunity for farmers and businesses looking to invest in secondary processing, as it adds value to their products and enables them to earn more profits.

2. Sinking of Central Schemes:

Now, if there are any central-level subsidy schemes that are applicable to agriculture-based projects, these can also be combined with the AIF. For example, if you are availing the NABARD subsidy for warehousing activities, you can now also benefit from the AIF.

Furthermore, the PMEGP Scheme (Prime Minister’s Employment Generation Program), which covers projects up to ₹50 lakh, is also now integrated with the AIF. This means that you can avail both capital subsidy and interest subsidy under both schemes for agriculture-based projects.

3. Budget Allocation:

The total budget for the AIF is ₹1 lakh crore, out of which ₹50,000 crore has already been sanctioned. The remaining ₹50,000 crore is still available for sanctioning. Since the scheme is valid until 31st March 2026, there is approximately 1.5 years left to avail these funds. If you are planning an agriculture-based project, it is advisable to apply for AIF funding as soon as possible before the remaining budget is fully allocated.

How to Avail the AIF Benefits:

To make the most of the Agricultural Infrastructure Fund, you need to:

Get your project approved under the AIF at the earliest.
Prepare your project report and communicate with banks to secure funding.
Understand the necessary documentation to apply for the subsidy and loan.

For assistance with this process, KIP Financial Consultancy has designed a special e-book to guide you through the application process, help you with the documentation, and maximize your subsidy claims. Our expert team can also assist you in understanding the technical aspects and ensuring that your application is successful.