How to Avail 3% Annual Interest Subsidy for Agri Projects

The Agriculture Infrastructure Fund (AIF), launched by the Government of India, provides a unique opportunity for farmers, agri-entrepreneurs, start-ups, and Farmer Producer Organizations (FPOs) to access affordable financing for agricultural infrastructure projects. A key benefit under this scheme is the 3% per annum interest subsidy on loans up to ₹2 crore, designed to reduce financing costs and promote investment in post-harvest management, warehousing, cold storage, and precision agriculture projects.

Introduction: Agriculture Infrastructure Fund (AIF)

The Agriculture Infrastructure Fund (AIF) is a flagship initiative launched by the Government of India to strengthen agricultural infrastructure and improve post-harvest management across the country. Announced under the Atma Nirbhar Bharat Abhiyan, the fund provides a financing facility of ₹1 lakh crore to support farmers, agri-entrepreneurs, start-ups, and Farmer Producer Organizations (FPOs) in developing farm-gate and aggregation point infrastructure.

The primary aim of AIF is to reduce post-harvest losses, improve storage and logistics, and enhance farmers’ income by providing affordable credit. It offers key benefits such as a 3% annual interest subsidy, credit guarantee coverage under CGTMSE for loans up to ₹2 crore, and linkage with other Central and State Government capital subsidies.

Eligible projects include warehouses, cold storage, silos, primary processing units, packaging units, and smart agriculture technologies. By facilitating timely access to finance, the AIF encourages investment, promotes innovation in agriculture, and contributes to building a sustainable, efficient, and technologically advanced agri-ecosystem across India.

Objectives of the AIF Scheme

Farmers: Improved marketing and logistics infrastructure reduces post-harvest losses and provides access to wider markets. FPOs boost collective productivity.
Agri-Entrepreneurs & Start-ups: Interest subsidies, credit guarantees, and top-up benefits promote innovation and business growth.
Government: Encourages private investment and reduces post-harvest inefficiencies.
Banks: Lower risk lending via credit guarantees and interest subvention.
Consumers: Improved supply chain efficiency ensures better quality produce and stable pricing.

Financial Benefits and Incentives

AIF’s financial incentives make it one of the most attractive schemes for agri-infrastructure investment.

A. Interest Subvention (3% p.a.)

3% annual interest subsidy for loans up to ₹2 Crore per project/location.
Benefit available for 7 years, including the moratorium period.

B. Credit Guarantee Coverage

Loans up to ₹2 Crore are covered under CGTMSE, with the fee paid by the Government.
FPOs and cooperatives receive additional guarantee fee reimbursements.

C. Top-Up with State Subsidies

AIF can be combined with schemes like RIPS 2024, PMKSY, NHB, NABARD, or State Logistics Policies for additional capital subsidy benefits.

D. Multi-Project Facility

Up to 25 projects allowed per private entity; interest benefit applicable up to ₹2 Crore per project.

Eligible Projects under AIF

Storage & Logistics: Warehouses, Silos, Cold Chains, Reefer Vans
Processing: Primary processing for cereals, pulses, oilseeds, and fruits
Technology & Smart Farming: Drones, IoT systems, AI-based monitoring, GIS advisory
Input Production: Organic fertilizers, biofuels, biogas units
Community Assets: Hydroponics, mushroom farming, greenhouses, vertical farming

Eligible Beneficiaries

Farmers and Agri-Entrepreneurs
Startups and Private Companies
Farmer Producer Organizations (FPOs)
PACS, SHGs, and Cooperative Societies
APMCs and PPP Projects supported by Government Agencies

How KIP Can Help You

KIP provides complete end-to-end support to help businesses leverage AIF benefits:

Subsidy Viability Report (SVR): Identify eligible Central and State subsidies.
Business Modeling: Select suitable business structure (MSME, Pvt. Ltd., FPO).
Detailed Project Report (DPR): Create bankable DPRs aligned with subsidy norms.
Bank Loan Support: Secure financing at lower interest rates.
Subsidy Application & Processing: Assist with AIF registration and project approvals.
Compliance & Claim Management: Ensure timely claims for recurring incentives.

Frequently Asked Questions (FAQs)

Q1: What is the primary financial assistance offered under AIF?

3% interest subvention per annum on loans up to ₹2 crore per project.

Q2: How long is the interest subvention available?

For a maximum of 7 years.

Q3: Does the interest cover the moratorium period?

Yes, interest subvention applies during construction/gestation periods.

Q4: Are projects eligible for credit guarantee coverage?

Yes, up to ₹2 crore under CGTMSE, with fees paid by the government.

Q5: Who can apply for AIF benefits?

Farmers, agri-entrepreneurs, start-ups, FPOs, PACS, SHGs, APMCs, and cooperatives.

How to Avail 3% Annual Interest Subsidy for Agri Projects