NABARD Subsidy and Agriculture Infrastructure Fund: A Comprehensive Guide

In Today’s competitive business environment, especially for those involved in agriculture and warehousing sectors, it is essential to take full advantage of the subsidies and financial assistance programs provided by the government. One such key opportunity is the NABARD (National Bank for Agriculture and Rural Development) subsidy and the Agriculture Infrastructure Fund (AIF), both of which are designed to support and strengthen the agriculture infrastructure in India. If you are planning to set up a warehouse, a storage facility, or any agriculture-based project, this blog will guide you on how to effectively develop your business model to maximize the benefits from these Government Schemes.

Introduction

The NABARD subsidy is a well-known scheme that provides capital subsidies for agriculture-related infrastructure projects. On the other hand, the Agriculture Infrastructure Fund (AIF) offers interest subsidies on loans, making it easier and more affordable for businesses to set up agriculture-related infrastructure like warehouses, godowns, cold storage facilities, and other projects.

If you are planning to undertake such projects, understanding these schemes can help you not only reduce your project costs but also enhance your profitability by availing subsidies and interest benefits. In this blog, we will explore how you can benefit from these schemes and what steps are required to claim the subsidies effectively.

Key Benefits :

Interest Subsidy: Under the Agriculture Infrastructure Fund (AIF), you can avail of an interest subsidy of 3% for a tenure of up to 8 years, helping you reduce the overall cost of your bank loan.
No Upper Limit on Loan Amount: One of the most attractive features of the AIF is that there is no upper limit on the loan amount, which means that whether you are seeking a loan for ₹2 crores or ₹50 crores, you can still enjoy the interest subsidy benefit.
Capital Subsidy: The NABARD scheme offers a capital subsidy on your project cost, meaning a certain percentage of your project cost will be reimbursed by NABARD. This significantly reduces your initial investment requirements.
Relaxations on Security: For those who find it difficult to arrange high collateral, the scheme provides SGSY/MS coverage, offering relaxations on security requirements for loans.
Comprehensive Business Support: The schemes also provide support for business modeling, helping you structure your projects in a way that maximizes your eligibility for subsidies.

How to Plan for Maximum Subsidy Benefits

To take full advantage of NABARD’s subsidy and the Agriculture Infrastructure Fund, it is essential to have a clear business plan and ensure all the technical aspects of your project are well documented. Here’s a step-by-step guide to help you prepare:

1. Understanding the Subsidy Criteria

Before applying for any subsidy or loan, it is critical to understand the basic eligibility criteria for both NABARD and AIF schemes. NABARD supports a variety of agriculture-related projects, including storage facilities, godowns, cold chains, and animal husbandry projects like dairy farming, veterinary services, and even waste residue management like organic manure and biogas plants.

Make sure that your project falls within the eligible sectors under these schemes.

2. Prepare a Detailed Project Report (DPR)

The next step is to prepare a comprehensive project report that outlines your project’s objectives, scope, financial projections, and expected returns. This project report will be crucial for your discussions with the bank as well as the authorities who will approve your subsidy.

Your project report should include:

Cost estimation for construction, equipment, and other infrastructure.
Technical specifications of the land and facilities.
Funding requirement: How much of your own capital you plan to invest and how much loan you will require.
Expected ROI (Return on Investment).

3. Collaborating with Experts

While developing your project, it is advisable to consult with chartered accountants, engineers, architects, and other professionals to ensure your project meets all the technical and financial requirements. These experts will help you with cost estimation, design layout, and ensuring your project aligns with NABARD’s technical norms.

4. Documentation for Loan and Subsidy

To claim NABARD and AIF subsidies, you need to ensure your documentation is complete and accurate. Common documents required include:

Land ownership proof or lease agreements.
Cost estimates from engineers/architects.
Project report.
Bank loan application.
Any other documents as required by NABARD or your bank.

Make sure you have all the documents in place to avoid any delays or rejections during the approval process.

5. Engaging with Your Bank

After preparing your project report and gathering the necessary documents, approach your bank to discuss the financing options available under these schemes. Many banks may not be fully aware of the latest updates in the Agriculture Infrastructure Fund and NABARD subsidy. Therefore, it is a good idea to share the information about the scheme with them to ensure they process your loan correctly.