Agriculture Infrastructure Fund (AIF)

Table of Contents

Purpose

To set up facilities such as cold storage, warehouses, silos, packing units, assaying/grading centers, logistics facilities, primary processing centers, ripening chambers/waxing plants, and more.

Duration

The duration of the Scheme shall be from FY2020 to FY2033.

What is the Scheme?

The Agriculture Infrastructure Fund is a centrally sponsored scheme designed to provide a financing facility of Rs. 1 lakh crore. This funding will support agriculture infrastructure projects located at farm-gate and aggregation points, including those associated with farmers’ producer organizations, primary agricultural cooperatives, startups, and entrepreneurs in the agriculture sector.
  • This program offers financial support for projects focused on improving post-harvest management and community farming. It provides long-term loans with reduced interest rates and financial backing to make investments in processing and storage facilities.
  • The goal is to assist farmers and Farmers Producer Organizations (FPOs) in constructing post-harvest infrastructure and community farming assets.
  • By creating these facilities, farmers can minimize waste, store their produce, process it, and add value to their products. This, in turn, enables them to command better prices for their agricultural goods.
  • Initially, the scheme was planned to last for ten years, from 2020 to 2029. However, in July 2021, it was extended for an additional three years, now set to run until 2032-33.
  • In this setup, banks and financial institutions offer loans with a 3% annual interest reduction.
  • Additionally, the scheme includes credit guarantee coverage through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to Rs. 2 Crore.
  • NABARD, in collaboration with the Ministry of Agriculture and Farmers’ Welfare, will lead this initiative.
  • For Agricultural Produce Market Committees (APMCs), there is an interest reduction for loans up to Rs. 2 crore for various infrastructure projects like cold storage, sorting, grading and assaying units, silos, etc., all located within the same market yard.

Beneficiaries

  1. Farmer
  2. Agri-Entrepreneur
  3. Start-Up
  4. Self Help Group
  5. Joint Liability Groups
  6. Federations of Self Help Groups
  7. Farmer Producers Organization
  8. Federation of Farmer Produce Organisations
  9. Primary Agricultural Credit Society
  10. Multipurpose Cooperative Society
  11. Marketing Cooperative Society
  12. Agricultural Produce Market Committee
  13. State Agencies
  14. State Federations of Cooperatives
  15. National Federations of Cooperatives
  16. State sponsored Public-Private Partnership Project
  17. Central sponsored Public-Private Partnership Project
  18. Local Body sponsored Public-Private Partnership Project

Eligible projects under AIF

Eligible projects for all beneficiaries

  1. Nursery
  2. Tissue culture
  3. Seed Processing
  4. Custom Hiring Center
  5. Infrastructure for smart and precision agriculture
  6. Farm/Harvest Automation
  7. Purchase of drones, putting up specialized sensors on the field, Blockchain, and AI in agriculture, etc.
  8. Remote sensing and Internet of Things (IOT) such as automatic weather stations, Farm advisory services through GIS applications.
  9. Logistics facilities – Reefer Van & Insulated vehicles
  10. Assaying Units
  11. Supply chain services including e-marketing platforms
  12. Warehouse & Silos
  13. Cold Stores and Cold Chain
  14. Packaging Units
  15. Primary Processing activities
  16. Organic inputs production
  17. Bio stimulant production units

Eligible projects for building community farming assets

Apart from the mentioned activities, the following groups of farmers, including FPOs, PACS, SHGs, JLGs, Cooperatives, National and State Level Federation of Co-operatives, FPO federations, Federations of SHGs, National and State Level Agencies, etc., qualify for the subsequent activities:

  1. Poly house/Greenhouse
  2. Vertical farming
  3. Hydroponic Farming
  4. Aeroponic farming
  5. Mushroom farming
  6. Logistics facilities (including non-refrigerated/insulated vehicles)

Importance of the Agriculture Infrastructure Fund:

For almost 58% of our population, farming is the main source of income. The majority of farmers, around 85%, operate on smaller plots of land, cultivating less than 2 hectares. Consequently, most farmers in the country earn modest annual incomes.

Due to inadequate connectivity and limited infrastructure linking farmers with markets, a significant 15 – 20% of the produced goods go to waste, a much higher percentage compared to other nations. Additionally, investments in agriculture have remained stagnant.

Given these challenges, there is a pressing need for a dedicated scheme focused on enhancing post-harvest management and farming infrastructure. This initiative aims to address these issues and uplift the agricultural sector.

Agriculture Infrastructure Fund Objectives

The main goal of this initiative is to offer financial aid to agricultural entrepreneurs in order to enhance the agricultural infrastructure in India.

Objectives for Farmers:

  1. Boost Value: Enable farmers to sell directly to a wider consumer base by improving marketing infrastructure, leading to increased value realization.
  2. Reduce Losses: Minimize post-harvest losses and reduce the number of intermediaries through investments in logistics infrastructure. This empowers farmers, providing them with greater independence and improved market access.
  3. Enhance Realization: Access to modern packaging and cold storage systems allows farmers to choose the optimal time for selling, leading to improved realization of profits.
  4. Optimize Assets: Develop community farming assets to enhance productivity and optimize inputs, resulting in significant cost savings for farmers.

Government Goals:

  1. Support Innovation: The government aims to encourage innovation and private sector investment in agriculture by providing interest subvention, incentives, and credit guarantees for currently unviable projects within the priority sector.
  2. Reduce Food Wastage: By enhancing post-harvest infrastructure, the government seeks to decrease the national food wastage percentage. This move will make the agriculture sector more competitive on a global scale.
  3. Facilitate Investments: The government is working towards structuring viable Public-Private Partnership (PPP) projects to attract investments in agriculture infrastructure. This initiative aims to foster collaboration between the public and private sectors for the overall development of the agricultural domain.

Objectives for Agri Entrepreneurs and Startups:

  1. Promote Innovation: Encourage agricultural entrepreneurs and startups to introduce innovation in the farming sector, utilizing technologies like AI, IoT, and more.
  2. Foster Collaboration: Enhance collaboration opportunities between entrepreneurs and farmers, facilitating better partnerships for mutual growth.

Objectives for the Banking Ecosystem:

  1. Reduce Risk: By offering Credit Guarantee, incentives, and interest subvention, lending institutions aim to provide loans with lower associated risks.
  2. Empower Cooperative Banks: Grant a more significant role to cooperative banks and regional rural banks (RRBs) through refinance facilities, strengthening their contribution to the agricultural financial landscape.

Objectives for Consumers:

  1. Improve Quality and Prices: With a higher share of produce reaching the market, consumers can benefit from improved quality and more competitive prices. This ensures a better experience for consumers in terms of the products they receive.

Benefits of the Agriculture Infrastructure Fund:

  1. Reduced Interest Rates: All loans obtained through this funding program come with a 3% annual interest reduction, applicable up to a limit of Rs. 2 crore. This benefit lasts for a maximum of seven years.
  2. Credit Guarantee: Eligible borrowers can enjoy credit guarantee coverage under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, applicable for loans up to Rs. 2 crore. The government covers the fee for this guarantee.
  3. Flexible Repayment: The repayment moratorium for loans received through this funding facility varies but ranges from a minimum of 6 months to a maximum of 2 years. This flexibility provides borrowers with options based on their financial circumstances.

How to apply

To apply online, click here

 

Document Checklist

  • Bank’s loan application form / Customer Request Letter for AIF Loan duly filled and signed
  • Passport size photographs of the promoter/partners/director
  • Identity proof – Voter ID card/PAN card/Aadhaar card/Driving license
  • Address Proof :
    • Residence: Voter ID card/Passport/Aadhaar card/Driving license/Electricity Bill/Latest property Tax Bill
    • Business Office/Registered Office: Electricity Bill/Latest Property Tax Receipt/Certificate of Incorporation in case of Companies/Certificate of Registration in ca of partnership Firms
  • Proof of Registration
    • In case of Company : Article of Association
    • In case of Partnership : Certificate of Registration of Firm with Registrar of Firm
    • In case of MSMEs : Certificate of Registration with District Industries Centre (DIC)/Udyog Aadhar Copy
  • Income Tax Return for last three years, If available.
  • Audited Balance Sheet of last 3 Years, If available.
  • GST Certificate, if applicable.
  • Land ownership records – title deed/lease deed. If applicable, then Permission to mortgage the Immovable Property from the Lessor in case the Property is Leasehold (for primary security)
  • ROC Search Report of the Company
  • KYC documents of the promoter/firm/company
  • Copy of Bank Statement for last one year (If available)
  • Repayment track record of existing loans (Loan Statement)
  • Net Worth Statements of promoter
  • Detailed Project Report
  • As applicable – Local authority permissions, Layout plans/estimates, Building sanction

Resources

Complete scheme guidelines: click here

Source: click here

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