Food Processing Subsidy, Loan (NABARD) in India

Introduction to subsidy available for food processing unit establishment: The NABARD loan was established in 2014 which provides loans to entrepreneurs for setting up food processing industries in labelled food parks through the budget. The budgetary sum of loan is approximately Rs.2000 crores with the procedures announced by the NABARD. In this article, we look at the operational guidelines of NABARD Food Processing Fund in details and the procedure for getting a loan from NABARD for the food processing industry.

A guide to NABARD subsidy for food processing units in India

The Government of India accords highest priority for the growth of food processing industry in India to decrease food decay and regulate the rising food increase. The Government is being providing subsidies for creation of food parks in India. The freshly introduced food processing fund delivers loans at minimal rates for setup of food processing industries in the food parks.

A guide to Food Processing Loans and Subsidies.
A guide to Food Processing Loans and Subsidies.

Objectives of the Scheme

  • To grow a cluster for the food processing segment in the India
  • To decrease the wastage of agronomicyield
  • To generate job openings in rural parts

Eligibility to apply for the scheme

NABARD finance for food processing is obtainable for anextensive range of post-harvest processes ensuing in value addition and/or boosted storage life to the food product. The subsequent food processing happenings such as waxing, grading, cleaning, controlled ripening, labelling, packing, warehousing and packaging, canning, freeze-drying, freezing, and more are entitled under this scheme. The yields of processing/manufacturing undertaken by the units may include:

  • Fruits, mushrooms, vegetables, plantation crops and other horticulture crops
  • Milk and milk yields
  • Poultry and meat
  • Fish and other aquatic and marine products
  • Cereals, oilseeds, pulses, and oil crops
  • Herbs, medicinal &aromatic plants, forest produce, etc.
  • Consumer food products, such as confectionery,bakery products, snacks, etc.
  • Any other ready-to-eat food/ convenience foods
  • Beverages, energy drinks, non-alcoholic drinks, packaged drinking water, carbonated drinks, soft drinks, etc.
  • Food flavours, spices,food colours, ingredients, condiments, preservatives and any other item which might be essential in food processing
  • Nutraceuticals, health drinks, health foods, etc.
  • Any other action approved by the competent authority for establishment in the chosen Food Park

Food parks are eligible for NABARD loans

  • State Governments Entities
  • Entities promoted by Government of India
  • Joint ventures, SPVs, Cooperatives
  • Federations of Cooperatives
  • Farmers’ Producer Companies
  • Limited Companies
  • Private Limited Company
  • Individual Entrepreneurs (Proprietorships)

Term Loan Provided by NABARD

Under the NABARD Food Processing Fund, term loan will be delivered by NABARD either directly or in-consortium with other lenders. The term loan will be provided by NABARD at concessional amount of interest for the following:

  • Development/Launching of all infrastructure essential in the nominated Food Parks
  • Augmentation/modernization/formation of surplus infrastructure in the designated Food Parks
  • Setting up of individual food processing units or any other unit that is established for assisting the processes of the food processing units within the chosen Food Parks
  • Upgrading of existing processing units and their modernization in the labelled Food Parks resulting in process technology up-gradation, increased efficiency, reduction in cost, automation, improvement in product quality, etc.

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NABARD Loans for Food Parks.
NABARD Loans for Food Parks.

For undertaking the above actions, NABARD offers term loan of upto 75% of plan cost for, companies, corporates, SPVs, individual entrepreneurs and to joint ventures. The term loan can be prolonged with a tenure of upto 7 years at NABARD’s Prime Lending Rate (PLR) + Risk Premium. NABARD’s current Prime Lending Rate (PLR) is around 9.00%. A risk premium of upto 1% shall be included on top of the NABARD PLR based on borrower’s credit summary. In addition, collateral safetyshall be requested by NABARD for authorising of term loan based on the borrower credit profile.

Documents Needed

  • Registration certificate or Partnership agreement for SPV
  • Auditor’s Certificate
  • Profiles of shareholders and Directors
  • PAN & TAN of Special Purpose Vehicle
  • Registered Deed Details
  • State Policy on Food, Agro-processing

Schemes under expansion of the food processing units

The main objectives of the Scheme is tocreate the processing andprotection capacities in the farm and along with the modernisation or expansion of present food processing units, along with the level of processing, and includes value addition which leads to wastage saving. The processing actions undertaken by the singleunitsshields a broad range of post-harvest proceduresensuing in value addition and/or enhancing shelf life with focused facilities needed for storage of perishables. While extension of processing capacity is necessary to escalate the level of processing and decrease wastage, the introduction of modern machinery is envisioned to make a clear change in terms of process efficacies as well as refining the quality of the end product. The setting up of new entities and modernization/ growth of present units are covered under this scheme. 

Scheme for mega food park

The Mega Food Park scheme aims to provide a mechanism to relate with theagronomic production to the market to bring the processors, farmers,  and retailers and to make ensure the maximize the value addition, lessening wastage, to the growing farmers income and in generating employment opportunities mainly in the rural segment in India. The Scheme under Mega Food Park is mainly based on cluster approach where you can foresee theformation of state of art support and infrastructure which is arranged in well-defined agricultural or horticultural region for setting up the main current food processing units in the manufacturingthe plots that will bedelivered in the park with well-recognition to the supply chain. Mega food park naturallyhelps the consist of supply chain infrastructure that will comprises the collection of centers, central processing centers,primary processing centers,and cold chain in and around 25-30 fully developed plots for industrialiststhat need to arrange food processing units.

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According to the Food Processing Ministry, the higher cap of subsidy is provided to a unit which will be 10 lakh, apart from interest subsidy, if they take loans. The scheme will run at the cluster level where food processing elements or individual players could submit online for subsidy.

The other schemes include-

For ultra-mega, mega, integrated food parks          

  • Grant of 50% will be sanctioned on behalf of the projects that would cost for setting up the Mega Food Parks, which would be limited to ₹ 50 crores.
  • Grant of 50%of project cost that can be sanctioned for setting up the Integrated Food Parks, which sums upto₹ 20 crores.
  • VAT/CST/GST reimbursement will be done for Integrated Food Parks mainly during the construction period for more than 2 years, which would make upto ₹ 2 crores.

Power subsidy of food processing

An amount of Rs. 1.50 per unit for food processing units that would comprise of the cold storage units,cold storage chains, ripening units that would be for 5 years, which could be from date of commencement mainly of profitable production.

Power Subsidy on Food Processing Business.
Power Subsidy on Food Processing Business.

Capital subsidy of food processing

  • A subsidy of 25% of project cost which includes plant and machinery, technical and other civil works that would be limited to Rs. 5 croresto establish the new food processing units in India especially in rural areas.
  • The subsidy of 25% of new or the upgraded equipment cost which is limited to Rs. 1 croremainly for the technology up-gradation for agriculture.
  • A subsidy of up to 50% for setting up to the Primary Processing Centres – PPCsand Primary Collection Centres – PPCs, that would be limited to Rs. 2.5 crores.
  • A percentage of 35% for setting up of cold chain storage for agriculture or horticulture or dairy or to meat produce which would be upto Rs. 5 crores.

Interest on the food processing subsidy

A percentage of upto7% per annum on term loan is provided as fixed capital investments just for a period of 5 years upto the following –

  • The amount of Rs. 2 crores for food processing units and cold chain infrastructure was sanctioned by the government.
  • An amount of upto Rs. 1 crore is sanctioned which is used for setting up Primary Processing Centres called PPCs along with Primary Collection Centres – PCCs.
  • Make a note that for Integrated Food Parks which has already availed loans from NABARD the interest subsidy will not be applicable for them.

VAT or CST or SGST schemes

  • The subsidies for micro and small scale units includes 100% of reimbursement of net VAT or CST or SGST just for 5 years
  • The subsidies formedium scale units include 75% of the net VAT or CST or SGST which will be for 7 years.

Conclusion of food processing loans and subsidies

The above infromation may be used for food processing scheme in Karnataka, food processing scheme in Tamilnadu, food processing scheme in Telangana, food processing scheme in Maharashtra, food processing scheme in Andhra Pradesh, food processing scheme in Kerala, food processing scheme in Bihar, food processing scheme in Madhya Pradesh, food processing scheme in Uttar Pradesh, food processing scheme in West Bengal, food processing scheme in Gujarat, food processing scheme in Rajasthan, food processing scheme in Punjab, food processing scheme in Haryana, food processing scheme in Uttarakhand, food processing scheme in Chhattisgarh, food processing scheme in Odisha, food processing scheme in Assam, food processing scheme in Himachal Pradesh, food processing scheme in Nagaland, food processing scheme in Meghalaya, food processing scheme in Tripura. You may be interested in Growing Microgreens in Pots.

4 COMMENTS

  1. Thanks for valuable presentations…
    DEVELOPING ECONOMICS of our country
    The main themes of your travel are very essentials and Praisables.
    Hearty Thanks &Congratulations for you &all.

  2. Please call on +91 9376677799.

    Swastik Consultancy. basically we are subsidy consultant, Gujarat based company.

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