<h2 style="text-align: justify;">Introduction</h2> <p style="text-align: justify;">The role of infrastructure is crucial for agricultural development and for taking production dynamics to the next level. It is only through the development of infrastructure, especially at the post-harvest stage, that agricultural produce can be optimally utilized, providing opportunities for value addition and ensuring a fair deal for farmers. The development of such infrastructure will also help address the vagaries of nature, reduce regional disparities, support <a title="External website that opens in new window" href="viewcontent/agriculture/state-specific-schemes-for-farmers/lakshadweep/human-resource-development?lgn=en" target="_blank" rel="noopener" data-page-id="1348">human resource development</a>, and enable the full realization of the potential of limited land resources.</p> <p style="text-align: justify;">In view of the above, the Hon’ble Finance Minister announced on 15.05.2020 a ₹1 lakh crore <a title="External website that opens in new window" href="https://schemes.vikaspedia.in/viewcontent/schemesall/schemes-for-farmers/agriculture-infrastructure-fund?lgn=en" target="_blank" rel="noopener" data-page-id="24915">Agriculture Infrastructure Fund</a> for farm-gate infrastructure for farmers. A financing facility of ₹1,00,000 crore will be provided for funding <a title="External website that opens in new window" href="https://energy.vikaspedia.in/viewcontent/energy/rural-innovations/agriculture?lgn=en" target="_blank" rel="noopener" data-page-id="108">agriculture</a> infrastructure projects at farm-gate and aggregation points such as Primary Agricultural Cooperative Societies (PACS), Farmers Producer Organizations (FPOs), agricultural entrepreneurs, start-ups, etc. This initiative aims to provide impetus for the development of farm-gate and aggregation point infrastructure, ensuring affordable and financially viable post-harvest management systems.</p> <p style="text-align: justify;">Accordingly, the Department of <a title="External website that opens in new window" href="https://energy.vikaspedia.in/viewcontent/energy/rural-innovations/agriculture?lgn=en" target="_blank" rel="noopener" data-page-id="108">Agriculture</a> and Farmers Welfare (DA&FW) has formulated this Central Sector Scheme to mobilize a medium- to long-term debt financing facility for investment in viable projects relating to post-harvest management infrastructure and community farming assets through incentives and financial support.</p> <p style="text-align: justify;">Subsequently, in the Budget announcement made on 01.02.2021, it was decided to extend the benefits of the scheme to Agricultural Produce Market Committees (APMCs). Accordingly, modifications in the scheme were carried out with the approval of the Cabinet to make it more inclusive.</p> <h2 style="text-align: justify;">Rationale of the Scheme</h2> <p style="text-align: justify;"><a title="External website that opens in new window" href="https://energy.vikaspedia.in/viewcontent/energy/rural-innovations/agriculture?lgn=en" target="_blank" rel="noopener" data-page-id="108">Agriculture</a> and allied activities are the primary source of income for approximately 58% of the total population of India. Around 85% of farmers are small holding farmers (SHFs) with less than 2 hectares of land under cultivation, managing approximately 45% of agricultural land. The annual income of the majority of farmers remains very low.</p> <p style="text-align: justify;">Furthermore, India has limited infrastructure connecting farmers to markets, resulting in 15–20% of yield being wasted, which is relatively high compared to other countries where wastage ranges between 5–15%. Investment in agriculture in India has also remained stagnant, with less than 2% CAGR over the last five years. Investment in FY17 was approximately ₹2.19 lakh crore, of which the private sector share was around 83%, compared to a higher investment of approximately ₹2.50 lakh crore in FY14 and a higher private sector share of around 88%.</p> <p style="text-align: justify;">Additionally, a lack of investor confidence has led to a lower plowback ratio (approximately 14% of Gross Value Addition in FY18) compared to other sectors (around 33% of Gross Value Addition in FY18).</p> <h2 style="text-align: justify;">Objectives of the Scheme</h2> <p style="text-align: justify;">The objective of the scheme is to mobilize a medium- to long-term debt financing facility for investment in viable projects for post-harvest management infrastructure and community farming assets through incentives and financial support, thereby improving agricultural infrastructure in the country. This financing facility aims to fulfill multiple objectives for all stakeholders in the agricultural ecosystem.</p> <h3>A. Farmers (including FPOs, PACS, Marketing Cooperative Societies, Multipurpose Cooperative Societies, State Agencies, APMCs, National & State Federations of Cooperatives, Federations of FPOs and SHGs, etc.)</h3> <ul> <li style="text-align: justify;">Improved marketing infrastructure will allow farmers to sell directly to a larger consumer base, thereby increasing value realization and improving overall income.</li> <li style="text-align: justify;">Investments in logistics infrastructure will reduce post-harvest losses and minimize intermediaries, making farmers more independent with better market access.</li> <li style="text-align: justify;">Access to modern packaging and cold storage systems will enable farmers to decide the timing of sale, improving price realization.</li> <li style="text-align: justify;">Community farming assets will enhance productivity and optimize input use, resulting in substantial savings.</li> </ul> <h3>B. Government</h3> <ul> <li style="text-align: justify;">The government will be able to direct priority sector lending towards currently unviable projects through interest subvention, convergence incentives, and credit guarantees, thereby encouraging innovation and private investment.</li> <li style="text-align: justify;">Improved post-harvest infrastructure will help reduce national food wastage and enhance the competitiveness of the agriculture sector globally.</li> <li style="text-align: justify;">Central and State Government agencies or local bodies will be able to structure viable projects independently or through Public-Private Partnerships (PPP) to attract investment.</li> </ul> <h3 style="text-align: justify;">C. Agri-entrepreneurs and Startups</h3> <ul> <li style="text-align: justify;">A dedicated funding source will encourage innovation through the use of modern technologies such as IoT and AI.</li> <li style="text-align: justify;">It will also strengthen ecosystem linkages, promoting collaboration between entrepreneurs and farmers.</li> </ul> <h3 style="text-align: justify;">D. Banking Ecosystem</h3> <ul> <li style="text-align: justify;">Credit guarantees, convergence, and interest subvention will reduce lending risks for financial institutions, helping them expand their customer base and diversify portfolios.</li> <li style="text-align: justify;">Refinance facilities will enable cooperative banks and Regional Rural Banks (RRBs) to play a larger role.</li> </ul> <h3 style="text-align: justify;">E. Consumers</h3> <ul> <li style="text-align: justify;">Reduced inefficiencies in the post-harvest system will ensure a larger share of produce reaches the market, leading to better quality and more stable prices. Overall, investment in agricultural infrastructure will benefit all stakeholders in the ecosystem. </li> </ul> <h2 style="text-align: justify;">Implementation Period of the Scheme</h2> <p style="text-align: justify;">The scheme will be operational from 2020–21 to 2032–33. Loan disbursement under the scheme will be completed within six years, i.e., by the end of Financial Year 2025–26. As of 31st December 2022, ₹14,118 crores have been sanctioned, out of which ₹9,117 crores have been disbursed under the scheme. The remaining ₹90,883 crores out of the total ₹1 lakh crore will be disbursed during the period from 2022–23 to 2025–26.</p> <p style="text-align: justify;">The repayment period under the financing facility will be for a maximum of 7 years, including a moratorium period of up to 2 years.</p> <h2 style="text-align: justify;">Eligible Projects</h2> <p style="text-align: justify;">The scheme will facilitate the setting up and modernization of key elements of the agricultural value chain. The following projects are eligible for all beneficiaries, including private entities as well as group-based organizations such as Farmer Producer Organizations (FPOs), Primary Agricultural Credit Societies (PACS), Self Help Groups (SHGs), Joint Liability Groups (JLGs), cooperatives, national and state-level federations of cooperatives, FPO federations, SHG federations, and national and state-level agencies.</p> <h3 style="text-align: justify;">A. Post-Harvest Management Projects</h3> <p style="text-align: justify;">Under this category, eligible projects include supply chain services such as e-marketing platforms, warehouses and silos, cold storage and cold chain infrastructure, packaging units, assaying units, and sorting and grading units. Logistic facilities such as reefer vans and insulated vehicles are also included. Additionally, projects like ripening chambers, farm residue and waste management infrastructure, and primary processing activities (as specified in Table 1) are covered.</p> <h3 style="text-align: justify;">B. Community Farming Assets</h3> <p style="text-align: justify;">This category includes projects related to the production of organic inputs such as vermicomposting, compressed biogas (CBG) plants, and bio-stimulant production units. Infrastructure supporting smart and precision agriculture is also eligible, including the purchase of drones, installation of specialized sensors, and the use of blockchain and artificial intelligence in agriculture.</p> <p style="text-align: justify;">Other eligible components include remote sensing and Internet of Things (IoT)-based systems such as automatic weather stations and GIS-based farm advisory services. Projects such as nurseries, tissue culture units, seed processing units, and custom hiring centers for farm machinery (with a minimum of four implements) are also included.</p> <p style="text-align: justify;">Further, farm and harvest automation equipment such as combine harvesters, sugarcane harvesters, and boom sprayers are eligible. Renewable energy initiatives like standalone solar pumping systems under PM-KUSUM Component B and solarization of grid-connected agricultural pumps under PM-KUSUM Component C are also covered.</p> <p style="text-align: justify;">Additional eligible projects include integrated spirulina production and processing units, sericulture processing units, honey processing units, and plant quarantine facilities. The scheme also supports projects aimed at developing supply chain infrastructure for crop clusters, including export clusters. Projects promoted by central, state, or local governments or their agencies under Public-Private Partnership (PPP) models for building community farming assets or post-harvest management infrastructure are also eligible.</p> <h3 style="text-align: justify;">C. Projects Eligible Only for Group-Based Beneficiaries</h3> <p style="text-align: justify;">The following projects are eligible exclusively for group-based entities such as FPOs, PACS, SHGs, JLGs, cooperatives, their federations, and government agencies, as they qualify as community farming assets:</p> <ul> <li style="text-align: justify;">These include hydroponic farming, mushroom farming, vertical farming, aeroponic farming, and protected cultivation systems such as polyhouses and greenhouses. Logistic facilities, including non-refrigerated or insulated vehicles, and tractors are also included under this category.</li> </ul> <p style="text-align: justify;"> Notes</p> <ul> <li style="text-align: justify;">Solarization of any of the eligible infrastructure can also be financed under the <a title="External website that opens in new window" href="https://schemes.vikaspedia.in/viewcontent/schemesall/schemes-for-farmers/agriculture-infrastructure-fund?lgn=en" target="_blank" rel="noopener" data-page-id="24915">Agriculture Infrastructure Fund</a> (AIF).</li> <li style="text-align: justify;">Digital connectivity and optical fiber infrastructure are also eligible for financing when developed as part of the above-mentioned projects.</li> </ul> <p style="text-align: justify;"><a href="https://agriwelfare.gov.in/Documents/AIF_Guidelines_English_12Jun24.pdf" target="_blank" rel="noopener">AIF GUIDELINE </a></p> <p style="text-align: justify;"><a href="https://agriwelfare.gov.in/en/Major" target="_blank" rel="noopener">MINISTRY OF AGRICULTURE</a></p>