The need for proper agricultural infrastructure is evident as it plays a vital role during the whole process. From the initial step of sowing the seeds to the final step of distributing the product to the market through transportation, infrastructure is a key requirement. Given the requirement for growth in irrigation, roads, transportation, equipment, machinery, and infrastructure for precision agriculture, financial initiatives are vital in the agriculture sector’s infrastructure. In the last few decades, the adoption of modern technologies and types of equipment has escalated the production and profitability in the agriculture sector, which clearly shows the important role of quality infrastructure.

To effectuate the financial contribution to the agriculture sector, the Agriculture Infrastructure fund (AIF) scheme was launched in August 2020 by the Union cabinet. Agriculture Infrastructure fund comes up with a scheme that aims to provide medium-long term debt financing facility through 3% interest subvention and credit guarantee support on loans for the creation of post-harvest management infrastructure and community farming assets. 

The duration of the AIF scheme is of 10 years from FY2020 to FY2029. Under the Agriculture Infrastructure scheme, Rs 1 lakh crore will be provided for financing agriculture infrastructure projects at farm gates and aggregation points for multiple pre-harvest and post-harvest activities. These funds will be allocated by the banks and financial institutions as loans, with interest subvention of 3 percent per annum, which will be available for a maximum period of 7 years. Also, Credit guarantee coverage will be available for eligible borrowers from the Agriculture Infrastructure Fund (AIF) under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for a loan up to INR 2 crores. The Government will pay the fee for AIF coverage.

The recipients of the fund include- Farmers, Agri-entrepreneur, Agricultural produce market committees, Farmer producer organizations( FPO), PACS, Marketing Cooperative Societies, Self-help groups (SHGs), Joint Liability Groups (JLG), Multipurpose Cooperative Societies, Agri-entrepreneurs, Startups, and Central/State agency or Local Body sponsored Public-Private Partnership Projects.

The infrastructure development that is targeted for this fund scheme involves -Supply chain services including e-marketing platforms, Warehouses, Silos, Pack houses, Assaying units, Sorting &grading units, Cold chains, Logistics facilities, Primary centers, and Ripening  Chambers. It also includes viable projects for building community farming assets like organic input production, bio stimulant production units and Infrastructure for smart and precision agriculture. The above-mentioned Agri-infrastructure units build a strong foundation for quality post-harvest management and that’s why it is crucial to focus on their development. A portal has been created so that the eligible applicants can directly register for the scheme and can get the financial facility as soon as possible. So far, the portal has received more than 22689 applications seeking subsidized loans worth INR 15340 crore under the Agriculture Infrastructure Fund (AIF) scheme. And a total of 10394 projects have been sanctioned under the scheme worth a loan of INR 7677 crore which includes in principle sanction by NABARD.

The government of India has introduced multiple reforms to render the best outcomes for the Agriculture infrastructure. The introduction of AIF has not only contributed to the financial growth but the production growth and technological growth of the Agriculture sector. AIF is creating an impact with all these initiatives and is making the Agriculture ecosystem stronger by bringing all the stakeholders together. Farmers, entrepreneurs, and businesses are collaborating for better results and better learning opportunities. The agriculture infrastructure fund scheme has the potential to build a world-class agriculture infrastructure in India and we are moving towards it slowly and steadily.

This has been co-authored by Ayushi Giri and Agriculture Team.

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