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18 Aug 2023

Capital Investment Subsidy

Objective of the Scheme

Main objectives of the Capital Investment Subsidy Scheme are listed as follows:

  • To promote organic farming by making available the organic inputs such as bio fertilisers, Biopesticides and fruit and vegetable market waste compost and thereby better return for the produce.
  • To reduce the total dependence on chemical fertilisers and pesticides by increasing the availability and improving the quality of biopesticides, biofertilizers and composts in the country.
  • To increase agricultural productivity by maintaining soil health and environmental safety.
  • To prevent environmental degradation and pollution by proper conversion of organic waste.
  • For converting the organic waste in to plant nutrient resources.

Eligible Organizations

The eligible organisations for the Capital Investment Subsidy Scheme are listed as follows:

  • Individuals
  • Private entrepreneurs
  • Biofertilizers and Biopesticides production Unit
  • Fruit and Vegetable Waste Compost Unit
  • Group of farmers/growers
  • Proprietary
  • Partnership firms
  • Co-operatives
  • Fertiliser industry
  • Companies and Corporations
  • NGOs
  • APMCs
  • Municipalities

Conditions for Setting Up

The Conditions for Setting up of Commercial Production unit is explained in detail below:

Project Cost Details

The project cost will be depended upon the capacity, architects, technology, invoice prices of the machines subject to norms of appraisal of financing bank and NABARD.

  • The estimated cost of establishment of the fruits and vegetable market Waste Compost unit of 100TPD capacity is about Rs 200 lakh
  • The estimated cost of establishment of new BiofertilizerBiopesticide production unit of installed capacity of 200 tonnes/annum is about 160.00 lakh.

The condition for Computing the Project Cost

  • Project cost can include the cost of the land purchased, plant and machinery civil works, scientific instruments and equipment
  • The value of land to be computed should not exceed 10% of the project cost.
  • The cost of the land and cost of civil structures should not exceed 50% of the total financial outlay.
  • The cost of land calculated in the project cost can be reckoned towards the margin money required to be met by the enterprise
  • The cost of land will be computed only when such land is to be purchased by the enterprise.
  • The cost of the property should be the purchase value and not the market value of the land.
  • The value of a particular portion of the land which is need-based for the project only will be considered.

Quantum of Subsidy

The Capital Investment Subsidy Scheme provides credit linked and back-ended capital investment subsidy as described below.

1.     Biofertilisers-Biopesticides Unit – The Quantum of Subsidy Is 25% of total financial outlay subject to the maximum of Rs 40 lakh per unit, whichever is less.

2.     Fruit & Vegetable Market Waste Compost Unit – The Quantum of Subsidy Is 33% of total financial outlay subject to the maximum of Rs. 60 lakh per unit, whichever is less.

Release of Subsidy

NABARD releases the subsidy to the units financed by the Commercial Banks,  State Cooperative Banks (SCBs), Regional Rural Banks (RRBs), State Cooperative Agricultural and Rural Development Banks (SCARDBs), Urban Cooperative Banks (PUCBs), Scheduled Primary and such other institutions which will be eligible for refinance from NABARD.

  • NCDC  will release subsidy to projects financed by it in the cooperative sector
  • The subsidy will be released in two instalments as advance subsidy and final instalment subsidy

Pattern of Assistance

For Biofertilizer-Biopesticide production unit

1.     Owner’s contribution - 25-33%

2.     Subsidy from Central Government of India subject to the maximum ceiling - 25%

3.     Bank Loan - 42-50%

For Fruits and Vegetable Market Waste Compost unit

1.     Owner’s contribution - 25-33%

2.     Subsidy from Central Government of India subject to the maximum ceiling - 33%

3.     Bank Loan - 34-42%

Term Loan

Up to 50% of the project cost will be raised as term loan from the financing banks. As the subsidy is back-ended, the eligible amount of subsidy (25%) would be initially allowed as a term loan to the beneficiary. The repayment schedule will be drawn as per the total loan amount; the subsidy amount is adjusted after liquidation of net bank loan.

The financial institution will provide working capital separately for undertaking the business.

Rate of Interest

The interest rate to the ultimate borrower will be decided by the financing bank.