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Capital Investment Subsidy Scheme for Horticulture

Subsidy Scheme for Horticulture

Capital Investment Subsidy Scheme for Horticulture

Nearly one-third of our horticultural produce, especially fruits and vegetables, are wasted, mainly on account of poor cold storage and other storage facilities. Keeping this in view, a capital investment subsidy scheme for construction/expansion/modernisation of cold storage and storages for horticulture produce has been introduced. It would help in minimising post-harvest losses being suffered by farmers, particularly small and marginal farmers. The scheme is implemented by the National Bank for Agriculture and Rural Development (NABARD) in collaboration with National Horticulture Board (NHB), Ministry of Agriculture. In this article, we look at the Capital Investment Subsidy Scheme for Horticulture in detail.

Objectives of the Scheme

The objectives of the Capital Investment Subsidy Scheme for Horticulture are given below:

  • To promote setting up of cold storages in the country for reducing post-harvest losses.
  • Creation of 12 lakh tonnes of new cold storages and modernization/rehabilitation of 8 lakh tonnes of existing cold storages.

Eligible Organizations

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


Cold Storages including Controlled Atmosphere (CA), Modified Atmosphere (MA) storage, pre-cooling units and mother Storages for onion etc.

Project Cost Details

The project cost will be depended upon the capacity, technology used for cold storage, architects, invoice prices of machinery, etc., subject to the norms of appraisal of financing banks/NABARD regarding technical feasibility/financial viability.

Quantum of Subsidy

 The subsidy provided on the capital investment of the project will be calculated as follows:

Particulars Scale of Assistance
New Cold Storage/expansion of existing cold storage Rs.4000 per tonne
Modernisation/rehabilitation of existing cold storage Rs.1000 per tonne
Storage for horticulture produce like onion Rs.2000 per tonne

Note: For calculating the subsidy, the capacity of cold storage can be decided by providing a volume of 3.4 cum per tonne or 120 cubic feet per tonne of production.

Release of Subsidy

The release of subsidy under the Scheme is subject to availability of funds, the instructions/guidelines issued by the Government of India/NHB.

The subsidy calculated as above is subject to a maximum limit of Rs.50 lakh per project. But for the projects in the North-Eastern States, maximum subsidy admissible would be Rs.60 lakh at the rate of 33.33% of the project cost.

The banks would sanction projects having the cold storage capacity of more than 5000 tonnes and also having a normal techno-financial appraisal, but the maximum amount of subsidy under these projects would be calculated as per the exact guidelines.

Term Loan

To the extent of 50% of the project, the cost can be raised as term loan from institutional agencies. In the case of computing, the value of land in the project cost should not be more than 10% of the cost of the project. In case the cost of the land exceeds 10% of the project cost, such value only has to be computed in the total project cost. The cost of land included in the project cost is required to be considered towards the margin money to be met by the enterprise under the following conditions:

  • The cost of the land must be the purchase value and not the market value.
  • The land value will be included in the project cost only if the land is purchased by the enterprise.
  • The land value will be covered if it is required to include under this project.

Margin Money

The margin money for the Capital Investment Subsidy Scheme is 25% of the term loan.

Rate of Interest

The rate of interest to be charged from the borrower are tabulated below:

Size of Limit   Commercial Banks ADFCs/RRBs/SCBs/SCARDBs
Up to Rs.2.00 lakhs   Not exceeding PLR of the bank Not exceeding PLR of the convener bank of the State Level Bankers’ Committee (SLBC) of the concerned State
Above Rs. 2.00 lakhs  Not exceeding 1% above PLR of the bank

Not exceeding 1% above PLR charged by the convenor bank of the State Level Bankers’ Committee (SLBC) of the concerned State


Refinance Assistance from NABARD

Commercial Banks (CBs), Regional Rural Banks (RRBs), State Co-operative Banks (SCBs), State Co-operative Agricultural and Rural Development Banks (SCARDBs), Agriculture Development Finance Companies (ADFCs) and other institutions that are eligible to obtain refinance from NABARD.

Rate of Interest on refinance amount

Rate of Interest on refinancing amount to be charged to financing banks will be at the rate of 8.5% per annum.

Quantum of refinance

To the extent of 90% of the amount financed to the borrower and in the case of SCARDBs in North-Eastern Region and Sikkim, 95% of the amount will be provided.

Repayment Period

The repayment period will depend upon the cash flow and will be up to 9 years, including a moratorium period of 2 years.

Documents Required

The following are the documents required to be furnished along with the application form.

  • Copy of completion certificate of the project from the Bank. 
  • A financial appraisal from the Bank before sanctioning of term loan along with any other details showing investment components and their costs.
  • In case of presanction inspection of the project, the site is carried out by the  FI/Bank, then a certified copy of such documents should be enclosed along with the claim. 
  • Term loan sanction letter provided by the Bank to the beneficiary with clearly mentioning the purpose of the term loan, the period of repayment along with the activities for which loan sanctioned.
  • Term loan disbursement detail for the project. 
  • Term loan account details of the promoter. 
  • Copy of Record of Rights (ROR) of project land as mentioned in the loan document by the beneficiary along with Search Report.
  • Copy of record of right (ROR) furnished by the beneficiary to NHB along with the application for Letter of Intent (LOI). 
  • Copy of Photographs captured at the time of the inspection of the project duly signed by the Bank  Officer and the promoter.   
  • Duly certified expenditure statement on the basis of bills or vouchers by Bank or CA certificate as per NHB format.

Procedure for Sanctioning Project

The concerned Financial Institution or Bank who has provided credit for the project has to submit subsidy claims to the respective office of NHB directly for sanctioning subsidy for the project. The subsidy claims have to be submitted either by speed post or registered post or by a messenger of the Bank who should possess Identity Proof of being a messenger or should hold authorization certificate from the concerned bank branch. 

The application form for the Capital Investment Subsidy Scheme for Horticulture is reproduced below for quick reference.

horiculture 1

Note: Also, NHB is proposing to make provisions enabling Financing Institution to make an online entry about loan sanction, the release of instalments of the loan, progress of project implementation, and making subsidy claims.


  • NABARD would notify its Regional Offices to ensure monitoring of the loan applications (receipt, processing, sanction, the release of funds, etc.) under the scheme at State Level Bankers Committee (SLBC) and also at the district level.
  •  A Monitoring Committee will consist of officials from NABARD NCDC, participating banks/Financial Institutions (FI), would inspect the project-work within the operational guidelines of the scheme and would submit its report to NHB. 
  •  For this purpose, the promoters/participating banks or FI will initiate necessary action to conduct the inspection for the project site by the Monitoring Committee when the project is nearing completion.
  • Upon completion of the project, the FI/participating bank/promoter would submit a commissioning/completing certificate to NHB through NABARD/NCDC/FI/Bank.
  •  Thereafter, a utilization certificate is excepted to be furnished by the NCDC/NABARD/Promoter/Bank/FI indicating that the full amount of subsidy has been received.
  •  Other institutions like Commercial /Cooperative Banks/NCDC /FIs etc. will follow their own procedures for monitoring the projects under the scheme.

Other Conditions

  • NABARD would release back-ended subsidy to the financing bank on submission of commissioning certificate.
  • In case the unit has not submitted the commissioning certificate, NABARD would refund the subsidy to NHB.
  • The subsidy disbursed by NABARD to the banks on behalf of individual units will be maintained in a separate account.
  • Therefore, the project cost, including the subsidy amount but excluding the margin money contribution from the beneficiary would be disbursed as a loan by the banks.
  • The repayment schedule will be fixed based on the loan amount that the subsidy amount is adjusted after the bank loan is liquidated.
  • The amount of subsidy applicable to the borrower under the scheme will be maintained in the Subsidy Reserve Fund Account.