Food Processing Fund - NABARD

A strong and vibrant food processing industry can help reduce food waste, improve value and serve as a strong link in the agri-value chain. To serve the massive demand for food and food products in India, the Government of India has setup a special fund of Rs.2000 crores in

NABARD for providing direct term loans at affordable rates of interest to Designated Food Parks (DFPs) and food processing units in the DFPs. In this article, we look at the food processing fund setup by NABARD in detail.

Eligibility

Food processing units at Designated Food Parks (DFPs) are eligible for sanction of term loan financing from NABARD under the food processing fund scheme. Designated food parks include:

Food Parks promoted by MOFPI;
Mega Food Parks promoted by MOFPI;
Food Parks [exclusive Food Processing Industrial Estates promoted by State Governments;
Food Processing] Agro Processing] Multi-Product Special Economic Zones (SEZs), including de-notiﬁed areas of these SEZs designated by MoFPI; or
Any other area having developed enabling infrastructure and designated as Food Park by MoFPI.

The term loan from the fund can be used for development and establishment of all infrastructure required or for augmentation or modernization or creation of additional infrastructure. The scope of processing activities eligible for term loan can include:

Fruits. vegetables. mushrooms, plantation crops and other horticulture crops
Milk and milk products
Poultry and meat
Fish and other aquatic
Marine products
Cereals. pulses, oilseeds and oil crops
Herbs. medicinal and aromatic plants, forest produce. etc.
Consumer food products, such as bakery items, confectionery, snack.etc.
Any other ready-to-eat food ] convenience foods
Beverages, non-alcoholic drinks
Energy drinks, carbonated drinks, packaged drinking water. soft drinks. etc.
Food ﬂavours, food colours. spices, condiments, ingredients, preservatives and any other item which may be required in food processing.
Nutraceuticals, health foods, health drinks. etc.
Any other activity approved by the competent authority for establishment in the designated Food Park

The eligible activities can also cover a range of post-harvest processes resulting in value addition and/or enhanced storage life, such as cleaning, grading, waxing, controlled ripening. labelling, packing and packaging, warehousing, canning, freezing, freeze drying, various levels of product processing.

Amount of Term Loan

Entrepreneurs and companies can avail term loan from the Food Processing Fund of NABARD upto a maximum of 75% of total project cost. Eligible items in the total project cost would vary depending on the nature of project and generally includes site development, civil works, internal roads, drainage, plant and machinery, equipment and other fixed assets, technology transfer fee and other consultancy charges, preliminary and pre-operative expenses, capitalized working capital for one operating cycle, etc. The total repayment period of term loan will be assessed by NABARD based on the projected cash flows of the project/borrowing entity which cannot exceed 7 years, inclusive of moratorium period. Depending on the cash flows, grace period up to a maximum of two years can be considered for repayment of instalments of principal amount. However. interest will be payable during the grace period also.

For assistance with obtaining bank loan or preparing project report, get in touch with an IndiaFilings advisor at sales@indiafilings.com

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Frequently Asked Questions

Common questions about Food Processing Fund Loans by NABARD in India.

The Food Processing Fund is a special fund of Rs. 2000 crores set up by NABARD to provide direct term loans at affordable rates of interest to Designated Food Parks (DFPs) and food processing units located within these DFPs. The aim is to support the development of a strong and vibrant food processing industry in India.

Food processing units located within Designated Food Parks (DFPs) are eligible for term loan financing from NABARD under this scheme. DFPs include Food Parks promoted by the Ministry of Food Processing Industries (MOFPI), Mega Food Parks, Food Processing Industrial Estates promoted by State Governments, Agro Processing/Multi-Product Special Economic Zones (SEZs), and any other area designated as a Food Park by MOFPI.

The term loan from the fund can be used for a wide range of food processing activities, including processing of fruits, vegetables, mushrooms, plantation crops, milk and milk products, poultry and meat, fish and aquatic products, cereals, pulses, oilseeds, herbs, medicinal and aromatic plants, forest produce, consumer food products, beverages, food flavors, food colors, spices, condiments, preservatives, nutraceuticals, health foods, and any other activity approved by the competent authority.

Entrepreneurs and companies can avail term loans up to a maximum of 75% of the total project cost under this fund. The total project cost includes site development, civil works, internal roads, drainage, plant and machinery, equipment, technology transfer fees, consultancy charges, preliminary and pre-operative expenses, and capitalized working capital for one operating cycle.

The total repayment period for the term loan will be assessed by NABARD based on the projected cash flows of the project or borrowing entity, but it cannot exceed 7 years, inclusive of the moratorium period. A grace period of up to 2 years can be considered for the repayment of principal instalments, but interest will be payable during this period.

The term loan from the Food Processing Fund can be used for the development and establishment of all infrastructure required for food processing units within DFPs, or for augmentation, modernization, or creation of additional infrastructure related to food processing activities.

The Food Processing Fund by NABARD aims to support the growth of a strong and vibrant food processing industry in India by providing affordable term loan financing to food processing units located within Designated Food Parks. This fund can help reduce food waste, improve value addition, and strengthen the agri-value chain in the country.

The term loan from the Food Processing Fund can be used for the development of various types of enabling infrastructure required for food processing activities within DFPs, such as site development, civil works, internal roads, drainage systems, plant and machinery, equipment, and other fixed assets related to food processing.

The Food Processing Fund covers a wide range of food processing activities, including processing of fruits, vegetables, mushrooms, plantation crops, milk and milk products, poultry and meat, fish and aquatic products, cereals, pulses, oilseeds, herbs, medicinal and aromatic plants, forest produce, consumer food products, beverages, food flavors, food colors, spices, condiments, preservatives, nutraceuticals, and health foods.

The article does not provide specific details on the application process for the term loan under the Food Processing Fund. However, it mentions that interested entrepreneurs and companies can get in touch with an IndiaFilings advisor at sales@indiafilings.com for assistance with obtaining the bank loan or preparing the project report.