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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:

1. Food Parks promoted by MOFPI;
2. Mega Food Parks promoted by MOFPI;
3. Food Parks [exclusive Food Processing Industrial Estates promoted by State Governments;
4. Food Processing] Agro Processing] Multi-Product Special Economic Zones (SEZs), including de-notified areas of these
   SEZs designated by MoFPI; or
5. 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 [email protected]