Organic Farming Subsidy for Indian Entrepreneurs – Complete Guide

The concept of organic farming is gaining importance world-over. The present-day intensive agriculture practices have resulted in soil fatigue and gradual deterioration of soil health. In this article, we intend to explore the scope of receiving organic farming subsidies for Indian entrepreneurs.

Organic production is an overall system of farm management and food production that aims at sustainable agriculture, the production of high-quality products, and the use of processes that do not harm the environment or human, plant, and animal health.

The decreased cost of synthetic fertilizer and pesticide inputs, along with the higher prices that consumers pay for organic produce, contribute to increased profits.

Organic farms have been consistently found to be as or more profitable than conventional farms. Without the price premium, profitability is mixed.

Read: How To Start A Profitable Organic Farming Business

The Government of India under the National Project on Organic Farming provides capital investment subsidies for commercial production units manufacturing organic fertilizers / bio-fertilizers.

In this article, we intend to explore organic farming subsidies for Indian entrepreneurs.

The objective of the Organic Farming Subsidy Scheme

The major objectives of the scheme are

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

Entities Eligible for Organic Farming Subsidy

Individuals, a group of farmers/growers, proprietary, and partnership firms, Co-operatives, the fertilizers industry, Companies, Corporations, and NGOs are eligible to get the subsidy for biofertilizer and biopesticide manufacturing operations. APMCs, Municipalities, NGOs, and Private entrepreneurs are eligible to get the subsidy for fruit and vegetable waste compost units. Azotobacter, Rhizobium, PSB, Azospirillum, Acetobacter, Trichoderma, and Mycorrhiza are some of the profitable products, you can start manufacturing under this scheme.

In the biofertilizer and biopesticide unit, you can avail 25% of the total financial outlay subject to the maximum of Rs 40 lakh per unit, whichever is less. For the fruit and vegetable waste compost unit, the subsidy amount is 33% of the total financial outlay subject to the maximum of Rs. 60 lakh per unit, whichever is less.

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

Sanction & Release Procedure of Organic Farming Subsidy

NABARD/ NCDC will release the eligible subsidy amount by DAC in advance as per the requirement. You will get a 50% advance subsidy to the participating bank for keeping the same in the subsidy reserve fund account of the concerned borrower.

This 50% advance subsidy would be released by NABARD to the participating bank on submission of the project profile cum claim form after sanctioning the bank loan and disbursement of the first installment of the loan.

Read: Best Government Subsidy for Small Businesses

You will get the remaining 50% disbursed to the participating banks after conducting an inspection. Generally, the Joint Inspection Committee consists of officials from the financing bank, NABARD/NCDC, and NCOF/DAC and their recommendations to the effect. This is an interest-free subsidy. Bank will only charge interest on the loan amount excluding the subsidy amount.

Repayment Period of Organic Farming Subsidy

You will get a time limit of a maximum of 15 months for the completion of the project from the date of sanction by the bank. However, you can also get a further grace period of 3 months for the completion of the project. Basically, the participating bank may allow this. If the project is not completed within the stipulated period, the benefit of subsidy is withdrawn and the advance subsidy has to be refunded forthwith. You can visit the National Centre of Organic Farming for more details.