Government subsidy is a very much essential thing for the financial benefits of small businesses. In fact, the small-scale industry highly depends on different government subsidy schemes and grants.
In India, both the Central and State Governments provide a number of subsidy schemes to promote the growth of small-scale industries, especially MSMEs.
Actually, the food processing industry transforms agricultural produce into value-added food items. Hence, it is a highly promising sector in our country. India holds the 6th position in the food and grocery market and the 5th position in the retail market globally.
India is the largest producer of milk, bananas, mangoes, guavas, papaya, ginger, and okra. Additionally, it is the second-largest producer of wheat, rice, fruits, vegetables, tea, sugarcane, and cashew nut. And the third-largest producer of cereals, coconut, lettuce, chicory, nutmeg, mace, cardamom, and pepper globally. Therefore, our country has ample resources for the food processing sector.
Here in this article, you will find a list of the 10 best Government subsidies for agro and food processing-based businesses. Most of the schemes are focused on the food processing industry in different sectors. Definitely, it will help you in getting the financial benefits to start your own business.
List of 10 Government Subsidy For Agro & Food Business
#1. National Horticulture Board (NHB) – Government Subsidy
NHB provides capital investment subsidy for the construction/expansion/modernization of cold storage for Horticulture Products (a subscheme under MIDH). The scheme is for setting up cold storage (of capacity above 5000 MT and up to 10000 MT) and their modernization. Basically, it is an open-ended credit-linked scheme. For availing of this scheme, you will need to submit an online application for IPA in the prescribed application format. It is available on the website: http://nhb.gov.in.
#2. National Horticulture Mission (NHM) – Government Subsidy
NHM provides financial assistance for cold storage (long-term storage and distribution hubs) up to 5000 MT capacity. This scheme comes under the open-ended scheme of NHM/ HMNEH. Actually, it is a subscheme of MIDH). And you can avail of the subsidy to credit-linked projects @ 35% of the capital cost of the project in the general area and 50% in the case of the Hilly & Scheduled area.
#3. Small Farmer Agri-Business Consortium (SFAC) assistance
Under the SFAC, you can avail of the subsidy for setting up cold storage as a part of an integrated value chain project. You can apply for a subsidy for the cold storage component that is not more than 75% of TFO (Total Financial Outlay).
The scale of assistance as a subsidy to projects is 25% of the capital cost and the maximum ceiling to Rs 2.25 crores in the general area. And it is 33.33% and the maximum ceiling is up to Rs 4 crores in the case of NE, Hilly & Scheduled areas.
#4. Agricultural and Processed Food Products Export Development Authority (APEDA) Assistance
Under this scheme, you can set up a cold chain business. Basically, it is part of a strategy to develop the industries relating to the scheduled products for export only. You can get a 40% subsidy subject to a limit of Rs 75 lakhs for cold chain projects with a mechanized handling system.
#5. Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)
Actually, the up-gradation of the process and the corresponding plant and machinery helps SMEs to reduce production costs. Actually, the Ministry of Small Scale Industries (SSI) runs this scheme for technology upgradation of Small Scale Industries.
The sole proprietorship, partnership firms, cooperative, private, and public limited companies can apply this scheme. Basically, it aims at facilitating technology upgradation by providing an upfront capital subsidy of 15%.
#6. Government Subsidy for the Food Processing Unit
Horticulture Mission provides financial assistance for the food processing units for horticulture products. The scheme is only for North Eastern Region and Himalayan States (HMNEH). It is a credit-linked back-ended capital investment assistance of 50% of project cost (ceiling amount of project cost is Rs 8 crores ).
#7. Venture Capital by Small Farmer Agri-Business Consortium (SFAC)
SFAC extends venture capital assistance in the form of equity to agribusiness projects. The quantum of SFAC support is 26% of the promoter’s equity or an amount of Rs 50 lakhs whichever is lower in the general area. And it is 40% of the promoter equity or amount of Rs 50 lakhs whichever is lower in Hilly and NE regions. You will need to repay this venture capital to SFAC after the repayment of the term loan.
#8. Venture Capital by SIDBI Venture Capital Ltd. (SVLC)
SIDBI extends support to MSME through one of its schemes Smaridi Fund with a corpus of Rs 450 crores. Currently, it is available in Bihar, Uttar Pradesh, Madhya Pradesh, Odisha, Chattisgarh, Jharkhand, Rajasthan, and West Bengal. SMEs can apply for financial assistance under the scheme. The investment size is approx 5 to 40 Crore. However. the MSME Udyog Aadhaar registration is a must for applying for this scheme.
#9. Technology Upgradation and Quality Certification – Government Subsidy
Ministry of Micro Small Medium Enterprises provides financial Support to MSMEs in ZED Certification Scheme. Basically, the scheme supports the Make in India initiative. The scheme helps SMEs to reduce wastages substantially, increase productivity, expand their market as IOPs, become vendors to CPSUs, have more IPRs, develop new products and processes, etc. All the small business enterprises in the manufacturing activity and having Udyog Adhar Memorandum can apply.
#10. Pradhan Mantri Kaushal VikasYojana (PMKVY) – Government Subsidy
Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme of the Ministry of Skill Development & Entrepreneurship (MSDE). Under this Scheme, you can get training and assessment fees from the Government. However, you will get assistance according to the National Skills Qualification Framework (NSQF). Apart from providing training, TCs shall also impart training in Soft Skills, Entrepreneurship, Financial, and Digital Literacy.
#11. Setting Up/Up-gradation of Quality Control/Food Testing Laboratories
Generally, food testing ensures that it complies with domestic standards as well as international standards for exports. Also, there is a need for testing all imported food products to ensure that they are of the requisite standard and food products.
Under the scheme, Central/State Government organizations Government universities (including deemed universities), and all other implementing agencies/private sector organizations/universities (including deemed universities) are eligible to receive financial assistance for setting up food testing laboratories.
We hope this wide list of Government subsidy schemes will help you in getting financial assistance for your small-scale business.
Rupak is the founder of MUVSI. He is a small business consultant by profession. His mission is to make people know how to make money and understand personal finance for a better living.