Subsidy for Organic Farming in India

The continued use of synthetic fertilizers and pesticides is causing environmental degradation and health problems. As a result, there is a growing demand for organically farmed produce as consumer awareness and environmental regulations evolve. Organic farming necessitates the use of biological and organic inputs rather than chemical inputs, and there is a need to increase the production of bio-fertilizers or organic fertilizers in India. As a result, the Government of India, through the National Project on Organic Farming, offers capital investment subsidies to commercial production units producing organic fertilizers / bio-fertilizers. This article examines the organic farming subsidy in India in terms of units producing bio-fertilizers, bio-pesticides, or fruit and vegetable compost.

The Scheme's Objectives

The Department of Agriculture & Cooperation is implementing a capital investment subsidy scheme for commercial production units of organic/ biological inputs through the National Centre of Organic Farming (NCOF) in collaboration with NABARD or NCDC. The scheme's main goals are to promote organic farming in the country by making organic inputs available, to increase agricultural productivity while preserving soil health and environmental safety, to reduce total reliance on chemical fertilizers and pesticides, to convert organic waste into plant nutrient resources, and to prevent pollution and environmental degradation.

Subsidy-Eligible Entities

Under the scheme, new and existing units (expansion/renovation) engaged in the production of organic fertilizers or bio-fertilizers are eligible for subsidies. Individuals, groups of farmers/growers, proprietary firms, partnership firms, co-operatives, fertilizer industry, companies, corporations, and NGOs can all receive subsidies if they manufacture bio-fertilizer and/or bio-pesticides. If a fruit and vegetable waste compost unit is planned, APMCc, municipalities, non-governmental organizations (NGOs), and private entrepreneurs may be eligible for a subsidy under the scheme.

Project Cost and Location

The scheme has no specific requirements for location. As a result, the entrepreneur can locate the unit wherever it is technically feasible and commercially viable. The estimated total cost of establishing a new bio-fertilizer or bio-pesticide production unit with a capacity of 200 tonnes per year is around Rs.160 lakhs, and the estimated total project cost of establishing a new fruit and vegetable waste compost unit with a capacity of 100TPD is around Rs.200 lakhs. The above-mentioned estimated total project costs are only estimates; the actual project cost will be determined by a variety of factors such as capacity, location, technology, equipment pricing, and so on.

Subsidy Component & Subsidy Release

The program offers credit-linked and back-ended capital investment subsidies. It provides a capital subsidy of 25% of the total project cost, up to a maximum of Rs.40 lakhs per unit, to bio-fertilizer and bio-pesticide units. Fruit and vegetable compost units are eligible for a capital subsidy of 33% of the total project cost, up to Rs.60 lakhs per unit. The cost of the project may include the purchase of land, civil works, plant and machinery, scientific instruments and equipment, and so on. Calculate the value of the land in the project cost, which must not be more than 10% of the total project cost. The land and civil structures (buildings) should not cost more than 50% of the total financial outlay.

The land cost computed in the project cost can be applied to the margin money required by the enterprise. However, the cost of land will be included in the project cost only if the enterprise purchases the land. Furthermore, the cost of the land should be the purchase price, and the value of that portion of the land that is only needed for the project will be considered.

NABARD will make the subsidy available to units financed by Commercial Banks, Regional Rural Banks, and other institutions that are eligible for NABARD refinancing. The subsidy will be distributed in two installments. After sanction and disbursement of the first installment of the loan, NABARD will release 50% of the subsidy amount to the financing institution upon submission of the project profile and claim form. The remaining 50% would be distributed to the financing institution based on the results of the inspection and recommendations made by officials from the financing institutions, NABARD/NCDC and NCOF/DAC. As the subsidy is back-ended, the financing institution will keep it in a subsidy reserve fund account, to be finally adjusted against the bank's loan amount at the end of the repayment period.

Repayment Period

The project has a time limit of 15 months for completion, with a three-month grace period with justification. If the project is not completed within the specified time frame, the subsidy benefit is withdrawn, and the advance subsidy must be repaid. Bio-fertilizer units, bio-pesticide units, and fruit and vegetable compost units are generally allowed up to ten years to repay the loan, with a two-year grace period. The financing institution sets the interest rate based on its policies.

Also Read:- Integrated Organic Farming System