The Agriculture Infrastructure Fund (AIF), introduced in July 2020, serves as a key financing mechanism designed to enhance agricultural infrastructure throughout India. The AIF aims to provide medium to long-term debt financing for investments in viable projects that improve post-harvest management and create community farming assets. By offering incentives and financial support, the scheme seeks to boost the agricultural infrastructure across the nation.
Its goal is to deliver comprehensive financial assistance to farmers, agri-entrepreneurs, and farmer groups such as Farmer Producer Organisations (FPOs), Self Help Groups (SHGs), and Joint Liability Groups (JLGs). This support enables the establishment of post-harvest management infrastructure and the development of community farming assets, benefiting the entire agricultural sector in India. This article delves into the details of AIF, explaining its objectives, features, management, benefits, eligibility criteria, exclusions, and the application process.
What are the objectives of AIF?
AIF aims to offer all-inclusive financial support for various stakeholders in the agricultural ecosystem. Its primary objectives include:
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Offering financial support to farmers, agri-entrepreneurs, and farmer groups like Farmer Producer Organisations (FPOs), Self Help Groups (SHGs), and Joint Liability Groups (JLGs).
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Developing post-harvest management infrastructure and fostering community farming assets nationwide.
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Mobilizing medium to long-term debt financing for viable projects, thereby enhancing agriculture infrastructure in the country.
What are the features of AIF?
AIF has a several distinctive features designed to facilitate its objectives effectively:
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Interest Subvention: AIF provides a 3% interest subvention to borrowers, reducing the financial burden on agricultural projects.
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Credit Guarantee Support: Through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, AIF offers credit guarantee support for loans up to Rs. 2 crores.
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Convergence with Government Schemes: AIF facilitates convergence with other Central and State Government schemes, enhancing its impact and reach.
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Reduction of Post-Harvest Losses: By creating and modernizing agriculture infrastructure, AIF contributes to reducing post-harvest losses, thereby preserving crop quality and increasing farmers' income.
Management of AIF:
AIF's management framework involves:
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Online Management Information System (MIS) Platform: AIF is managed and monitored through an online MIS platform, streamlining loan application processes for qualified entities.
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Establishment of Monitoring Committees: National, State, and District-level monitoring committees ensure real-time monitoring and effective feedback mechanisms, enhancing operational efficiency.
What is Post-Harvest Management?
Post-harvest management encompasses activities and techniques employed to preserve and protect crops after harvesting. These activities include cleaning, sorting, grading, packaging, storage, and transportation, with the overarching goal of maintaining crop quality, safety, and shelf life.
Coverage of AIF
AIF extends its support to various post-harvest management projects and community farming assets, including:
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Supply Chain Services: This encompasses e-marketing platforms, warehouses, grain storage, pack-houses, testing units, sorting & grading units, cold chains, logistics facilities, and primary processing centers.
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Community Farming Assets: AIF covers projects including the manufacture of organic inputs, the establishment of biostimulant manufacturing facilities, the construction of smart and precision agriculture infrastructure, and the supply chain infrastructure for crop clusters, including export hubs.
Loan Provisions & Duration
Under AIF, loans up to Rs. 2 crores are eligible for a 3% interest subvention for a maximum period of 7 years. Applicants can propose up to 25 projects in different locations, each eligible for the scheme. Private sector entities are limited to a maximum of 25 projects, while no such cap applies to state agencies, cooperatives, or farmer organizations.
Operational Duration & Grants Allocation
AIF operates from 2020-21 to 2032-33, with loan disbursements expected to conclude by the end of the Financial Year 2025-26. Additionally, 24% of total grants-in-aid are reserved for SC/ST entrepreneurs, ensuring inclusive participation and equitable distribution of benefits.
Benefits of AIF
The scheme aims to deliver numerous benefits, including:
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Farmers gain direct access to a broader consumer base, leading to increased value realization and overall income growth.
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Investments in logistics infrastructure enable farmers to minimize losses and engage with fewer intermediaries, enhancing market access and independence.
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Investments in community farming assets drive productivity gains and input optimization, translating into cost savings for farmers.
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Modern packaging and cold storage facilities empower farmers to make informed market decisions, resulting in better price realization.
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AIF fosters innovation and private sector involvement in agriculture by providing incentives, interest subvention, and credit guarantees.
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Refinance facilities enable cooperative banks and Regional Rural Banks (RRBs) to play a larger role in agricultural financing.
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Credit guarantees, incentives, and interest subventions mitigate risk for lending institutions, expanding their customer base and portfolio diversification.
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Enhanced post-harvest infrastructure aids in reducing national food wastage, enhancing the competitiveness of the agriculture sector globally.
AIF: Eligibility Criteria
Participating lending institutions carefully evaluate eligibility criteria, taking into account the viability and potential success of the proposed projects. Moreover, a specific portion of grants-in-aid is set aside to support entrepreneurs from the SC/ST communities. This deliberate allocation aims to promote inclusivity and ensure that financing opportunities are accessible to all, contributing to a more equitable business environment.
Public Sector Undertakings (PSUs) are not directly eligible under AIF. However, projects sponsored by PSUs under Public-Private Partnerships (PPP) are eligible for funding.
Application Process
The application process for AIF is conducted online and involves several steps:
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Beneficiary Registration: Applicants must register on the AIF portal to generate a Beneficiary ID.
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Submission of Detailed Project Report (DPR): Applicants fill out project details on the portal using the provided DPR template.
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Review and Approval: The Ministry of Agriculture & Farmers Welfare reviews and transfers eligible applications to selected banks for credit appraisal.
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Loan Sanction: Participating banks review project viability and sanction loans within a maximum period of 60 days from the date of application.
Overall, Agriculture Infrastructure Funds (AIF) represent a vital scheme aimed at enhancing agriculture infrastructure and boosting post-harvest management capabilities in India. It aims to empower farmers, encourage innovation, and propel sustainable growth in the agriculture industry by offering financial support, incentives, and loan guarantees.
