The DIDF will be set up with the National Bank for Agriculture and Rural Development (NABARD).
Of the Rs 108.8bn, Rs 80bn ($1.25bn) shall be a loan from NABARD to the National Dairy Development Board (NDDB) and National Dairy Development Cooperation (NCDC).
NABARD will disburse Rs 20bn ($313m), Rs 30bn ($470m) and Rs 29.9bn ($468m) in each of the next three years.
The DIDF project will focus on building an efficient milk procurement system by setting up a chilling infrastructure; installing electronic milk adulteration testing equipment; and creating, modernizing and expanding processing infrastructure and manufacturing facilities for value added products for milk unions and milk producer companies.
The project will be implemented by the NDDB and NCDC.
An implementation and monitoring cell (IMC) located at NDDB, Anand, will manage the implementation and monitoring of day-to-day project activities.
The end borrowers will receive loans at 6.5% interest per annum. The period of repayment will be 10 years with an initial two years’ moratorium.
The respective State Governments will be the guarantor of loan repayment.
Increased production and job creation
The investment will benefit 9.5m farmers in about 50,000 villages.
The government said it anticipates an additional milk processing capacity of 12.6m liters per day; milk drying capacity of 210 MT per day; milk chilling capacity of 14m liters per day; installation of 28,000 bulk milk coolers (BMCs) along with electronic milk adulteration testing equipment and value added products manufacturing capacity of 6m liters per day.
Initially, 39 milk unions in 12 states will be involved in the project.
The government said direct employment opportunities will be created for about 40,000 people.