India sets up $2bn fund to include dairy sector

By Jim Cornall

- Last updated on GMT

The government has announced loans of up to 90% for dairy-related projects. Pic: Getty Images/Ram Tekale
The government has announced loans of up to 90% for dairy-related projects. Pic: Getty Images/Ram Tekale

Related tags India Dairy

India’s Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi, has approved the setting up of the Animal Husbandry Infrastructure Development Fund (AHIDF) worth Rs. 15,000 crore ($2bn).

The government has been implementing several schemes for the development of dairy infrastructure, although this funding also covers other animal products such as poultry and meat.

The AHIDF is intended to facilitate incentivization of investments in the establishment of infrastructure for dairy and meat processing and value addition infrastructure, as well as the establishment of animal feed plants in the private sector.

The eligible beneficiaries under the scheme will be Farmer Producer Organizations (FPOs), MSMEs, Section 8 companies, private companies and individual entrepreneurs, who would need to contribute 10% of the amount funded. The balance, 90%, would be the loan component to be made available by scheduled banks.

The Government of India will provide 3% interest subvention to those funded. There will be a two-year moratorium period for the principal loan amount and a six-year repayment period thereafter.

The government is also setting up a Credit Guarantee Fund of Rs. 750 crore ($100m).

The government said there is huge potential in investment through private sector, and the AHIDF and the interest subvention scheme for private investors will ensure availability of capital to meet upfront investment required for these projects, and also help enhance overall returns and payback for investors. 

Such investments in processing and value addition infrastructure will also promote exports, the government added.

Since, almost 50-60% of the final value of dairy output in India flows back to farmers, growth in this sector can have significant direct impact on farmers’ incomes, and lead to the creation of more jobs, the government said.

Related topics Markets Fresh Milk Emerging Markets

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