AGRICULTURE INFRASTRUCTURE FUND - ECONOMY

AGRICULTURE INFRASTRUCTURE FUND - ECONOMY

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Agricultural Infrastructure Fund (AIF) Scheme

1. Introduction

• The Agricultural Infrastructure Fund (AIF) is a Central Sector Scheme launched by the Government of India in 2020.
• It has an operational period from 2020-21 to 2032-33 and is aimed at developing post-harvest agricultural infrastructure across India.
• The scheme is designed to provide medium to long-term financing to support infrastructure that enhances storage, processing, and value addition in agriculture.

2. Financial Provisions Under AIF

2.1 Total Loan Allocation

• The scheme has an overall loan provision of ₹1 lakh crore, which will be disbursed through various lending institutions to eligible beneficiaries.

2.2 Interest Rate and Subvention

• The maximum interest rate that lending institutions can charge on loans under AIF is capped at 9% per annum.
• The government provides an interest subvention of 3% per annum on loans up to ₹2 crore, making borrowing more affordable for agricultural stakeholders.
• This interest subvention is applicable for a maximum duration of 7 years, reducing the financial burden on borrowers.

2.3 Credit Guarantee Mechanism

• Loans under AIF are backed by a credit guarantee through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
• This helps reduce risk for banks and makes it easier for small farmers, startups, and agri-entrepreneurs to access credit.

2.4 Loan Limits for Different Beneficiaries

Private Sector Entities (Farmers, Agri-Entrepreneurs, Startups, and Companies)

• Eligible private-sector applicants can apply for up to 25 projects across different locations.
• Each project is eligible for a loan of up to ₹2 crore under the interest subvention scheme.
• If multiple projects are established in the same location, they must collectively stay within the ₹2 crore loan cap.

State Agencies, Cooperatives, FPOs, and SHGs

• Unlike private entities, State Agencies, Cooperatives, Farmer Producer Organizations (FPOs), and Self-Help Groups (SHGs) are not subject to a limit on the number of projects they can establish.

2.5 Mandatory Borrower Contribution

• Every applicant must contribute at least 10% of the total project cost, ensuring stakeholder commitment and reducing the financial risk for lenders.

3. Eligible Beneficiaries Under AIF

3.1 Individual Farmers

• Farmers can apply for funding to develop on-farm storage units, processing facilities, and value-addition infrastructure.

3.2 Social Inclusion Provisions

• To ensure equitable distribution of funds, a minimum of 24% of grants-in-aid under AIF is reserved for Scheduled Caste (SC) and Scheduled Tribe (ST) entrepreneurs:
• 16% is earmarked for SC beneficiaries.
• 8% is earmarked for ST beneficiaries.

3.3 Farmer Producer Organizations (FPOs)

• FPOs can establish community-based post-harvest and storage infrastructure, enabling small farmers to collectively process and market their produce.

3.4 Self-Help Groups (SHGs) and Joint Liability Groups (JLGs)

• These groups, engaged in agriculture-related activities, can avail funding to set up small-scale processing and marketing units.

3.5 Cooperative Societies and Primary Agricultural Credit Societies (PACS)

• Cooperative societies and PACS can use AIF loans to establish common storage, grading, and processing units for member farmers.

3.6 Startups and Agri-Tech Companies

• Innovative startups working on post-harvest management solutions, food processing, and technology-driven agricultural infrastructure can apply for financial assistance under AIF.

3.7 Exclusion Criteria

• Public Sector Undertakings (PSUs) are not eligible to apply for loans under AIF.
• However, Public-Private Partnership (PPP) projects that involve private sector participation in agricultural infrastructure development are eligible for funding.

4. Focus on Post-Harvest Management

4.1 Importance of Post-Harvest Management

• Effective post-harvest management includes key activities such as handling, grading, curing, ripening, packaging, storage, and transportation to maintain the quality and longevity of agricultural produce.

4.2 Challenges in India

• Inadequate post-harvest infrastructure leads to significant food losses, estimated at ₹93,000 crores in 2019.
• Due to post-harvest inefficiencies, India ranked 8th among global agricultural exporters in 2023, behind countries with better storage and processing systems.

4.3 Impact on Quality and Marketability

• Poor handling results in:
• Mechanical losses – bruising, contamination, and spillage of produce.
• Physiological losses – rapid respiration, pigment changes, and moisture loss.
• These factors lower the market value and consumer acceptance of agricultural products, despite investments from both government and private sector initiatives.

5. Eligible Projects Under AIF

5.1 Post-Harvest Infrastructure

• Establishment of warehouses, cold storage units, silos, and drying yards to enhance storage capacity.
• Sorting and packaging units for improving quality control before market distribution.

5.2 Processing and Value Addition

• Setting up food processing plants, oil mills, flour mills, cashew processing units, and kinnow processing units.
• Standalone secondary processing units are not eligible under AIF, as they fall under the schemes of the Ministry of Food Processing Industries (MoFPI).

5.3 Technology-Driven Solutions

• Drone-based agricultural projects and hi-tech farm equipment rental centers to modernize farming practices.

5.4 Renewable Energy Integration

• Projects focused on solar-powered irrigation systems and cold storage units to promote sustainable agricultural practices.
• AIF has been integrated with the PM KUSUM Component-A Scheme, allowing farmers to install solar-powered infrastructure for agricultural use.

6. Implementation Status of AIF

6.1 Performance of Top States (As of February 28, 2025)

• Punjab has successfully utilized 100% of its allocated ₹4,713 crore, making it the top-performing state in AIF implementation.
• Other leading states in AIF execution include Maharashtra, Uttar Pradesh, and Madhya Pradesh, which have achieved high levels of fund utilization and project implementation.

• Impact of AIF Implementation: 71% of beneficiaries are farmers.
• 67% of all sanctioned projects cost below ₹25 lakh, ensuring grassroots penetration.

The Agricultural Infrastructure Fund (AIF) scheme has played a crucial role in reducing post-harvest losses, improving farm infrastructure, and enhancing value addition. With the recent expansion of funds  the scheme is set to further boost rural employment, agripreneurship, and agricultural modernization across India.

7. Conclusion

• The Agricultural Infrastructure Fund (AIF) Scheme plays a crucial role in strengthening India’s agricultural supply chain by financing post-harvest management, processing, and value addition infrastructure.
• By providing subsidized credit, interest subvention, and credit guarantees, AIF is enabling farmers, FPOs, startups, and cooperatives to develop efficient and sustainable agricultural infrastructure.
• The scheme aligns with the government’s vision of self-reliance in agriculture and has the potential to significantly reduce post-harvest losses, enhance market linkages, and increase the income of Indian farmers.

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