Government Schemes Supporting Agricultural Finance in India

Access to finance is one of the biggest hurdles for farmers and agripreneurs in India. Whether someone wants to start a small dairy unit, launch an agri-processing business, or expand an existing farm enterprise, capital remains a critical need. Recognizing this, the Indian government has introduced a range of targeted financial schemes to bridge this gap. These schemes do not just provide money – they create an enabling environment for agricultural entrepreneurship, rural employment, and inclusive growth. Here is a closer look at four key government schemes that directly support agricultural finance in India.

Venture Capital Assistance Scheme (VCAS) 🔗

The Venture Capital Assistance Scheme (VCAS) is a central sector scheme for agribusiness development, implemented by the Small Farmers’ Agribusiness Consortium (SFAC) under the Ministry of Agriculture and Farmers’ Welfare. The scheme is specifically designed to help agripreneurs overcome the equity gap – the shortfall between what a bank is willing to lend and the total cost of a project.

SFAC provides interest-free venture capital as a soft loan to fill the financial gap identified by the bank financing the project. This means the entrepreneur does not pay any interest on the venture capital component, significantly reducing the overall cost of establishing the agribusiness. The loan amount typically ranges from a minimum of ₹10 lakh to a maximum of ₹50 lakh, though higher amounts may be considered for projects in the North-Eastern Region, hilly states, and backward districts.

Who can apply? 🔗

The scheme is open to a broad set of applicants: individual farmers, agripreneurs, Farmer Producer Companies (FPOs), self-help groups, partnership firms, companies, agriculture graduates, and units in Agri-Export Zones. The project must be in agriculture or an allied sector – including poultry and dairy – and must have already secured a term loan from an eligible bank or financial institution such as NABARD, SIDBI, or a nationalized bank.

Key conditions 🔗

The venture capital must be repaid to SFAC in a lump sum only after the bank’s term loan has been fully repaid. This makes it a uniquely supportive instrument – the entrepreneur is not burdened with two simultaneous repayment obligations. The project must also demonstrate backward linkage with farmers or producer groups, assuring them of a stable market.

Stand-Up India Scheme 🔗

Launched on 5 April 2016, the Stand-Up India Scheme is a flagship government programme aimed at promoting entrepreneurship among two historically underserved groups: Scheduled Caste (SC)/Scheduled Tribe (ST) individuals and women entrepreneurs. The scheme covers new enterprises in manufacturing, services, trading, and activities allied to agriculture.

Under the scheme, every branch of scheduled commercial banks is required to sanction at least one loan to an SC/ST borrower and one to a woman borrower for setting up a greenfield enterprise. The composite loan – covering both term loan and working capital – ranges from ₹10 lakh to ₹1 crore, offered at the lowest applicable lending rate for that borrower category (not exceeding MCLR + 3% + tenor premium), with a repayment period of up to 7 years and a moratorium of up to 18 months.

Agri-allied coverage 🔗

For agripreneurs, the scheme covers a wide range of agri-allied activities. These include pisciculture, beekeeping, poultry, livestock rearing, dairy, fishery, agri-clinics and agribusiness centres, food and agro-processing, and similar income-generating services. In the case of non-individual entities such as companies or partnerships, at least 51% shareholding and controlling stake must be held by an SC/ST individual or a woman.

Impact so far 🔗

The scheme has shown substantial reach. Between April 2022 and March 2025, the Stand-Up India Scheme supported over 1.26 lakh women entrepreneurs, 30,145 SC entrepreneurs, and 9,625 ST entrepreneurs through sanctioned loans. To provide collateral-free coverage, the government also set up the Credit Guarantee Fund for Stand-Up India (CGFSI). Entrepreneurs can register and seek guidance through the online portal standupmitra.in, which provides handholding support from training to loan application.

Dairy Entrepreneurship Development Scheme (DEDS) 🔗

India is the world’s largest milk producer, and the Dairy Entrepreneurship Development Scheme (DEDS) was a key driver in building that capacity from the ground up. The scheme was introduced in September 2010 by the Department of Animal Husbandry, Dairying and Fisheries, with NABARD as the nodal agency for implementation. It provided financial support to dairy entrepreneurs aiming to set up modern dairy farms and milk processing units.

Objectives and coverage 🔗

The scheme had multiple interlinked goals: promoting clean milk production through modern dairy farms, encouraging heifer calf rearing to conserve good breeding stock, bringing structural changes to the unorganised dairy sector, and generating rural self-employment. Eligible beneficiaries included individual entrepreneurs, farmers, NGOs, companies, self-help groups, dairy cooperative societies, milk unions, and milk federations.

Subsidy structure 🔗

One of the most attractive features of DEDS was its back-ended capital subsidy. For setting up a small dairy unit of up to 10 animals, the subsidy was 25% of the project outlay for general category applicants and 33% for SC/ST and women entrepreneurs. For a 20-calf rearing unit, loan support extended up to ₹9.70 lakh. The repayment period ranged from 3 to 7 years, with a grace period of 3 to 6 months for dairy farms and up to 3 years for calf-rearing units. NABARD released the subsidy directly to the financing bank, which then adjusted it against the loan balance.

It is important to note that DEDS was officially discontinued from the financial year 2020-21, though its legacy continues through successor programmes and the broader dairy development policy framework of the government. Understanding DEDS remains essential as it laid the institutional groundwork for dairy entrepreneurship finance in India and informs current agri-finance policy design.

Pradhan Mantri Mudra Yojana (PMMY) 🔗

For small and micro agribusiness enterprises that may not qualify for large institutional loans, the Pradhan Mantri Mudra Yojana (PMMY) offers accessible, collateral-free credit. Launched on 8 April 2015, PMMY provides loans to non-corporate, non-farm small and micro enterprises in manufacturing, trading, services, and allied agricultural activities. It operates through the Micro Units Development and Refinance Agency (MUDRA), which refinances lending institutions rather than lending directly to individuals.

Loan categories 🔗

PMMY structures its support into four tiers based on the borrower’s stage of business growth:

• Shishu: Loans up to ₹50,000 – for businesses at the very early stage
• Kishore: Loans from ₹50,001 to ₹5 lakh – for growing enterprises
• Tarun: Loans from ₹5 lakh to ₹10 lakh – for more established businesses
• Tarun Plus: Loans from ₹10 lakh to ₹20 lakh – introduced in Union Budget 2024-25 for entrepreneurs who have already successfully repaid a Tarun loan

Agricultural activities covered 🔗

Agri-allied activities covered under PMMY include pisciculture, beekeeping, poultry, livestock rearing, dairy, fishery, agri-clinics and agribusiness centres, food and agro-processing, and aggregation agro industries. Notably, pure crop loans and land improvement activities like irrigation and wells are excluded. Loans are collateral-free and carry no processing or upfront charges, making the scheme particularly useful for first-generation agripreneurs without significant assets.

Scale and reach 🔗

The numbers speak to the scheme’s scale. Over 52 crore loans amounting to ₹32,61,000 crore have been sanctioned in the past 10 financial years, from April 2018 to March 2025. Women account for 68% of all Mudra beneficiaries, reflecting the scheme’s strong role in advancing women-led micro enterprises. Borrowers can apply through any scheduled commercial bank, regional rural bank, NBFC, microfinance institution, or online through the Udyamimitra portal.

How these schemes work together 🔗

These four schemes are not isolated instruments – they form a layered ecosystem of financial support for agripreneurs at different stages and scales. A small farmer starting a beekeeping unit can begin with a PMMY Shishu loan. A woman from an SC background setting up a food processing enterprise can access Stand-Up India. A dairy farmer looking to modernize their unit could have used DEDS (and can now explore successor schemes under the National Livestock Mission). An agriculture graduate launching a larger agri-processing startup can seek equity gap financing through VCAS. Together, these schemes reduce the barriers of collateral, equity contribution, and credit history that have historically kept small farmers and first-generation entrepreneurs outside the formal financial system.

India’s agricultural finance landscape is still evolving, with the government regularly revising these schemes – expanding loan limits, adding new categories like Tarun Plus, and launching fresh programmes for SC/ST and women entrepreneurs. Staying updated through official portals like SFAC, NABARD, and MUDRA is essential for anyone looking to leverage these opportunities.

What do you think? With so many government schemes available for agricultural finance, what do you think is the single biggest barrier that still prevents small farmers and agripreneurs from accessing them? And if you were to design a new scheme for agricultural finance in India, which gap would you target first – equity support, working capital, or market linkage?

References

1. https://asfac.assam.gov.in/schemes/venture-capital-assistance-scheme
2. https://dhruvaca.com/sfac-vca/
3. https://www.ibef.org/government-schemes/stand-up-india
4. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2146820
5. https://pnb.bank.in/downloadprocess.aspx?fid=vC+D/bv4dXF7EKkkYnHYdw%3D%3D
6. https://www.standupmitra.in
7. https://www.tatacapital.com/blog/loan-for-business/dairy-entrepreneurship-development-scheme/
8. https://cleartax.in/s/dairy-entrepreneurship-development-scheme
9. https://www.slideshare.net/slideshow/dairy-entrepreneurship-development-scheme-deds-by-nabard/250812369
10. https://www.nabard.org/content.aspx?id=591
11. https://www.mudra.org.in/
12. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2069170&reg=3&lang=2
13. https://www.mudra.org.in/offerings
14. https://www.ibef.org/government-schemes/pradhan-mantri-mudra-loan-bank-yojana
15. https://www.udyamimitra.in
16. https://sfac.in
17. https://www.nabard.org
18. https://www.mudra.org.in