Agriculture Infrastructure Fund (AIF)

The Agriculture Infrastructure Fund (AIF) is a flagship Central Sector Scheme launched by the Government of India to provide medium and long-term financing support for the creation of post-harvest management infrastructure and community farm assets. It forms a vital part of India’s strategy to modernise the agricultural sector, reduce post-harvest losses, and enhance the income and competitiveness of farmers through improved infrastructure and value-chain development.

Background and Rationale

Agriculture in India has traditionally suffered from inadequate infrastructure, especially in post-harvest management. Farmers often face challenges in storing, processing, and marketing their produce effectively, leading to wastage and reduced profitability. Recognising these limitations, the Government of India launched the Agriculture Infrastructure Fund on 8 August 2020 under the Atmanirbhar Bharat Abhiyan initiative.
The Fund was designed to bridge the critical gap between farm production and market access by providing affordable credit for building agricultural assets. It supports initiatives that improve logistics, storage, processing, and market linkages, thereby facilitating better price realisation for farmers and promoting sustainable agricultural practices.

Objectives

The primary objectives of the Agriculture Infrastructure Fund are:

• To mobilise investments in agricultural infrastructure and value chains.
• To reduce post-harvest losses through the creation of efficient storage and processing facilities.
• To improve market access for farmers and producer organisations.
• To promote aggregation and collectivisation of small and marginal farmers through Farmer Producer Organisations (FPOs) and cooperatives.
• To encourage private sector participation in rural infrastructure development.

Through these objectives, the scheme aims to transform agriculture into a commercially viable and technologically modern sector.

Financial Structure and Tenure

The Agriculture Infrastructure Fund has a total outlay of ₹1,00,000 crore to be disbursed over a ten-year period from 2020–2032. The financing is provided through loans facilitated by banks and financial institutions to eligible beneficiaries for infrastructure projects.

• Interest Subvention: A 3% per annum interest subvention is provided on loans up to ₹2 crore per project, available for a maximum period of seven years.
• Credit Guarantee: Loans under the Fund are covered under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for loans up to ₹2 crore, to reduce credit risk and encourage lending.
• Moratorium: A moratorium on repayment of the principal amount is allowed for 6 to 24 months, depending on the type and nature of the project.
• Repayment Period: The repayment tenure of loans can extend up to 12 years, including the moratorium period.

The scheme’s financial design aims to make credit affordable, minimise risk, and enable both individual and collective investment in rural infrastructure.

Eligible Beneficiaries

The AIF covers a wide range of stakeholders in the agricultural value chain. Eligible beneficiaries include:

• Primary Agricultural Credit Societies (PACS)
• Farmer Producer Organisations (FPOs)
• Agricultural Marketing Cooperatives and Federations
• Self Help Groups (SHGs)
• Start-ups and Agri-entrepreneurs
• Central and State Agencies or Federations
• Joint Liability Groups (JLGs)
• Individuals engaged in agriculture and allied activities

By encompassing diverse entities, the Fund ensures that both institutional and individual stakeholders can access credit for creating infrastructure assets suited to their needs.

Focus Areas and Types of Projects

The AIF supports a broad range of infrastructure projects that enhance the efficiency, profitability, and sustainability of agricultural operations. Key areas of investment include:

• Post-harvest infrastructure: Warehouses, cold storage units, sorting and grading units, pack houses, and silos.
• Primary processing centres: Facilities for milling, cleaning, drying, and value addition of crops.
• Supply chain and logistics: Transport facilities, marketing platforms, e-trading infrastructure, and aggregation centres.
• Community farming assets: Custom hiring centres, machinery banks, and irrigation facilities.
• Agri-allied sectors: Units for dairy processing, fisheries, sericulture, poultry, and horticulture-based infrastructure.
• Smart and digital agriculture: Projects involving precision farming, farm automation, and digital platforms for market access.

This wide coverage ensures that the Fund addresses both pre- and post-harvest requirements of the agricultural economy.

Implementation Mechanism

The Agriculture Infrastructure Fund is implemented through a Central Project Management Unit (PMU) housed in the Department of Agriculture and Farmers Welfare (DA&FW). The National Bank for Agriculture and Rural Development (NABARD) and other participating banks serve as the key financial intermediaries.
At the district level, District Level Monitoring Committees (DLMCs), headed by District Collectors, oversee project approvals and implementation, ensuring local relevance and coordination.

Progress and Achievements

Since its inception, the Agriculture Infrastructure Fund has recorded steady growth in loan approvals and disbursements across the country. Thousands of projects have been sanctioned under the scheme, spanning storage facilities, processing units, and logistics hubs.
The Fund has been particularly beneficial to Farmer Producer Organisations (FPOs), PACS, and agri-start-ups, helping them modernise infrastructure and access new markets. Several states have leveraged AIF support to strengthen their post-harvest management networks, thereby improving the efficiency of agricultural marketing and reducing wastage.

Benefits and Significance

The Agriculture Infrastructure Fund holds immense strategic and socio-economic significance:

• Reduces wastage: Improved post-harvest management reduces crop losses and enhances food security.
• Increases farmer income: Access to better storage and processing enables farmers to sell at favourable prices.
• Promotes rural entrepreneurship: Encourages start-ups and cooperatives to invest in value-added agricultural ventures.
• Facilitates credit access: Provides affordable, risk-mitigated financing for infrastructure projects.
• Strengthens value chains: Builds linkages from farm to market, reducing intermediaries and transaction costs.
• Supports modernisation: Promotes digital and smart farming through technology-enabled projects.

The scheme thus complements other government programmes such as the Pradhan Mantri Kisan Sampada Yojana, Formation of 10,000 FPOs Scheme, and the Digital Agriculture Mission, contributing collectively to the modernisation of Indian agriculture.

Challenges and Considerations

Despite its success, several challenges persist in the effective implementation of the Fund:

• Limited awareness among small and marginal farmers about the scheme’s benefits.
• Difficulties in collateral management and documentation for credit access.
• Slow project execution in some regions due to administrative delays or lack of technical expertise.
• Need for improved coordination between banks, local bodies, and state agricultural departments.

Addressing these challenges through targeted outreach, capacity-building, and digital monitoring can enhance the overall efficiency and inclusiveness of the scheme.