New Scheme for Diary Sector: GoI subsidizes interest rates on working capital

On May 14, 2020, the Government of India launched a new scheme for the diary sector. The scheme has introduced Interest Subvention on Working Capital to support Diary Cooperatives and FPO (Farmer Producer Organization).

Key Features

The scheme intends to modernize existing milk processing units. It will also enhance the milk processing capacity of the country to 126 lakh litres per day.

The scheme will provide interest subsidies to the loans that were availed by the banks to the cooperatives and farmer owned milk organizations and companies. The scheme will include those loans that were sanctioned between April 1, 2020 and March 31, 2021.

The scheme has also provided interest subvention of 2% per annum. An additional incentive of 2% of interest subvention will be provided if the farmers repay the loans on time.

The modified scheme is expected to make 100 crores of rupees available in farmers’ hands. The scheme is to be implemented by National Dairy Development Board (NDDB).


The National Dairy Development Board was established through an act of Parliament of India. It was founded in 1965. The main aim of the board was to spread similar successes as that of the AMUL Cooperative. The World Bank assisted the mission. It was named “Operation Flood” and lasted for 26 years.




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