Even as pandemic-induced lockdown left millions of people jobless, it has at the same time created opportunities to explore the untapped potential in various sectors of economy. And more importantly, it has forced the governments to prioritize infrastructural development in sectors which were getting scant attention in pre-Covid times.
It’s notable that eighty per cent or more of the demand in the economy vanished after the lockdown was announced and strictly implemented. The only way out for the government was to pump money in to revive the demand.
In the wake of unprecedented lockdowns, government announced major economic relief packages at regular intervals. Let us recall the Atma Nirbhar Bharat package. On May 12, the Prime Minister, Narendra Modi, announced a special economic package of Rs 20 lakh crore (equivalent to 10% of India’s GDP) with the aim of making the country independent against the tough competition in the global supply chain and to help in empowering the poor, labourers, migrants who have been adversely affected by COVID. Following this announcement, the Finance Minister, Nirmala Sitharaman, through five press conferences, announced the detailed measures under the economic package.
Among other things, the maiden economic package included collateral free loans for businesses. All businesses (including MSMEs) were declared eligible for collateral free automatic loans of up to three lakh crore rupees. A fund of funds with a corpus of Rs 10,000 crore was set up for MSMEs to provide equity funding for MSMEs with growth potential and viability. Remarkably, the package saw amending the Micro, Small and Medium Enterprises (MSME) Development Act, 2006. Under the new definition, the investment limit in MSME has been increased from Rs 25 lakh to Rs 1 crore for micro enterprises, from Rs 5 crore to Rs 10 crore for small enterprises, and from Rs 10 crore to Rs 20 crore for medium enterprises. The turnover limit for Micro, Small and Medium enterprises has been pegged at Rs 5 crore, Rs 50 crore, and Rs 100 crore, respectively. The distinction between manufacturing and services MSMEs (to provide different investment limits for each category) was removed.
Now let me come to the basic purpose of today’s column. In pursuance of Atma Nirbhar Bharat Abhiyan stimulus package for ensuring growth in several sectors, the government set up Animal Husbandry Infrastructure Development Fund (AHIDF) worth Rs. 15000 crore. Even as government has been implementing several schemes for incentivizing the investment made by dairy cooperative sector for development of dairy infrastructure, a need surfaced in Covid crisis to promote and incentivize MSMEs and private companies for their involvement in infrastructural development in animal husbandry. The AIDH Fund would see unlocking of huge potential in the sector as the Fund facilitate the establishment of such infrastructure for dairy and meat processing and value addition infrastructure and establishment of animal feed plant in the private sector.
The eligible beneficiaries under the scheme would be Farmer Producer Organizations (FPOs), MSMEs, Section 8 Companies, Private Companies and individual entrepreneur with minimum 10% margin money contribution by them. The balance 90% would be the loan component to be made available by scheduled banks. Government of India will provide 3% interest subvention to eligible beneficiaries.
As we have observed that mostly the government schemes carrying host of benefits to the businesses remain underutilized in our geography (J&K) as awareness about these schemes is not far and wide. AHIDF scheme is an opportunity for our farmers, entrepreneurs and businesses in the sector to reap the benefits and scale up their businesses and simultaneously be job providers.
Precisely this central government scheme with a budget allocation of Rs.15,000 crore is a package for incentivizing investments in animal husbandry and unlock the huge potential available in the sector.
What are the activities covered under the Scheme?
Broadly speaking, dairy and meat processing and value addition infrastructure and establishment of animal feed plant in the private sector are covered under the scheme.
In Dairy sector, funding will be done for establishment of new units and strengthening of existing dairy processing units with quality and hygienic milk processing facilities, packaging facilities or any other activities related to dairy processing. Loan can also be granted for establishment of new units and strengthening of existing manufacturing units for value addition of the milk products such as Ice Cream unit, Cheese manufacturing unit, Ultra High Temperature (UHT) Milk processing unit with tetra packaging facilities, Flavored Milk manufacturing unit, Milk Powder manufacturing unit and any other milk products.
In meat sector, establishment of new meat processing unit and strengthening of existing meat processing facilities for sheep/goat/ poultry/pig/buffalo in rural, semi-urban and urban areas are covered under the scheme. Large scale integrated meat processing facilities/ plant/ unit also fall under the ambit of the scheme. Here funding can also be done for establishing new or strengthening of existing value addition facilities for meat products
In animal feed segment, establishment of animal feed manufacturing and strengthening of existing units/ plants (Mini, Medium and Large) are eligible for funding under AHID Fund.
How much loan will be granted and how much contribution is to be made by the eligible entity?
An eligible entity can get loan up to 90% of the estimated/ actual project cost. The beneficiary contribution in case of Micro and Small units as per MSME defined ceiling could be 10% while in case of Medium Enterprises as per defined MSME ceiling, beneficiary contribution could go up to 15%. The beneficiary contribution in other categories of enterprises could go up to 25%.
There is no upper limit/ lower limit in the quantum of loan and the projects will be funded as per the detailed project report to be submitted by the eligible entity.
What is the repayment schedule of the loan and is there any moratorium period?
The scheme envisages a moratorium period of 2 years on repayment of principal. The loan is to be repaid in maximum 10 years’ time from the date of first disbursement inclusive of repayment holiday.
Is government providing any kind of subsidy?
Yes. Interest subvention of 3% is provided to all eligible entities. However, it will not be allowed for the loan sanctioned for procurement of land, working capital, old machineries and vehicle for personal use. It’s to be noted that the eligible entity will not get the interest subvention, if he/she is a defaulter in repayment of loan amount in any given year.
It’s also to be noted that interest subvention will not be provided to such borrowers found defaulter at any point of time for repayment.
What is the process of obtaining loan under the scheme?
The eligible person has to submit the proposal through “Udyami Mitra” Portal developed by Small Industries Development Bank of India (Sidbi).
The bank after due appraisal and sanction of the project will forward the application/ project to the Department of Animal Husbandry and Dairying for approval of interest subvention through online mechanism.
Are loans under AHIDF scheme covered under credit guarantee scheme?
Yes, the credit guarantee will be provided only for those projects which are viable and are covered under MSME defined ceilings and the guarantee coverage would be up to 25% of the credit facility available to the borrower.
The Credit Guarantee will not be provided to other borrowers who are not covered under MSME norms, however, those borrowers will be eligible to get interest subvention.