Seed Production

The Government of India under the National Project on Seed Production aims to provide capital investment subsidy for boosting seed production in India. Under this scheme, the credit-linked back-ended capital subsidy will be provided at the rate of 25% of the project cost subject to an amount of Rs.25.00 lakh per unit on seed infrastructure development. In this article, we have a look at the procedure for availing subsidy under seed production.

Objective of the Scheme:

The objective of the seed production scheme is to develop and strengthen the existing infrastructure for the production and distribution of certified or quality seeds to farmers.

Eligible Organizations

The below following are the entities eligible for financial assistance under the scheme.

  • Individual
  • Partnership firms
  • private companies
  • Entrepreneurs
  • Self-help groups
  • Seed cooperatives

Credit Linked Assistance

  • The assistance linked to institutional credit is available to the eligible project financed by Scheduled Commercial Banks, Nationalized Banks, Regional Rural Banks and National Cooperation Development Corporation (NCDC).
  • The assistance will be provided on capital investment of the project including construction of seeds processing plants, purchase and erection/commissioning of seed processing, seed grading, seed cleaning, seed packaging machinery and equipment, seed treating, machinery and equipment for loading and unloading seed bags,  construction of seed storage godown and seed testing laboratories
  • Note: Loans availed by the beneficiary directly from the bank or NCDC would carry an adequate long-term re-payment period.

Implementing Agency:

The Nationalized Banks and NCDC will implement the scheme. The National Seeds Corporation will serve as Nodal agency for implementation and monitoring of the scheme and release of funds.

Quantum of Subsidy:

The subsidy at the rate of 25% of the capital investment of the project will be released through NSC for a project financed by Nationalized Banks, Scheduled Commercial Banks and through NCDC for cooperatives. The subsidy provided on the capital investment of the project will be calculated as follows:

Processing Activities  Scale of Assistance
For seed godown Rs.2500 per tone based on storage capacity or actual cost whichever is less.
For all the seed processing machinery and equipment At actuals
For the seed processing plant structure Rs.3500 per square meter will be provided.

Release of Subsidy

  • The National Seeds Corporation (NSC) will release the subsidy amount to the participating bank or NCDC in advance. NSC would issue an amount of 50% subsidy to the NCDC or participating bank on submission of a project profile with a claim form within 15 days from the receipt of the form.
  • The remaining 50% of the subsidy would be disbursed to the participating banks or NCDC by NSC after the inspection performed by the inspection committee consisting of officials from NSC, participating banks or NCDC.
  • The subsidy released to the bank or NCDC for an individual project will be kept in a separate borrower-wise account. The adjustment of the grant will be back-ended. Accordingly, the project cost, including the subsidy amount, excluding the margin money contribution from the beneficiary, is disbursed in the form of loan by the banks. The repayment schedule will be carried on the loan amount in a way that the total subsidy amount is adjusted after the bank loan component with interest is liquidated.

Institutional Lending:

  • Initially, the eligible amount of subsidy 25% will be provided in the form of the term loan to the beneficiary and the 65% of the project cost can be raised from the financing bank.
  • The repayment period will depend upon the amount borrowed and will be for up to 11 years, including a grace period of the year. The first installment will fall due within 23 months from the date of the first disbursement. Also, early payment is permitted without penalty.
  • The Rate of interest applicable to borrower’s on term loan will be as per the guidelines of RBI. This is applicable from the date of disbursement of the loan.
  • The financial institution also can provide working capital separately for undertaking business by the beneficiary.

Time Limit for Completion:

The prescribed time limit of 15 months is allocated for completion of the project from the date of sanction of loan by the bank. However, if the reasons for the delay are specified, a further grace period of 3 months is allowed by the NCDC or participating bank. If the project is not finished within the prescribed time, the benefit of subsidy will not be available, and the subsidy availed in advance has to be refunded.