NABARD Loan for Food Processing Industry

The NABARD loan was evolved in the year 2014 which provides loans to entrepreneurs setting up food processing businesses in designated food parks through the Budget. The budgetary amount of loan is of around Rs.2000 crores with the guidelines announced by the NABARD. In this article, we look at the operational guidelines of NABARD Food Processing Fund in details and the process for getting a loan from NABARD for the food processing industry.

The guidelines can be accessed below:

Background

The Government of India accords top priority for the development of food processing industry in India to reduce food spoilage and control the rising food inflation. The Government has provided subsidies for setting up of food parks in India. The newly introduced food processing fund provides loans at nominal rates for setting up of food processing businesses in the food parks.

Objectives

To develop a cluster for the food processing sector in the country
To reduce the wastage of agricultural produce
To create employment opportunities in rural areas

Eligibility

NABARD loan for food processing is available for a wide range of post-harvest processes resulting in value addition and/or enhanced storage life to the food product. The following food processing activities such as cleaning, grading, waxing, controlled ripening, labelling, packing and packaging, warehousing, canning, freezing, freeze-drying and more are eligible under the scheme. The products of processing/manufacturing undertaken by the units may include:

Fruits, vegetables, mushrooms, plantation crops and other horticulture crops
Milk and milk products
Poultry and meat
Fish and other aquatic & marine products
Cereals, pulses, oilseeds and oil crops
Herbs, medicinal and aromatic plants, forest produce, etc.
Consumer food products, such as bakery items, confectionery, snacks, etc.
Any other ready-to-eat food/ convenience foods
Beverages, non-alcoholic drinks, energy drinks, carbonated drinks, packaged drinking water, soft drinks, etc.
Food flavours, food colours, spices, condiments, ingredients, preservatives and any other item which may be required in food processing
Nutraceuticals, health foods, health drinks, etc.
Any other activity approved by the competent authority for establishment in the designated Food Park

Eligible Entities

NABARD loan for food processing units under this scheme will be provided only for units in designated food parks. Food processing units in the following designated food parks are eligible under this scheme:

Food Parks promoted by Ministry of Food Processing Industries (MOFPI), Government of India
Mega Food Parks promoted by Ministry of Food Processing Industries (MOFPI), Government of India
Food Parks/ exclusive food processing industrial estates promoted by State Governments
Designated food processing/ agro-processing/ multi-products SEZs, including de-notified areas of these SEZs
Any other area having developed enabling infrastructure and designated as Food Park by Ministry of Food Processing Industries (MOFPI), Government of India

The following types of entities in the above-designated food parks are eligible for NABARD loan:

State Governments Entities
Entities promoted by Government of India
Joint ventures, SPVs, Cooperatives
Federations of Cooperatives
Farmers’ Producer Companies
Limited Companies
Private Limited Company
Individual Entrepreneurs (Proprietorships)

Term Loan Provided by NABARD

Under the NABARD Food Processing Fund, term loan will be provided by NABARD either directly or in-consortium with other lenders. The term loan will be provided by NABARD at concessional rate of interest for the following:

Development/Establishment of all infrastructure required in the designated Food Parks
Augmentation/modernization/creation of additional infrastructure in the designated Food Parks
Setting up of individual food processing units or any other unit that is established for supporting the operations of the food processing units within the designated Food Parks
Modernization of existing processing units in the designated Food Parks resulting in process technology up-gradation, automation, increased efficiency, improvement in product quality, reduction in cost, etc.

For undertaking the above activities, NABARD provides term loan of upto 75% of project cost for corporates, companies, SPVs, joint ventures and individual entrepreneurs. The term loan can be extended with a tenure of upto 7 years at NABARD's Prime Lending Rate (PLR) + Risk Premium. NABARD's present Prime Lending Rate (PLR) is 9.00%. A risk premium of upto 1% will be added on top of the NABARD PLR based on borrower's credit profile. In addition, collateral security will be requested by NABARD for sanctioning of term loan based on the borrower profile.

Documents Needed

Registration certificate or Partnership agreement for SPV
Auditor's Certificate
Profiles of shareholders and Directors
PAN & TAN of Special Purpose Vehicle
Registered Deed Details
State Policy on Food, Agro-processing

For more details, contact: NABARD, Plot C-24, G Block, Bandra Kurla Complex, BKC Road, Bandra East, Mumbai, Maharashtra-400051 Phone: (91) 022-26539895/96/99 The application form for NABARD can be accessed below:

To know more about obtaining term loan for business, visit IndiaFilings.com