Subsidy for Seed Production in India

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. Also, read about Seed Certification in India.

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

List of Eligible Processing Activities

The list of seed processing activities which are covered under the scheme is given below:

Seed Pre-cleaner
Seed Cleaner-cum-Grader
Indent Cylinder
Conveyor System
Seed Elevator
Seed Treater
Seed Drying Unit.
Seed Holding Bins.
Weighing Machine.
Bag Closer
Other connected equipment, accessories, different sieve sizes
Seed Testing Laboratory Equipments.

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.

Pattern of Assistance

For projects financed through banks or NCDC

S.No	Pattern of Assistance
1.	Owner’s contribution	10%
2.	Subsidy from the Government	25%
3.	An institutional loan from the nationalized bank or NCDC	65%

Insurance

All beneficiaries participating in this scheme are required to have the coverage for all the infrastructure.

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 instalment 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.

Refinance Assistance from NABARD

NABARD would render re-finance to the Nationalized Banks subject to the maximum limit of 90% of the amount financed in the form of the term loan as per their guidelines and norms.

Other Conditions

The NCDC or participating banks will adhere to their norms for appraisal of projects.
It is the responsibility of the beneficiaries to hold the insurance coverage for the infrastructure being created under the project.
The Government’s interpretation of various terms will be decided as the final.
Any other pre and post-inspection will be undertaken to verify physical and financial progress if required.
The Government has the right to add, delete and modify any term and condition without assigning any reason.
Subsidy for the sector should be provided primarily for low value or high volume seeds such as paddy, wheat, oilseeds, pulses and other coarse cereals.

Procedure to be followed for sanctioning Project

The applicant will have to follow the given procedure to apply for the Scheme for Assistance to seed production:

Projects financed through banks

Any beneficiary interested to avail subsidy under the scheme is required to submit the project proposal to the bank on a prescribed application form along with project report and other documents for appraisal and sanction of loan.
The bank will verify the application submitted and sanction the first instalment of the loan along with the brief project profile-cum-claim form and copy of bank’s sanction letter furnished for an advance subsidy to the Managing Director, National Seeds Corporation.
The NSC on receipt of such project profile cum claim form from the participating bank will approve and sanction 50% advance subsidy to participating bank for maintaining the same in the Subsidy Reserve Fund Account (borrower-wise).
When the project reaches the completion stage, the beneficiary will inform the bank who will initiate steps for inspection by the Committee consisting of officials from the bank.
And, the NSC has to ensure that the seed infrastructures conforms with the financial and technical parameters.
Such inspection will have to be completed within one month of the submission of details by the beneficiary.
After the inspection is performed, the bank will submit the claim form for final subsidy in the prescribed format to NSC in duplicate.
The completion certificate and inspection report of the Committee has to be enclosed with the claim form for final subsidy.
The NSC will distribute the final subsidy to banks which will be provided by Seed Division, DAC or adjusted against subsidy amount given to NSC in advance.

Project financed through NCDC

The NCDC is required to assist the Cooperatives for seed infrastructure facilities.
The Cooperatives will formulate proposals in the format prescribed by NCDC and submit directly to NCDC.
The NCDC would verify the proposal for consideration and appraise it as per their guidelines.
The NCDC should intimate its sanction to the Cooperatives and the NSC.
The interest rate, funding pattern and the mode of release of sanctioned assistance should be performed as per NCDC’s norms and policies circulated from time to time to overall guidelines of the scheme.
The assistance would be released to the Cooperatives within 15 days of the sanction.
The NCDC should periodically furnish progress report to NSC.
The NSC should release 50% advance subsidy as per requirement in NCDC’s account. The project-wise subsidy has to be adjusted/replenished by NSC.
The NCDC should furnish utilization certificate to NSC.
The NCDC and NSC will undertake the inspection of seed infrastructure facilities to verify the utilization as provided.

The application form for availing assistance under the scheme for seed production has been reproduced below in the PDF format for the quick reference.

Monitoring

NSC should perform the monitoring of this component and review will be done by the Seeds Division of DAC on quarterly.
After releasing the final instalment of subsidy in the Reserve Fund of the borrower, a utilization certificate is required to be enclosed by the NCDC or participating bank to NSC with the amount of subsidy received by beneficiary has been adjusted or utilized fully in the books of accounts as the terms and conditions of the project, within overall guidelines of the scheme. The NSC should submit the utilization certificates to Seeds Division of DAC.
The progress report of the scheme has to be sent by NSC directly to the Seed Division, DAC every month.