How to Get NABARD Warehousing Subsidies: Avoid Common Mistakes
Dear Businessman,
We Welcome You, and through this Blog, We are discuss some technical specifications related to NABARD’s Subsidy in the Warehousing Sector so that you can easily benefit from NABARD’s Subsidy and get a loan from the bank for your project. Generally, there is a common opinion about NABARD that if we build Godowns, NABARD provides us a subsidy. They provide more subsidies for women and less in other cases, with a maximum subsidy of up to 50 lakhs. However, in reality, when you carry out the project, there are some technical specifications you need to take care of. If you are not aware of these specifications, your proposal can be rejected by the bank.
We are cover these technical specifications in Three Basic Parts:
1. Cost-related norms
2. Land-related norms
3. Construction-related norms
Cost-related norms :
1 New Godown Construction :
The Subsidies you receive are directly correlated with the project cost. It is crucial to note that NABARD subsidies are available only if you are undertaking a new godown construction project. If you are renovating or repairing an existing godown, you will not receive the subsidy. This is a very important aspect. Only new godown construction projects are eligible for NABARD Subsidies; renovations or repairs of existing godowns are not eligible.
2 Direct Link to Primary Processing Activities :
NABARD provides subsidies specifically for food grain storage facilities. So, when setting up godowns, if you are storing any type of food grain, the structures eligible for NABARD subsidies are those that fall within the cost eligibility and are directly connected to primary processing activities. An important aspect for you is understanding what constitutes primary processing activities. These are activities that maintain the natural values and contents of food grains.
3 Components Of Cost :
The next cost-related aspect to consider is what costs are included in the subsidy calculation.
The primary cost components need to be clearly outlined in your project report because the project report plays a crucial role. The cost components and related norms should be framed carefully. According to NABARD guidelines, the total construction cost includes several elements:
1. Construction Cost: This is the direct cost of constructing the godowns.
2. Functionally Required Structures: These include costs for operational necessities such as boundary walls, internal roads, drainage systems, and any units for sorting or grading. Testing equipment for quality control and other essential items for operating the storage facility also fall under this category.
4 Promoter Contribution :
Important aspect is the minimum contribution from the promoter :
- NABARD requires that the promoter’s contribution be at least 20% of the total project cost. When preparing your project report, make sure that the actual cost of your project meets this requirement.
- If the actual cost is lower than what the bank appraised or what was estimated, NABARD will consider the lower amount for subsidy calculations. Therefore, it’s important to manage your actual expenditure effectively. If your own contribution is less than 20%, your subsidy claim may be rejected.
Banks may offer term loans ranging from 50% to 80% of the construction cost. When discussing with the bank and preparing your project report, ensure that the promoter’s margin is at least 20% to qualify for the subsidy.
5 Calculate Permissible Cost :
- NABARD’s cost coverage for subsidies includes up to 5000 metric tons of capacity, with maximum benefits of ₹50 lakh for women entrepreneurs or reserved categories. The maximum subsidy is ₹1000 per ton of capacity, which can be availed indirectly.
- When examining cost components, it is important to understand that NABARD’s permissible cost per metric ton is ₹3000. If you calculate the subsidy benefit at 33%, the subsidy amounts to ₹1000 per metric ton. The key point here is that when framing your project cost, it should not fall below ₹3000 per metric ton to avoid losing out on the subsidy.
These cost-related norms are crucial for securing financing from the bank and for handling NABARD subsidies effectively.
Our aim with this Blog is to ensure you don’t just rely on general parameters, but understand how to plan your project report to benefit from both agriculture infrastructure fund interest subsidies and NABARD subsidies.
Ensure your documents are error-free and correctly frame the project cost to get the maximum subsidy benefits.
For, more information on this you are requested to contact our KIP subsidy helpline on Mail – sales@kipfinancial.com and contact Number- +918683898080
KIP Financial Consultancy Pvt. Ltd.
DSB – 38, Red Square Market, Hisar – 125001 (HR)
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