How to Get a Government Subsidy for Your Dairy Farm

Introduction: Your Dream of a Dairy Farm

Hello, and welcome to Fiknow!

India is the largest milk producer in the world. We love milk. It’s a part of our daily life, from our morning tea to our night-time glass of haldi-doodh.

Because of this, many Indians dream of starting their own dairy farm. It is a business that feeds the nation and can earn you a good, honest living.

But this dream has one big challenge: money.

Starting a dairy farm is expensive. You need to buy good cows or buffaloes, build a strong shed (tabela), buy feeding equipment, and get insurance. All this can cost lakhs of rupees.

This is where the Government of India steps in to help.

To help farmers and new businessmen (and women!), the government offers “subsidies.” A subsidy is like a big “discount” from the government to help you get started.

What is this guide for? This is your complete, A-to-Z guide on how to get a government subsidy loan for your dairy farm. We will explain everything, step-by-step. We will cover:

What is a “subsidy” (and what it is not)?
What are the most important government schemes (like NABARD and AHIDF)?
A 7-step guide to applying for the loan.
The secret to getting your loan approved: The “Project Report.”
Big mistakes to avoid (like fake agents!).

This is a long, detailed guide. We wanted to make sure we answered every single question you might have.

A Very Important Note (Disclaimer): We at fiknow.com are here to give you knowledge. This article is for information and education only. It is NOT financial advice. The rules for these loans can change. Before you make any decision, please talk to your nearest bank manager and a professional advisor.

Okay, let’s start your dairy farm journey!

Part 1: What is a “Dairy Farm Subsidy”? (The Big Picture)

This is the most important part of the entire article. You must understand this.

Most people make a big mistake. They think a “subsidy” is free money that the government gives you in your hand to start the business.

This is 100% wrong.

In 99% of cases, a dairy farm subsidy is a “Back-Ended Subsidy.”

Let’s break this down.

What is a “Back-Ended Subsidy”? It is not a “down payment.” It is a “reward” you get after you have successfully run your farm for some time.

Here is the real process, explained like a story:

You Have a Dream: You want to start a 10-cow dairy farm. You make a plan (a “Project Report”).
You Go to the Bank: You take your plan to a bank (like SBI, Bank of Baroda, or your local cooperative bank).
The Bank Approves: The bank manager likes your plan. He approves a loan for you. Let’s say, ₹10 Lakhs.
You Start Your Farm: The bank gives you the ₹10 Lakhs. You buy the 10 cows, build the shed, and start your business.
The Bank Applies for Subsidy: Now, the bank (not you) sends your project file to the government (like to NABARD).
The Subsidy is Approved: The government sees you have a real farm. They approve your subsidy. Let’s say the subsidy is 25%.
- 25% of ₹10 Lakhs = ₹2.5 Lakhs.
The “Subsidy Lock-in”: Does the government send you ₹2.5 Lakhs? No.
- This ₹2.5 Lakh subsidy money is sent to your bank. The bank puts it in a “Subsidy Reserve Fund Account.” It’s like a locked piggy bank with your name on it. You can see it, but you cannot touch it.
You Pay Your EMIs: For the next 3-4 years, you run your farm and pay your monthly loan EMIs just like normal.
The “Back-End” Magic: After the lock-in period (e.g., 3 years), the bank “unlocks” your piggy bank.
- The ₹2.5 Lakhs is taken from the subsidy account and paid directly against your remaining loan.
- This means your loan will be finished 1-2 years early!

So, what is the benefit? The benefit is that you do not have to pay the last ₹2.5 Lakhs of your loan. The government pays it for you.

Why does the government do this? This is very smart.

It filters out fake or non-serious people.
It makes sure you actually build the farm and run it well.
It rewards the real, hard-working farmers.

RULE #1: A subsidy is not a handout. It is a reward for successfully starting your project with a bank loan. You must get a bank loan to get the subsidy.

Part 2: The Most Important Schemes (Where the Money Comes From)

When you go to the bank, you need to know which “scheme” (yojana) you are applying under. Here are the most famous and important ones in India.

Scheme 1: NABARD – The DEDS Scheme (The Most Famous One)

Full Name: Dairy Entrepreneurship Development Scheme (DEDS).
Run by: NABARD (National Bank for Agriculture and Rural Development).

NABARD is the “king” of all farm-related loans in India.

A quick note: The original DEDS scheme was so popular, it is now a part of a new, bigger scheme. But 99% of banks and farmers still call it the “NABARD Dairy Loan” or “DEDS.” The rules are almost the aame.

What does it cover? This scheme is perfect for small- to medium-sized farmers.

Setting up a small dairy unit (from 2 to 10 cows or buffaloes).
Buying milking machines.
Buying milk coolers (to store milk).
Buying a van to transport milk.

How much subsidy do you get? (This is the best part)

For General Category: You get a 25% back-ended subsidy on your project cost (up to a certain limit).
For SC / ST Farmers: You get a 33.33% back-ended subsidy.

Example:

You are in the General category.
Your 10-cow farm project costs ₹10 Lakhs.
The bank gives you the loan.
Your NABARD subsidy will be 25% of ₹10 Lakhs = ₹2.5 Lakhs.
This ₹2.5 Lakhs will be kept in your subsidy account at the bank.

This is the scheme that most people starting out will use.

Scheme 2: AHIDF – The “Big Project” Scheme

Full Name: Animal Husbandry Infrastructure Development Fund (AHIDF).
Run by: The Central Government (Department of Animal Husbandry and Dairying).

This is the new, bigger scheme. If DEDS is for small farms, AHIDF is for big infrastructure.

What does it cover? This is for the business of dairy, not just the farm.

Milk Processing: Setting up a plant to make milk, curd, cheese, paneer, ice cream.
Cattle Feed: Setting up a “cattle feed plant” to make and sell animal food.
Breed Improvement: Setting up a farm to raise high-quality cows.
Animal Vaccine Plant: Setting up a factory to make medicines for animals.

How much subsidy do you get? This scheme works differently. It does not give a 25% subsidy. It gives an “Interest Subvention.”

Interest Subvention: This means the government helps pay your interest.
You get a 3% interest subvention.
Example: You take a big loan of ₹1 Crore. The bank charges you 9% interest. The government will pay 3% of that interest for you. So, you only have to pay 6% interest.
This is a huge saving on a big loan.

Who can apply?

Individual entrepreneurs (businessmen)
Farmer Producer Organizations (FPOs)
Private Companies

Scheme 3: National Livestock Mission (NLM)

Full Name: National Livestock Mission.
Run by: Central Government.

This scheme is not just for cows. It’s for all “livestock” (animals), but it has a very important part for dairy.

What does it cover? The NLM is most famous for Fodder (animal food).

It gives a 50% subsidy for setting up fodder “silage” (stored green grass) units.
It gives subsidies for growing new types of fodder grass.

A smart farmer will take a NABARD loan for his cows and an NLM subsidy for his fodder.

Scheme 4: State-Level Schemes (Your Local Help)

Do not forget this!

Every state government (like Maharashtra, Uttar Pradesh, Punjab, Haryana, Tamil Nadu) has its own special schemes for dairy farmers.

Example: The Maharashtra government might have a “Mukhyamantri Dairy Yojana.”
These schemes often give extra subsidies or help with insurance.

RULE #2: Before you go to the bank, you must also visit your local State Animal Husbandry Department office. Ask them, “What state schemes are available for a new dairy farmer?”

Part 3: Are You Eligible? (The “Who Can Apply” List)

Before you get excited, you need to check if you are eligible. The bank will check this first.

This is a simple checklist. You need to be able to say “YES” to most of these:

Are you an Indian citizen? (Must be yes).
Are you between 18 and 65 years old? (This is the usual range).
Are you a defaulter? Have you taken another loan and not paid it back?
- If yes, you will be rejected. The bank will check your CIBIL Score.
- Internal Link: A bad CIBIL score is a big problem. While these are not “low CIBIL loans,” your bank will reject you. If you have a low score, you must fix it first. (You can read about https://fiknow.com/best-loan-apps-low-cibil-score/ to understand how credit scores work, but those apps are not for dairy farming).
Do you have land?
- You need land for the shed and for the animals.
- It can be your own land (you have the 7/12 saat-bara extract).
- It can be leased land (you have a long-term rental agreement).
Do you have any experience?
- Have you worked on a farm before?
- If not, many banks will ask you to do a short training course at a Krishi Vigyan Kendra (KVK) or a government dairy training institute. This is a very good idea.
Are you part of a specific group?
- Are you in the General category?
- Are you in the SC / ST / OBC category?
- Are you a woman entrepreneur?
- The subsidy amounts are higher for reserved categories and women.

If you are a farmer, a group of farmers (Self Help Group), or even a new person who wants to start a business, you are eligible to apply.

Part 4: The 7-Step Guide to Getting Your Loan (The Action Plan)

This is the main “how-to” part. Follow these 7 steps.

Step 1: Make a Strong Plan (The “Business Plan”)

Do not just walk into a bank and say “I want a loan for cows.” Think first.

How many cows? Start small. A 5-10 cow farm is best for beginners.
Which breed? Will you buy Holstein Friesian (HF) cows (more milk, more food) or Gir cows (less milk, very strong)? Or will you buy Murrah buffaloes?
Where will you get fodder? Will you grow your own green grass? Or buy it?
Where will you sell the milk? Will you sell to the local milkman? Or to a big co-operative like Amul or Nandini?

Step 2: Get Your Documents Ready

Go to a file and collect these papers. This is your “KYC” file.

Identity Proof: Aadhaar Card, PAN Card, Voter ID.
Address Proof: Electricity Bill, Ration Card.
Land Proof: Your 7/12 extract or your lease agreement paper.
Caste Certificate (if you are applying for the 33.33% subsidy).
Bank Statement: Your last 6 months of bank transactions.
Passport-size photos.

Step 3: Create a “Detailed Project Report” (DPR)

This is the SINGLE MOST IMPORTANT DOCUMENT. A DPR is your farm’s “report card” before it is even built. It tells the bank manager that you are a serious professional, not a dreamer. We will explain this in detail in Part 5.

Step 4: Choose the Right Bank

First, go to the bank where you already have an account. If your family has a good relationship with a local bank manager, that is the best place to start.
Which banks give these loans?
- Commercial Banks (State Bank of India (SBI), Bank of Baroda, Punjab National Bank)
- Regional Rural Banks (RRBs)
- State Co-operative Banks

RULE #3: The bank manager is your most important partner. Be polite, be professional, and show them your strong DPR.

Step 5: Apply for the Bank Loan

Go to the bank.
Ask for the “Application for Agricultural Loan.”
Fill the form.
Attach your KYC documents (Step 2) and your DPR (Step 3).
The bank will take your application. The bank’s “field officer” may come to visit your land.
The bank will check your CIBIL score.
The bank will study your DPR.
If everything is good, the bank will send you a “Sanction Letter.” This means your loan is approved!

Step 6: The Bank Applies for the Subsidy

This is not your job. This is the bank’s job.
After your loan is sanctioned, the bank manager will log in to the official NABARD or AHIDF portal.
The bank will upload your DPR and your sanction letter.
This is the official “application” for the subsidy.

Step 7: Get Your Loan & Start Your Farm!

The bank will now give you the loan money.
Important: The bank will not give you ₹10 Lakhs in cash.
The bank will pay the money directly to the person you are buying from.
If you buy 10 cows, the bank will pay the cattle seller.
If you build a shed, the bank will pay the contractor.
This is to make sure the money is used for the right purpose.
Now you start your farm, sell your milk, and start paying your EMIs.

In the background, NABARD will approve your subsidy, and in a few months, the subsidy money (e.g., ₹2.5 Lakhs) will arrive at your bank and be kept in your locked “Subsidy Reserve Fund Account.”

Part 5: What is a “Detailed Project Report” (DPR)? (The Secret to Success)

If your application is a “test,” the DPR is 80% of your marks. You can hire a professional (like a CA or a dairy consultant) to make one, or you can make one yourself.

Here is what a good DPR must have.

Section 1: Introduction (The “About Me”)

Your name, address, and contact details.
Your experience in dairy farming (even “I grew up on a farm” is experience).
Why you want to start this project.

Section 2: Technical Plan (The “Farm Plan”)

Land: Where is your land? How much do you have?
Shed: What is the design of your cow shed? (The bank has standard, approved designs).
Animals:
- How many animals? (e.g., 10 H.F. Cows)
- Where will you buy them from? (e.g., “From Karnal market”).
- How much will one cow cost? (e.g., ₹80,000 per cow).
Fodder: How will you feed them? How much dry fodder (hay) and green fodder (grass)?
Water: Do you have a borewell or good water supply?
Milk Sale: Who will you sell the milk to? What is the price per litre?

Section 3: Financial Plan (The “Numbers”) This is the part the bank reads first.

Table 1: Cost of Project (How much money you need)

Cost of 10 cows (10 x ₹80,000) = ₹8,00,000
Cost of Shed = ₹1,50,000
Cost of Milking Machine = ₹50,000
Total Project Cost (A) = ₹10,00,000

Table 2: Margin & Bank Loan (Who pays for it)

Your Margin (10%): You must pay 10% from your pocket. = ₹1,00,000
Bank Loan (90%): The bank will pay the rest. = ₹9,00,000
(The subsidy is 25% of the total cost, not just the loan amount).

Table 3: Income Projection (How you earn money)

1 cow gives 15 litres of milk per day.
10 cows = 150 litres per day.
Sale price = ₹30 per litre.
Daily Income = 150 x 30 = ₹4,500
Monthly Income = ₹1,35,000

Table 4: Cost Projection (How you spend money)

Cost of animal feed = ₹60,000
Cost of medicine = ₹5,000
Cost of labour = ₹10,000
Monthly Cost = ₹75,000

Table 5: Profit & Loss (The Final Result)

Monthly Income = ₹1,35,000
Monthly Cost = ₹75,000
Monthly Profit = ₹60,000
From this profit, you will pay your bank EMI (e.g., ₹20,000).
Your Net Take-Home Profit = ₹40,000

When the bank manager sees these clear numbers, he will be impressed. It shows you have done your homework.

Part 6: Big Mistakes to Avoid (The “Red Flags” 🚩)

A lot of people fail to get the loan. It is often because of these simple mistakes.

Mistake 1: The “Fraud Agent” Trap

The Trap: You will meet a man in town who says, “I am an ‘agent’ for NABARD. Pay me ₹20,000, and I will get your subsidy approved.”
The Truth: This is a 100% SCAM. The government has NO AGENTS. The only way to apply is through your BANK. Do not give one rupee to any “agent.”

Mistake 2: Thinking Subsidy is “Free Money”

The Trap: You get the loan, the subsidy is locked in. You think, “My work is done.” You stop paying your EMIs.
The Truth: If you stop paying your EMIs (default on your loan), the bank has the right to take back the subsidy amount. You will lose the ₹2.5 Lakhs and your CIBIL score will be ruined.

Mistake 3: A “Copy-Paste” Project Report

The Trap: You download a DPR from the internet and just change the name.
The Truth: The bank manager has seen 100s of DPRs. He knows a fake one when he sees it. A copy-paste DPR will be rejected immediately. Your DPR must be for your land and your plan.

Mistake 4: Buying Bad Animals

The Trap: To save money, you buy cheap, old, or sick cows.
The Truth: Your income comes from milk. If your cows are bad, you get no milk, you make no money, and you cannot pay your EMI.
RULE #4: You must buy high-quality, healthy, “in-milk” animals. You must get them insured. The bank will often insist on this.

Mistake 5: Ignoring the Bank Manager

The Trap: The bank manager asks for 3 extra documents. You get angry and lazy.
The Truth: The manager is not your enemy. He is your partner. He wants to give the loan (it is his job!), but he needs the file to be perfect. Be polite, be patient, and give him every paper he asks for.

Conclusion: Your Farm is a Business, Not a Hobby

Starting a dairy farm is a wonderful dream. And with government help, it is 100% possible.

It is a lot of work, but it is not complicated. Let’s remember the main steps:

It is a “Back-Ended Subsidy.” You only get it if you get a bank loan.
You need a strong “Project Report” (DPR). This is your most important tool.
The Bank is your partner. You must apply through a bank (like SBI, PNB, etc.).
There are NO agents. Do not get scammed.
The subsidy is your “reward” for running the farm successfully.

A dairy farm is a real business. Treat it like one. Do your homework, create a strong plan, and you will be on your way to becoming a successful dairy entrepreneur.

Frequently Asked Questions (FAQ) Section

Q1: Can I get a subsidy without a bank loan? A: No. For these major schemes (NABARD, AHIDF), the subsidy is “credit-linked.” This means it is linked to a bank loan. You must get the loan to be eligible for the subsidy.

Q2: What is the maximum subsidy I can get? A: It depends on the scheme. For the popular NABARD (DEDS model) scheme, the subsidy is 25% (General) or 33.33% (SC/ST) of your project cost, up to a project limit (e.g., for 10 cows, the limit might be ₹10 Lakhs). For the bigger AHIDF scheme, it is a 3% interest subvention.

Q3: How long does the subsidy take to come? A: Be patient. After the bank sends your application, it can take anywhere from 3 to 6 months for the government to process the file and send the subsidy amount to your bank’s “Subsidy Reserve Fund Account.”

Q4: Do I need a CIBIL score for this? A: Yes! This is very important. The government is not checking your CIBIL score, but the BANK is. The bank is giving you its own money (e.g., ₹9 Lakhs). If you have a bad CIBIL score, the bank will reject your loan. If your loan is rejected, you cannot get the subsidy.

Q5: Can I get a subsidy for just 2 cows? A: Yes. The NABARD DEDS scheme is perfect for this. It is designed to help small farmers start with as few as 2 animals and go up to 10 animals.

Q6: What is the difference between “subsidy” and “interest subvention”? A:

Subsidy (like NABARD): A 25% chunk of your project cost is paid off by the government at the “back-end.”
Interest Subvention (like AHIDF): The government pays a part of your monthly interest. You still have to pay the full loan amount (the principal), but it’s much cheaper because your interest is lower.

Q7: Can I apply for this online? A: For the big AHIDF scheme, yes, there is an online portal. But for most small farmers, the process is: You go to the bank, and the bank applies online for you. Your first step is always the bank.

External Links (For Your Own Research)

To build your trust, please do not only read our article. Go and see the official government websites. This shows you are a serious applicant.

NABARD (National Bank for Agriculture and Rural Development) This is the official NABARD website. You can read about their different schemes. (https://www.nabard.org/)
Animal Husbandry Infrastructure Development Fund (AHIDF) This is the official portal for the big 3% interest subvention scheme. (https://ahidf.udyamimitra.in/)
National Livestock Mission (NLM) This is the official portal for the NLM, where you can read about fodder subsidies. (https://nlm.udyamimitra.in/)
Small Farmers Agri-Business Consortium (SFAC) This is another government body that helps FPOs (Farmer Producer Organizations) get financial help. (https://www.sfacindia.com/)