Government Subsidies for Food & Agriculture Businesses in India

(Central Government + Gujarat State | Updated & Running Schemes – 2026)

India’s food and agriculture sector is one of the most incentivised sectors under Government policy. From micro food units to large processing plants and cold chains, multiple Central and State subsidy schemes are currently operational to promote value addition, reduce post-harvest losses, and formalise the food ecosystem.

However, subsidy benefits are highly structure-driven. Many applications fail not due to ineligibility, but due to incorrect planning, weak DPRs, or wrong scheme selection.

This blog provides a complete, authentic and practical guide to the running subsidy schemes relevant for food and agriculture businesses, with a special focus on Gujarat.

1. PMFME Scheme – Prime Minister Formalisation of Micro Food Processing Enterprises

(Central Government – MoFPI)

Objective

To formalise and strengthen micro-level food processing units and integrate them into the organised economy.

Who Can Apply (Eligibility)

✔ Existing or new micro food processing units

✔ Proprietorship / Partnership / LLP / Company

✔ Units involved in:

• Pickles, papad, chutney

• Flour, spices, pulses

• Snacks, bakery, namkeen

• Ready-to-Eat / Ready-to-Cook foods

• Oilseed processing, minor food products

📌 The unit must fall within micro enterprise limits under MSME definition.

Incentive Structure

💰 Capital Subsidy: 35% of eligible project cost

🔺 Maximum subsidy: ₹10 lakh per unit

📌 Subsidy is credit-linked (bank loan mandatory)

Duration & Implementation

• Scheme launched in 2020

• Currently running with active implementation by States

• Gujarat is one of the top implementing states

• Subsidy is released after project completion and verification

Key Practical Points

✔ Proper DPR is compulsory

✔ Bank sanction before subsidy approval

✔ Only eligible components are considered for subsidy

✔ GST registration & Udyam registration required

👉 Best suited for: Small food entrepreneurs & family-run units looking to formalise.

2. Pradhan Mantri Kisan SAMPADA Yojana (PMKSY)

(Central Government – MoFPI)

Objective

To create modern food processing infrastructure and reduce food wastage through integrated supply chains.

Major Components Relevant to Businesses

✔ Integrated Cold Chain & Value Addition

✔ Food Processing Units

✔ Agro Processing Clusters

✔ Mega Food Parks

✔ Food Testing Laboratories

Eligibility

✔ Companies, LLPs, Partnerships, Cooperatives

✔ Existing or new food processing / cold chain projects

✔ Minimum project cost thresholds apply (component-wise)

Incentive Pattern

💰 Capital Grant generally ranging from 35% to 50%

📌 Percentage depends on:

• Type of project

• Location (general vs difficult areas)

• Scheme component

⚠️ Exact subsidy quantum is as per latest MoFPI guidelines at the time of approval.

Duration & Status

• PMKSY is an ongoing umbrella scheme

• Projects are approved in phases

• Disbursement is milestone-based

Practical Insight

PMKSY is ideal for medium to large projects, but:

❌ Documentation is strict

❌ DPR scrutiny is intense

✔ Works best when combined with bank finance & professional structuring

3. Agriculture Infrastructure Fund (AIF)

(Central Government – Ministry of Agriculture)

Objective

To encourage post-harvest agricultural infrastructure through cheaper credit.

Eligible Projects

✔ Warehouses & godowns

✔ Cold storage & cold chain

✔ Pack houses & grading units

✔ Primary processing facilities

✔ Logistics linked to agri produce

Incentives

💸 Interest Subvention: 3% per annum

🛡️ Credit Guarantee Coverage

📅 Long-term loans with suitable moratorium

📌 No direct cash subsidy, but major interest cost reduction.

Duration

• Scheme is active

• Loans available for long tenures

• Interest benefit applies for defined years as per guidelines

Practical Use

AIF works best:

✔ When combined with PMKSY or State incentives

✔ For capital-intensive infrastructure projects

4. Gujarat Industrial Policy 2020

(Applicable to Food Processing MSMEs)

Status

Industrial Policy 2020 is in force and applicable to manufacturing MSMEs, including food processing units.

Eligibility

✔ Food processing units registered as MSME

✔ Manufacturing activity within Gujarat

✔ New or expansion projects

Key Incentives (Indicative)

✔ Capital Investment Support

✔ Interest Subsidy on Term Loan

✔ Power tariff related benefits

✔ Special focus on rural / backward areas

📌 Incentives are governed by latest Government Resolutions (GRs) issued under the policy.

Duration

• Policy effective from 2020

• Benefits are available for specified years post-commercial production

Important Note

Exact percentages, caps and timelines vary based on GRs, unit category and location. Hence professional verification at the time of application is essential.

5. Gujarat MSME Incentive Schemes

(MSME / Industries Department – Government of Gujarat)

Who Can Apply

✔ MSME-registered manufacturing units

✔ Food & agro-based processing units

✔ New & expansion projects

Incentives Available

💰 Capital Investment Subsidy

💸 Interest Subsidy on term loans

📉 Stamp duty & electricity duty relief

🧾 Support for technology & quality upgrades

Duration

• Benefits are available for a fixed number of years

• Disbursement is compliance-linked

6. Role of GAIC (Gujarat Agro Industries Corporation)

GAIC acts as a nodal and facilitating agency for:

✔ PMFME implementation in Gujarat

✔ State-level agro & food processing support

✔ Coordination between Central & State schemes

GAIC does not replace schemes, but enables smoother implementation.

Common Reasons Why Subsidy Applications Fail

❌ Weak or generic DPR

❌ Loan sanctioned under wrong scheme

❌ Ineligible components included in project cost

❌ Delay in compliance & documentation

❌ Applying after investment instead of before planning

Key Takeaway for Food & Agro Entrepreneurs

Subsidy is not a gift. It is a policy-linked incentive for those who plan their project structure, financing and compliance correctly.

How Professional Planning Helps

✔ Correct scheme selection

✔ DPR aligned with subsidy norms

✔ Bank & subsidy alignment

✔ Faster approval & lower rejection risk