In India, where agriculture plays a vital role in the economy, cold storage facilities are critical for preserving perishable goods like fruits, vegetables, dairy products, and meat. However, setting up or expanding a cold storage business requires substantial capital investment. This is where the Cold Storage Subsidy Scheme can help.
The Cold Storage Subsidy Scheme provides financial assistance to entrepreneurs, farmers, and businesses looking to set up, expand, or modernize their cold storage facilities. In this blog, we'll walk you through the details of this loan scheme, including the types of loans, benefits, eligibility criteria, and the application process.
What is the Cold Storage Subsidy Scheme?
The Cold Storage Subsidy Scheme is a government-supported financing initiative tailored to support MSMEs, startups, and agribusinesses in setting up or upgrading cold storage facilities. These loans are crucial for preserving perishable goods, ensuring food security, and minimizing post-harvest losses.
Businesses can receive funding, covering infrastructure, energy-efficient refrigeration units, or operational expenses. Offered by banks, NBFCs, and government agencies, these loans come with subsidized interest rates and flexible terms.
Types of Cold Storage Subsidies Available for MSMEs
| Type | Purpose | Tenure |
|---|---|---|
| Term Loan | For construction or expansion of cold storage | 5–15 years* |
| Working Capital Loan | For operational expenses like electricity, labor | 1–3 years* |
| Subsidized Loan | Offered under PMKSY, NABARD | Varies |
| Equipment Financing | To purchase chillers, racks, IoT-based systems | Linked to asset lifespan |
Eligibility Criteria for Cold Storage Subsidy Scheme
To apply for the Cold Storage Subsidy Scheme, businesses must meet the following eligibility criteria:
- Registered MSME: The business must be a registered MSME in the cold storage or warehousing sector.
- Cold Storage Capacity: The storage facility should have a capacity of 251 MT and up to 20,000 MT.
- Product Type: The storage unit must be used for storing vegetables, spices, or onions.
- Compliance: The project should comply with technical standards and be eligible for a term loan from a financial institution.
Focus Areas of the Cold Storage Subsidy Scheme
- Construction of Cold Storage Units: With capacity ranging from 251 MT to 20,000 MT.
- Advanced Technologies and Energy-Efficient Systems: For improving operational efficiency.
- Promotion of Scientific Post-Harvest Infrastructure: To minimize wastage of perishable produce.
Benefits of the Cold Storage Subsidy Scheme
Capital Subsidy
- 251 MT to 10,000 MT:
- 50% Capital Subsidy (For Gujarat)
- 35% Capital Subsidy (For other Indian states)
- 10,001 MT to 20,000 MT:
- 35% Capital Subsidy (For all states)
Loan-Related Benefits
- 3% Interest Subsidy on loans up to ₹200 lakh.
- Loan Guarantee from the Central Government for loans up to ₹200 lakh.
- Reimbursement of CGTMSE Fee for loans covered under the credit guarantee scheme.
State Government (Gujarat) Revenue Subsidy
- 25% subsidy on electricity expenses (excluding electricity duty).
- Maximum of ₹2 lakh per year for 5 years.
Documents Required for Cold Storage Subsidy Scheme
- Business Registration Certificate
- KYC Documents (Aadhaar, PAN, etc.)
- Bank Statements for the last 6-12 months
- Income Tax Returns from the last 2 years
- Detailed Project Report outlining the cold storage setup
- Collateral Documents (if applicable)
- Environmental Compliance Certificates (if required)
Cold Storage Scheme Interest Rates
The interest rates for cold storage loans typically range from 7% to 12%* per annum, depending on the lender and government schemes. Government-backed schemes offer subsidized interest rates to reduce the financial burden on borrowers.
- Subsidized Rates: Typically range between 7% and 10%* annually.
- Longer Repayment Tenure: Loans typically come with flexible repayment terms from 5 to 15 years*, based on the loan amount and type of cold storage project.
Step-by-Step Process to Apply for Cold Storage Subsidy Scheme
- Understand the Scheme:
Review the Cold Storage Subsidy Scheme details, eligibility criteria, and benefits to ensure it's right for your business. - Check Eligibility:
Confirm you meet eligibility requirements such as MSME registration and a solid business plan for your cold storage project. - Prepare Documents:
Gather necessary documents like business registration, financial records, project report, and KYC documents. - Submit Application:
Apply through experts like Egniol to finish your application. It’s easy, quick, and hassle-free. - Verification:
Your documents will be verified, and the processing will be done. - Loan Approval:
Once approved, the loan amount will be disbursed based on the terms of the Cold Storage Subsidy Scheme. - Utilize the Loan:
Use the funds as outlined in your project plan to set up or upgrade your cold storage facility. - Repayment:
Repay the loan in installments as per the agreed schedule.
FAQs About Cold Storage Subsidy Scheme
Q1. What is the interest rate for a cold storage loan?
Interest rates for cold storage loans range from 7% to 12%* annually, depending on the lender and scheme.
Q2. Can startups apply for a cold storage loan?
Yes, startups in the cold storage industry can apply, provided they meet the eligibility criteria and have a strong business plan.
Q3. How long does it take for loan approval?
Most loans are processed within 2 to 4 weeks, depending on the lender’s verification process.
Q4. Is collateral required for a cold storage loan?
Collateral requirements vary; some government-backed loans offer funding without the need for collateral.
Q5. Are there any subsidies available for cold storage loans?
Yes, schemes like NABARD Cold Storage Scheme and Pradhan Mantri Kisan Sampada Yojana (PMKSY) offer subsidies to reduce costs.
Conclusion
The Cold Storage Subsidy Scheme is a valuable opportunity for businesses in the cold storage sector to expand, modernize, and improve their operations. With government support, low-interest rates, and flexible repayment terms, these loans are an excellent way for MSMEs to grow and make a lasting impact on food security and supply chain efficiency.
If you're looking to apply for a cold storage subsidy scheme, research available schemes, prepare the required documents, and consult with experts like Egniol to ensure a smooth and successful application process.
For more guidance on securing loans and funding for MSMEs, visit Egniol.
*(The figures are for indicative purposes only, they may change on a case to case basis).
Disclaimer: The information presented in this blog is sourced from various online platforms and government portals.