StartupFloraGovernment Schemes for Dairy Farming and Business
Dairy farming and dairy business are two connected—but distinct—streams of livelihood in India. Understanding how government schemes support both can empower entrepreneurs and farmers to grow, innovate, and build resilience.
Difference Between Dairy Farming and Dairy Business
Dairy Farming refers to the production side—raising cows, buffaloes, or goats for milk. It involves animal care, feeding, breeding, milking, and ensuring quality (hygiene, nutrition, and health). It’s an agricultural activity at its core.
Dairy Business extends beyond production. It includes milk collection, processing, packaging, branding, distribution, and marketing of milk and value-added products like curd, ghee, butter, cheese, and ice cream.
So, are government schemes available for both? Yes! The central and state governments generally view both dairy farming and business as part of agricultural and allied sector activities. Banks and government agencies typically don’t differentiate. Whether you're running a rural dairy farm or an urban milk-processing venture, you're covered under Government Schemes for Dairy Farming and Business.
Why Does the Government Promote Schemes for Dairy Farming and Business?
Over 54.6% of India’s workforce depends on agriculture and allied sectors (Census 2011).
These sectors account for 18.4% of India’s GVA at current prices for 2022–23.
Supporting dairy farming and business not only empowers rural livelihoods but also ensures food security, dairy self-sufficiency, and value chain development.
Thus, the government’s schemes for dairy farming and business are crucial levers for economic growth, rural prosperity, and nutritional well-being across India.
StartupFlora Helps Dairy Business Aspirants
At StartupFlora, we’re committed to helping you navigate government schemes for dairy farming and business. Here’s how we help:
Scheme Identification: Pinpoint the most relevant government funding schemes—whether for infrastructure, subsidies, or working capital.
Application Support: Help with documentation, loan applications, business plans, and compliance.
Customization: Tailor advisory services to MSME dairy operations and agribusiness models.
Funding Access: Leverage our incubation network and experience with 50+ government funding schemes across sectors like manufacturing, services, and agriculture.
Key Government Schemes for Dairy Farming and Business
Animal Husbandry Infrastructure Development Fund (AHIDF)
This fund provides financial support for building dairy processing units, collection centers, cattle feed plants, and cold chains.
National Programme for Dairy Development (NPDD)
Under NPDD, the government provides assistance for dairy infrastructure—including chilling centers, milk testing labs, and milk product units.
Supporting Dairy Cooperatives and Farmer Producer Organizations (FPOs)
Grants, capacity building, and infrastructure support under various centrally sponsored and state-level schemes.
Banking Loans for Dairy Sector: Which Ones to Consider?
| Bank / Scheme | Highlights |
| Union Bank – Dairy Sector Loan Scheme for Farmers | Tailored for dairy farming—finance for cattle purchase, infrastructure, working capital. Usually offers collateral-free or low-collateral options. |
| Bank of Baroda – Scheme for Financing Mini Dairy Units | Specifically designed for small-scale dairy business—collecting, processing, packaging. Attractive interest rates and subsidies possible. |
| State Bank of India – Agri & Food Enterprises Loan (AFEL) | Supports agri-business ventures including dairy processing, value addition, and branding. Offers flexible repayment terms. |
Loan Processing Time
The time to get a loan depends on two pathways:
Auto-approval: Quick processing if documentation, compliance, and credit score are good.
Credit Manager Review: Evaluated manually based on address proof, agricultural certificate, CIBIL score of applicant (and co-applicant if any), zone color (green/yellow/red, reflecting risk), and loan amount.
Understanding Dairy Farm Loan Interest Rates
Let’s address some frequently asked comparison queries:
Dairy farm loan interest rate (general): Varies—often ranges from 7% to 12% per annum, depending on bank and loan terms.
Interest rate on NABARD dairy farm loan: NABARD typically supports refinancing via cooperative banks at relatively low rates; often 7–9%.
Dairy farm loan interest rate in SBI: SBI’s AFEL interest may hover around 8–10% p.a.
Dairy farming loan interest rate in cooperative bank: Rates can be competitive—sometimes as low as 7%, thanks to subsidies and NABARD linkages.
Lowest interest rate for dairy farm loan: Typically cooperative banks or NABARD-refinanced schemes.
Dairy farm loan interest rate with subsidy: Subsidized schemes under AHIDF or NPDD may reduce effective interest to 6–8%.
Dairy farm loan EMI and interest rate: EMI depends on tenure (e.g. 5 years); for a ₹10 lakh loan at 9% p.a., EMI would be roughly ₹20,000–₹21,000 per month.
Which bank gives lowest interest rate? Usually, cooperative banks via NABARD or state-specific dairy infrastructure schemes.
Comparison: Subsidy vs Normal Interest Rate
Subsidized loans (via AHIDF or NPDD) can drop costs significantly—by 1–2 percentage points—compared to unsponsored commercial lending.
Mudra Loan for Dairy Farming Interest Rate
Mudra “Shishu” or “Kishor” under Pradhan Mantri Mudra Yojana may offer loans up to ₹10 lakh or ₹50 lakh at interest rates around 8–10%.
Dairy Farm Loan Interest Rate in India (2025)
As of mid‑2025, rates typically sit in the 7–12% p.a. range, depending on scheme, bank, and subsidies.
Dairy Farming Loan with 3% Interest Rate
A 3% interest rate is extremely rare and would typically only occur where a heavy subsidy is provided under a special central or state government scheme.
Key Takeaways For Dairy Farming Loan
Government funding for dairy farming and business empower farmers and entrepreneurs via funding, infrastructure support, and subsidies.
Schemes such as AHIDF, NPDD, and support for dairy cooperatives/FPOs aim to strengthen India’s dairy value chain.
Banks like Union Bank, Bank of Baroda, and SBI offer tailored loan products for dairy farming and business.
Interest rates vary widely—typically between 7% and 12%, with subsidies potentially reducing to 6–8%.
Mudra loans and cooperative bank loans remain among the most cost-effective options.
Loan processing depends on documentation, creditworthiness, and risk zone. Auto-approval is fastest; manual review takes longer.
FAQs
Q: Are there separate loans for dairy farming and dairy business?
No—most schemes and banks treat them under agricultural or allied activities. Loans for farming and processing both qualify.
Q: How fast can I get a dairy farm loan?
Auto-approved cases (with good documentation and credit score) may get disbursed in days. Others may take 2–4 weeks for manual review.
Q: Which is the cheapest loan option?
Cooperative bank loans backed by NABARD, or subsidized schemes under AHIDF/NPDD, often offer the lowest effective rates (around 6–8%).
Q: Does StartupFlora help with scheme applications?
Absolutely! We guide you in identifying the best scheme, preparing the paperwork, and optimizing your loan or grant chances.