Dairy farming is a cornerstone of India’s agricultural economy, providing livelihoods to millions and contributing significantly to the nation’s food security. However, starting or expanding a dairy farm requires substantial investment, which can be a barrier for many. To address this, the Indian government, along with various banks and financial institutions, offers a range of loans and subsidies specifically tailored for dairy farming. This article provides a detailed, easy-to-understand overview of the available government loans and schemes for dairy farming in India, ensuring it stands out as a comprehensive resource for farmers and entrepreneurs in the Indian region. By incorporating detailed information and source links, this guide aims to surpass existing articles in quality and reliability.

Why Government Loans for Dairy Farming Are Important

Dairy farming involves significant upfront costs, including purchasing livestock, constructing sheds, buying equipment, and managing operational expenses like feed and veterinary care. Government loans and subsidies play a crucial role in making dairy farming accessible and sustainable for farmers, especially small-scale and marginal farmers. These schemes not only provide financial support but also encourage modernisation, entrepreneurship, and growth in the dairy sector. By reducing the financial burden, these loans help farmers improve their productivity, income, and overall standard of living.

Key Government Loans and Schemes for Dairy Farming

A. Bank of Baroda – Scheme for Financing Mini Dairy Units

Bank of Baroda offers a dedicated scheme for financing mini dairy units, aimed at helping farmers establish small dairy farms with 2 to 10 milch animals.

• Purpose: To set up new small dairy units.
• Eligibility: Individuals, farmers, members of NGOs, Self-Help Groups (SHGs), or Joint Liability Groups (JLGs). Applicants must be between 21 and 65 years old.
• Loan Amount: Based on the cost per animal as determined by NABARD’s regional offices.
• Number of Animals: Minimum 2, maximum 10.
• Loan Type: Term Loan.
• Repayment Period: Up to 5 years, including a 3-month moratorium.
• Security:
  • For loans up to Rs 1.60 Lakh: Hypothecation of livestock.
  • For loans between Rs 1.60 Lakh and Rs 2 Lakh: Hypothecation of livestock + mortgage of land or third-party guarantee.
  • For loans above Rs 2 Lakh: Hypothecation of livestock + mortgage of land + third-party guarantee.
• Margin: Minimum 10%.
• Interest Rates:
  • Up to Rs 3.00 Lakhs: One-year MCLR (Marginal Cost of Funds based Lending Rate).
  • Above Rs 3.00 Lakhs to Rs 6.00 Lakhs: MCLR + Spread + 0.25%.
  • Above Rs 6.00 Lakhs: MCLR + Spread + 1.25%.
• Documents Required:
  • KYC documents (Aadhaar, Voter ID, PAN Card, Driving License, etc.).
  • Passport-size photo.
  • Land record.
  • Quotation/Invoice (if available).
• Processing and Inspection Charges: Waived for loans up to Rs 3.00 Lakhs. For higher amounts:
  • Processing charges: 1% of the limit sanctioned (maximum Rs 100 lakhs).
  • Inspection charges: Rs 250 (Rs 3 Lakhs to Rs 10 Lakhs), Rs 1,000 (Rs 10 Lakhs to Rs 1 Crore), Rs 5,000 (above Rs 1 Crore).
• Application Process: Apply online through Bank of Baroda.

B. NABARD Subsidy for Dairy Farming

The National Bank for Agriculture and Rural Development (NABARD) offers subsidies to promote dairy farming and entrepreneurship in the sector.

• Eligibility: Farmers, individual entrepreneurs, NGOs, companies, and groups from both organised and unorganised sectors (e.g., Self-Help Groups, Dairy Cooperative Societies, Milk Unions, Milk Federations). Individuals can avail the subsidy once per component, and family members must set up separate units at least 500 meters apart.
• Subsidy Amounts: The subsidy varies based on the type of dairy farming activity:
  1. Small dairy units (2-10 animals): 25% of Rs 5.00 lakh (33.33% for SC/ST, max Rs 1.25 lakh for general, Rs 1.67 lakh for SC/ST).
  2. Heifer calves (5-20 calves): 25% of Rs 4.80 lakh (33.33% for SC/ST, max Rs 1.20 lakh for general, Rs 1.60 lakh for SC/ST).
  3. Vermicompost: 25% of Rs 20,000 (33.33% for SC/ST, max Rs 5,000 for general, Rs 6,700 for SC/ST).
  4. Milking machines/milk testers/bulk milk cooling (up to 2000L): 25% of Rs 18 lakh (33.33% for SC/ST, max Rs 4.50 lakh for general, Rs 6.00 lakh for SC/ST).
  5. Dairy processing equipment: 25% of Rs 12 lakh (33.33% for SC/ST, max Rs 3.00 lakh for general, Rs 4.00 lakh for SC/ST).
  6. Dairy product transportation/cold chain: 25% of Rs 24 lakh (33.33% for SC/ST, max Rs 6.00 lakh for general, Rs 8.00 lakh for SC/ST).
  7. Cold storage for milk products: 25% of Rs 30 lakh (33.33% for SC/ST, max Rs 7.50 lakh for general, Rs 10.00 lakh for SC/ST).
  8. Private veterinary clinics (mobile: Rs 2.40 lakh, stationary: Rs 1.80 lakh): 25% of the outlay (33.33% for SC/ST, max Rs 60,000 for mobile, Rs 45,000 for stationary for general; Rs 80,000 for mobile, Rs 60,000 for stationary for SC/ST).
  9. Dairy marketing outlet/parlour: 25% of Rs 56,000 (33.33% for SC/ST, max Rs 14,000 for general, Rs 18,600 for SC/ST).
• Documents Required: Detailed project report/business plan, bank loan application, and entity registration documents (if applicable).
• Application Process:
  1. Decide on the dairy farming activity.
  2. Register the company/NGO/entity if necessary.
  3. Prepare a project report/business plan.
  4. Apply for a bank loan from an eligible bank (e.g., commercial banks, regional rural banks, state cooperative banks).
  5. Implement the project with your contribution and a bank loan.
  6. The bank applies to NABARD for a subsidy after the first loan instalment.
  7. NABARD releases the subsidy to the bank, held in a “Subsidy Reserve Fund Account.”
  8. The subsidy is adjusted against the last loan repayments upon satisfactory servicing.

Source: IndiaFilings – NABARD Subsidy

C. Supporting Dairy Cooperatives and Farmer Producer Organisations (SDCFPO)

This scheme, implemented by the Department of Animal Husbandry and Dairying, focuses on supporting dairy cooperatives and farmer-producer organisations during crises.

• Objective: To provide soft working capital loans to State Dairy Cooperative Federations to manage during adverse market conditions or natural calamities, ensure timely payments to farmers, and maintain remunerative milk prices.
• Eligibility: State Dairy Cooperative Federations and Producer-Owned Institutions engaged in dairy activities.
• Benefits: Interest subvention of 2% per annum on working capital loans, with an additional 2% for prompt repayment.
• Financials: Total outlay of Rs 500 crore from 2021-22 to 2025-26 under the Umbrella Scheme “Infrastructure Development Fund.”
• Application Process: Implemented by the National Dairy Development Board (NDDB); specific application details may be obtained from NDDB.

Source: Department of Animal Husbandry – SDCFPO

D. Other Banks Offering Dairy Loans

Several other banks and financial institutions in India provide loans for dairy farming. While specific details may vary, these institutions offer term loans and working capital for dairy-related activities:

• Indian Bank
• State Bank of India (SBI)
• Union Bank of India
• Central Bank of India
• Andhra Bank
• Canara Bank
• Federal Bank
• IDBI Bank
• Bank of India
• RBL Bank
• LendingKart

Farmers can approach these banks for loans tailored to their needs, such as setting up new dairy units, purchasing livestock, or upgrading infrastructure.

Commercial Bank Loans for Dairy Farming in India

In addition to government-backed schemes and NABARD’s refinance support, various commercial banks in India offer specific loan products for dairy farming. These loans can be utilised for a wide range of purposes, including purchasing milch animals, constructing dairy sheds, buying equipment like milking machines and chilling units, and meeting working capital requirements. Some examples of dairy loan schemes offered by commercial banks include:  

• State Bank of India (SBI): Offers various schemes for allied agricultural activities, including dairy farming, such as Agri & Food Enterprises Loan (AFEL) and Kisan Credit Card (KCC) for allied activities. SBI also participates in government schemes like AHIDF.  
• Union Bank of India: Provides financing for the dairy sector, including schemes for mini dairy units and commercial dairy units, with flexible repayment terms.  
• Central Bank of India: Offers the ‘Cent Dairy Scheme’ to finance the establishment of dairy units for milk production, with varying margin requirements and interest rates based on the loan amount.  
• Andhra Pradesh Grameena Vikas Bank (APGVB): Provides dairy loans for purchasing milch animals and related infrastructure, with specific eligibility criteria based on landholding and milk production track record.  
• HDFC Bank: Offers ‘Dairy Power Loan’ for the maintenance of existing cattle and also participates in the AHIDF scheme, providing term loans for various dairy-related infrastructure projects.  
• Canara Bank: Has specific dairy loan schemes for purchasing high-yielding milch cattle, constructing sheds, and buying equipment, with varying margin requirements and security based on the loan amount.  
• Federal Bank: Offers dairy loans as term loans or cash credit for various purposes, with loan amounts up to 75% of the project cost and repayment periods up to 7 years.  
• Karur Vysya Bank (KVB): Provides ‘Dairy Loan’ for establishing dairy units, purchasing milch animals and equipment, and constructing sheds, with repayment tenors ranging from 3 to 7 years.  

The eligibility criteria, loan amounts, interest rates, and repayment terms vary across different banks and schemes. Farmers are advised to contact their nearest bank branch or visit the bank’s official website for detailed information and application procedures.

How to Apply for Dairy Loans

The application process for dairy loans generally involves the following steps:

1. Choose the Right Scheme: Identify the scheme or loan that best suits your needs, whether it’s for starting a new dairy unit, expanding an existing one, or availing subsidies.
2. Check Eligibility: Ensure you meet the eligibility criteria, including age, land ownership, and other requirements.
3. Prepare Documents: Gather all necessary documents, such as KYC (Aadhaar, PAN Card, etc.), land records, project reports, and financial statements.
4. Apply Online or Offline: Many banks, like Bank of Baroda, offer online application facilities. Alternatively, you can visit the nearest branch of the bank.
5. Loan Sanction and Disbursement: Once approved, the loan amount is disbursed, and you can begin or expand your dairy farming operations.

Additional Considerations for Dairy Farmers

• Subsidies and Incentives: In addition to loans, farmers can benefit from subsidies like the NABARD subsidy, which reduces the overall cost of setting up a dairy farm.
• Training and Support: Many schemes also provide training and technical support to help farmers improve their dairy farming practices.
• Repayment Terms: Always check the repayment terms, including interest rates and moratorium periods, to ensure they are manageable.
• Consult Experts: Before applying, consult with financial advisors or bank representatives to understand the best options for your specific situation.

Benefits of Availing Government Loans for Dairy Farming in India

Availing government loans and financial assistance schemes for dairy farming in India offers numerous benefits to farmers and entrepreneurs. These include:  

• Financial Assistance: Government schemes provide crucial financial support in the form of loans at subsidised interest rates and capital subsidies, reducing the initial investment burden.  
• Expansion Opportunities: Access to affordable credit enables farmers to expand their existing dairy operations by increasing the number of milch animals, improving infrastructure, and adopting modern technologies.  
• Modernisation and Technology Adoption: Loan schemes often facilitate the purchase of modern milking machines, chilling units, and other equipment, leading to increased efficiency and productivity.  
• Improved Livelihoods: By enhancing milk production and reducing costs, government support contributes to increased income and improved livelihoods for dairy farmers, especially small and marginal farmers.  
• Infrastructure Development: Schemes like AHIDF and DIDF specifically focus on developing essential infrastructure for milk processing, storage, and transportation, strengthening the entire dairy value chain.  
• Breed Improvement: Missions like RGM support the development and conservation of high-yielding indigenous breeds, contributing to long-term productivity gains.  
• Employment Generation: The growth and modernization of the dairy sector, facilitated by government support, create numerous direct and indirect employment opportunities in rural areas.  
• Market Access: Schemes often aim to improve market linkages for dairy farmers, ensuring better prices for their produce.  

Challenges and Solutions in Applying for Dairy Farming Loans

While numerous schemes are available, farmers might face certain challenges while applying for or obtaining these loans. These challenges can include:  

• Lack of Awareness: Many small and marginal farmers might not be fully aware of the available schemes and their benefits.  
• Complex Application Processes: The application procedures and documentation requirements can sometimes be complex and cumbersome for farmers.  
• Collateral Requirements: While some loans are collateral-free, larger loan amounts might require collateral, which many small farmers may lack.  
• Credit Score and Financial Literacy: A good credit score is often preferred, and limited financial literacy among farmers can be a hindrance.  
• Loan Processing Delays: The loan approval and disbursement process can sometimes take a significant amount of time.  
• Limited Access in Remote Areas: Access to banking and financial services might be limited in remote rural areas.  

To navigate these challenges effectively, farmers can consider the following tips :  

• Gather Information: Stay informed about the latest government schemes and loan options through agricultural extension officers, bank websites, and government portals.
• Prepare a Strong Business Plan: Develop a detailed project report outlining the dairy farming business plan, including financial projections and repayment capacity.
• Maintain Good Credit History: Ensure a good credit score by managing existing loans and financial transactions responsibly.
• Prepare Necessary Documents: Keep all required documents, such as identity proof, address proof, land records, and bank statements, readily available.
• Compare Different Loan Options: Research and compare the terms and conditions offered by various banks and financial institutions.
• Seek Professional Assistance: If needed, seek guidance from agricultural consultants or financial advisors to navigate the application process.
• Understand Loan Terms: Carefully review and understand the interest rates, repayment terms, and other conditions before availing the loan.

Recent Updates and Initiatives (2024-2025)

The Government of India continues to prioritise the development of the dairy sector with various recent updates and initiatives. Some notable developments in 2025 include:  

• Revised National Programme for Dairy Development (NPDD): The Union Cabinet approved the revised NPDD with an enhanced budget for the 15th Finance Commission cycle (2021-22 to 2025-26), focusing on modernising and expanding dairy infrastructure to improve market access and farmer incomes- Source.
• Revised Rashtriya Gokul Mission (RGM): The RGM also received an additional outlay to boost the livestock sector, with new incentives for Heifer Rearing Centres and interest subvention on loans for high genetic merit IVF heifers- Source. 
• White Revolution 2.0: The Ministry of Cooperation launched this initiative in 2024 to modernise and expand dairy cooperatives, aiming to increase milk procurement and provide market access to more dairy farmers- Source.
• Emphasis on Infrastructure and Productivity: The government continues to focus on strengthening dairy infrastructure, improving bovine milk productivity, enhancing feed and fodder availability, and providing animal health services to reduce production costs and increase farmers’ income- Source.  
• Animal Husbandry Infrastructure Development Fund (AHIDF): The implementation of AHIDF continues till 2025-26, providing incentives for investments in dairy processing and value addition infrastructure- Source.  
• No Price Support Scheme: The DAHD clarified that it does not regulate milk prices and has no plans to introduce price support schemes or subsidies for dairy farmers, as prices are determined by market forces and cooperatives/private dairies- Source.  

These ongoing efforts demonstrate the government’s commitment to making dairy farming sustainable, scientific, and profitable in India.

Frequently Asked Questions (FAQs)

Q: Who can apply for dairy farming loans?
A: Individuals, farmers, NGOs, SHGs, JLGs, cooperatives, and companies can apply, depending on the scheme.

Q: What documents are needed?
A: Common documents include KYC (Aadhaar, PAN Card), land records, project reports, and quotations/invoices.

Q: Are there subsidies for SC/ST farmers?
A: Yes, NABARD offers higher subsidies (33.33%) for SC/ST farmers compared to 25% for the general category.

Q: Can I apply online?
A: Many banks, like Bank of Baroda, offer online applications. Check the bank’s website for details.

Conclusion

Government loans and subsidies are essential for the growth and sustainability of dairy farming in India. By providing financial support, these schemes empower farmers to invest in their businesses, improve productivity, and contribute to the nation’s dairy sector. This guide has outlined the key schemes available, including those from the Bank of Baroda, NABARD, and the Department of Animal Husbandry and Dairying, along with a list of other banks offering dairy loans. By following the application process and leveraging these opportunities, farmers can take significant steps toward building successful dairy enterprises.

Key Citations

• Bank of Baroda – Scheme for Financing Mini Dairy Units
• IndiaFilings – How to Get NABARD Subsidy for Dairy Farming
• Department of Animal Husbandry and Dairying – SDCFPO Scheme