DIDF in Brief

DIDF - Dairy Processing & Infrastructure Development Fund

Large number of dairy processing plants with India’s Dairy Cooperatives were commissioned during Operation Flood which ended in 1996. Majority of these plants have never been expanded and/or modernised thereafter. These plants are operating with old & obsolete technologies, which may not be energy efficient as compared to currently available modern technologies. In order to improve efficiencies as well as increase production of products with higher value addition, replacement and modernisation of these dairy plants is essential.

Considering the interests of both producers and consumers, Dairy Cooperatives pass on maximum share of sales realisation (generally about 75-80%) to milk producers and make available safe milk to the consumers at an affordable price. As a result, they are unable to invest in modernisation and/or expansion of dairy processing infrastructure since they have limited resources due to relatively low profit margins. To ensure that Dairy Cooperatives remain competitive for the sustained benefit of farmers, the Government of India had announced creation of Dairy Processing and Infrastructure Development Fund under NABARD in December 2017 with a total scheme outlay of Rs. 10,881 crore. Under the scheme, a corpus fund of Rs. 8004 crore has been set up for creation of dairy processing infrastructure during the period from 2017-18 to 2019-20. Out of the remaining amount, Rs. 2001 crore shall be end borrowers contribution, Rs. 12 crore shall be the share from National Dairy Development Board (NDDB) / National Cooperative Dairy Corporation (NCDC) and Rs. 864 crore shall be contributed by DAHD, Government of India (GoI) towards interest subvention.

In February 2020, the Cabinet Committee on Economic Affairs (CCEA) approved the revision in the funding period from “2017-18 to 2019-20” to “2018-19 to 2022-23”. The CCEA also approved revision in the rate of interest subvention from “upto 2% p.a.” to “upto 2.5% p.a.”, due to which the interest subvention amount to be contributed by DAHD increased from Rs. 864 crore to Rs. 1167 crore. Allocation of Rs. 1167 crore for meeting interest subvention will be released to NABARD over a period of 13 years covering the entire loan repayment period from 2018-19 to 2030-31. NABARD shall provide loan to National Dairy Development Board (NDDB) and National Cooperative Development Corporation (NCDC) at subsidized rate of 6% per annum. NDDB/NCDC shall further lend to End Borrowers @ 6.5% who are State Dairy Cooperative Federations, Districts Cooperative Milk Unions, Multi State Co-operatives Societies, NDDB subsidiaries, Milk Producers Companies for creation of dairy infrastructure. However, in future, in case there is any increase in the cost of funds for NABARD, the additional interest will be borne by the End Borrowers. The End Borrowers shall repay the loan in ten years including moratorium period of two years.

Objectives of the scheme - The scheme have been designed with the following objectives:

  • To modernise the milk processing plants and machinery and to create additional infrastructure for processing more milk.
  • To create additional milk processing capacity for increased value addition by producing more dairy products.
  • To bring efficiency in dairy processing plants/producer owned and controlled dairy institutions, thereby enabling optimum value of milk to milk producer farmers and supply of quality milk to consumers.
  • To help the producer owned and controlled institutions to increase their share of milk, thereby providing greater opportunities of ownership, management and market access to rural milk producers in the organised milk market.
  • To help the producer owned and controlled institutions to consolidate their position as dominant player in the organised liquid milk market and to make increased price realisation to milk producers.

Scheme Area - The scheme will be implemented across the country.