NABARD Warehouse Subsidy

Overview

What is Warehouse?

A warehouse is a large building or facility used for the storage of goods, products, or materials. It is commonly used by manufacturers, wholesalers, retailers, and distributors to store their inventory before it is distributed or sold. Warehouses can hold a variety of items, including raw materials, finished products, or agricultural commodities, and are often equipped with systems to manage, track, and move the goods efficiently.

Key features of a warehouse include:

1.     Storage: The primary function of a warehouse is to store goods in an organized manner. This includes products, materials, or inventory that need to be kept for future use, shipment, or sale.

2.     Inventory Management: Warehouses often have systems in place (such as barcodes, RFID, or warehouse management systems) to track and manage inventory to ensure proper stock levels and timely replenishment.

3.     Loading and Unloading: Warehouses facilitate the loading and unloading of goods from trucks, ships, or trains. Docking areas, cranes, and forklifts are typically used to move products efficiently.

4.     Shelving and Racking: Items are often stored on shelves or racks to optimize space and allow for easy retrieval.

5.     Security and Protection: Warehouses usually have security measures like surveillance cameras, alarms, and controlled access to ensure the safety of goods and prevent theft or damage.

6.     Types of Warehouses:

o    Public Warehouses: These are available for rent and are used by multiple companies.

o    Private Warehouses: Owned and operated by a company for their own use.

7.     Distribution Centers: A type of warehouse that focuses on the quick movement and distribution of goods rather than long-term storage.

Why is Warehouse?

A warehouse serves several important functions in the supply chain and overall business operations. Here are some key reasons why warehouses are essential:

1.     Storage of Goods: Warehouses provide a safe and organized space to store goods until they are needed for sale or distribution. This ensures that businesses have a ready supply of products to meet demand.

2.     Inventory Management: Warehouses help businesses manage their inventory efficiently. Proper storage and tracking of goods allow businesses to maintain optimal stock levels, reduce stockouts, and avoid overstocking.

3.     Improved Supply Chain Efficiency: Warehouses play a key role in streamlining the supply chain by acting as central hubs where goods can be sorted, stored, and prepared for further distribution to customers or retail locations.

4.     Reducing Lead Time: With a warehouse, businesses can store products close to their customers or sales markets, which reduces lead time (the time it takes to get products to customers) and speeds up the delivery process.

5.     Bulk Storage and Consolidation: Warehouses enable businesses to store goods in bulk, helping them to take advantage of economies of scale, reduce transportation costs, and consolidate orders for more efficient shipping.

6.     Seasonal Demand Handling: During peak seasons, warehouses allow businesses to store additional stock in anticipation of higher demand. This ensures businesses can meet customer needs during busy periods, such as holidays or sales seasons.

7.     Risk Management: By storing goods in a warehouse, businesses can mitigate the risks of overproduction or market fluctuations. They can stockpile products during periods of low demand and distribute them when demand rises.

8.     Flexibility in Distribution: Warehouses allow businesses to distribute goods in smaller, more manageable shipments, rather than in one large order. This helps businesses meet the specific needs of various customers, improving service levels.

In short, warehouses are critical for businesses to manage their inventory, improve efficiency, reduce costs, and meet customer demands. They serve as essential logistical hubs in modern supply chains, ensuring the smooth flow of goods from production to end customers.

Amount of Subsidy

The subsidy amount under the NABARD Warehouse Infrastructure Fund (WIF) varies depending on the category of the applicant and the nature of the project. Here are the key subsidy details:

1.     General Category:

o    For general category applicants, NABARD provides a 25% subsidy on the total cost of the project for the construction warehouses facilities.

2.     SC/ST Category:

o    For Scheduled Caste (SC) and Scheduled Tribe (ST) applicants, the subsidy is 33.33% of the total project cost.

3.     Maximum Subsidy Limit:

o    The maximum subsidy amount available is up to ₹1 crore for storage infrastructure projects.

o    For SC/ST applicants, the subsidy amount can go up to ₹1 crore depending on the project size and capacity.

4.     Eligible Activities:

o    The subsidy covers costs associated with the construction, and modernization of various types of storage infrastructure, including warehouses.

These subsidies are provided under the Gramin Bhandaran Yojana and are intended to support the development of storage infrastructure to reduce post-harvest losses and improve market access for farmers.

Capacity of Warehouse

Under the NABARD Warehouse Infrastructure Fund (WIF), the capacity of a warehouse eligible for subsidy depends on the type of project and the applicant. While there is no fixed capacity limit, there are certain general guidelines:

1.     Minimum Capacity:

o    For farmers' groups and other eligible entities, the minimum capacity for a warehouse should generally be around 50 metric tons to 5000 metric tons for storage infrastructure projects.

2.     Maximum Capacity:

o    The maximum capacity can vary based on the scale of the project, but the total subsidy amount is limited to ₹75 lacs for general category applicants and ₹1 crore for SC/ST applicants. The subsidy is a percentage of the total project cost, so the warehouse capacity should align with the total investment required.

3.     Types of Storage:

o    The warehouse capacity is considered for different types of storage facilities, including bulk storage warehouses, cold storage, silos, and controlled atmosphere (CA) stores, depending on the specific needs of the project.

The capacity for subsidy eligibility is flexible based on the needs of the applicant and the scope of the storage infrastructure. Applicants are encouraged to propose projects with appropriate capacities based on their regional needs and market conditions, while ensuring that the overall project cost and subsidy limits align with NABARD's guidelines.

Interest Subsidy

Under the NABARD Warehouse Infrastructure Fund (WIF), the interest subsidy is provided to support the development of storage infrastructure, including warehouses, cold storage, and silos. Here are the key points regarding the interest subsidy:

1.     Interest Subsidy Rate:

o    NABARD provides an interest subsidy of 3% per annum on the loan amount for eligible projects.

2.     Loan Assistance:

o    The interest subsidy is available on loans taken from eligible financial institutions (like banks or financial organizations) for the construction, renovation, or modernization of storage infrastructure.

3.     Eligibility Criteria:

o    The interest subsidy is available for entities such as farmer groups, cooperatives, private companies, and individuals who are eligible under the NABARD guidelines.

o    The subsidy is granted for storage infrastructure projects like warehouses.

4.     Loan Tenure:

o    The loans provided under the Warehouse Infrastructure Fund can have flexible repayment terms, typically up to 7 years, depending on the project.

5.     Maximum Loan Amount:

o    The loan amount is subject to a maximum limit of ₹10 crore for each project, and the interest subsidy is applicable on this loan amount.

6.     Subsidy for SC/ST Applicants:

o    In the case of SC/ST applicants, additional support is available, including higher subsidy rates or enhanced loan limits.

The interest subsidy aims to make financing for storage infrastructure more affordable, thus encouraging the creation and modernization of warehouses facilities to reduce post-harvest losses and improve farmers' access to markets.

List of Documents

To apply for the NABARD Warehouse Subsidy Scheme under the Warehouse Infrastructure Fund (WIF), the applicant (which can be an individual, Farmer Producer Organization, cooperative, or a company) must submit a set of essential documents. Below is a list of the key documents typically required for the scheme application:

1. Project Proposal

• A detailed project report (DPR) describing the warehouse project, including the capacity, technical specifications, financial estimates, and the proposed location.

2. Application Form

• A completed application form prescribed by NABARD for the Warehouse Infrastructure Fund scheme.

3. Proof of Identity and Address of Applicant

• Aadhaar Card or Passport (for individuals)
• Identity Proof (for FPOs, cooperatives, companies: certified copy of registration documents)
• Address Proof such as utility bills, voter ID, or lease agreements.

4. Legal and Ownership Documents

• Proof of land ownership or lease agreement for the proposed warehouse site.
• Land use certificate (if required) indicating that the land is designated for agricultural or industrial use.

5. Financial Documents:

• Audited balance sheets and profit and loss statements for the past 3 years (for companies, FPOs, and cooperatives).
• Income tax returns for the last 2-3 years.
• Bank statements for the last 6 months to demonstrate the financial health of the applicant.
• Project cost breakdown showing the total investment, costs for construction, and operational expenses.

6. Business/Organization Registration Documents

• Certificate of Incorporation (for companies) or Cooperative Registration Certificate (for cooperatives).
• Farmer Producer Organization (FPO) registration document (if applicable).
• Memorandum of Association (MOA) and Articles of Association (AOA) (for companies or FPOs).

7. Loan Sanction Letter (if applicable)

• If applying for financial assistance (loan) through a bank, a loan sanction letter from the financial institution for the proposed project.

8. Detailed Cost Estimates and Feasibility Study

• Cost estimates for the construction of the warehouse and other infrastructure.
• Feasibility study reports, including market analysis, demand forecasting, and ROI projections.

9. Subsidy and Loan Repayment Plan

• A repayment plan for the loan (if applicable), along with the interest subsidy details (if applicable).

10. Proof of Association (for FPOs and Cooperatives)

• List of members of the FPO or cooperative (for verification of eligibility as a collective entity).
• Member contribution records and shareholding pattern for cooperatives/FPOs.

11. Technical Details of the Project:

• Design and layout plan for the warehouse and associated infrastructure (storage space, temperature control systems, etc.).
• Technical specifications for construction, including the type of materials, systems, and machinery to be used.

12. Environmental Clearance (if applicable)

• For certain large-scale projects, environmental clearance may be required, especially if the project involves large-scale construction or if it is near sensitive areas.

13. Land Conversion Certificate (if applicable)

• If the land requires conversion for industrial or commercial use, a land conversion certificate must be submitted.

14. Photographs of Proposed Site

• Photographs of the proposed site where the warehouse or storage facility will be built.

15. NOC from Local Authorities (if applicable)

• A No Objection Certificate (NOC) from the local governing authority or municipality, especially for urban projects or large-scale warehouses.

16. Other Certifications (if applicable)

• Fire safety certificate or health and safety compliance documentation (depending on the nature of the warehouse).
• ISO certifications or any other relevant compliance certifications.

Requirement of Financing

Yes, under the NABARD Warehouse Subsidy Scheme, financing is required for the construction of warehouse infrastructure. While NABARD provides a subsidy (up to 25% of the project cost for general applicants and 33.33% for SC/ST applicants), applicants must secure the remaining funds through loans from banks or financial institutions.

These loans typically come with:

• Subsidized interest rates (3% interest subsidy).
• Repayment periods of up to 7 years.
• Loan amounts can go up to ₹10 crore, depending on the project scale.

The applicant (e.g., farmer groups, FPOs, cooperatives) must provide financial documentation and prove their ability to repay the loan.

FBO & Small Farmers having Benefits

Under the NABARD Warehouse Subsidy Scheme, small farmers can form a community and register it as a Farmer Producer Organization (FPO), Farmer Producer Company (FPC), or a cooperative to avail benefits for the development of storage infrastructure such as warehouses, cold storage, and silos. These community-based groups can significantly benefit from the scheme, which provides support for infrastructure development, loans, and subsidies. Here's how small farmers can make a community and register it under the scheme:

Steps to Form a Community of Small Farmers and Register for the NABARD Warehouse Subsidy Scheme:

1.     Form a Group or Collective:

o    Small farmers can come together to form a community group, cooperative, or a Farmer Producer Organization (FPO). The group should have a clear goal of improving agricultural practices, managing post-harvest storage, and marketing their produce collectively.

2.     Eligibility for Community-Based Registration:

o    The collective or community should have a sufficient number of members (generally a minimum of 10 to 20 farmers) to register as a Farmer Producer Organization (FPO) or Farmer Producer Company (FPC).

o    The group must operate with the objective of improving the income and welfare of its farmer members by jointly managing their produce and reducing costs related to storage, transportation, and marketing.

3.     Registration Process:

o    Once the community group is formed, the next step is to register the organization. This can be done under the following frameworks:

§  Farmer Producer Organization (FPO): These are typically registered under the Companies Act or the Cooperative Societies Act, depending on the state and the structure chosen.

§  Farmer Producer Company (FPC): This is another option for small farmers to register under the Companies Act, which allows the group to operate on a larger scale and offer members access to better financial resources and markets.

4.     Eligibility for NABARD Warehouse Subsidy Scheme:

o    Once the community or group is registered, they become eligible to apply for the Warehouse Infrastructure Fund (WIF) for creating storage infrastructure like.

o    The group can apply for a capital subsidy to help finance the construction or renovation of storage facilities, including warehouses for their collective produce.

5.     Subsidy and Loan Assistance:

o    Under the NABARD Warehouse Subsidy Scheme, the registered community or FPO can receive a 25% subsidy on the total project cost for warehouse infrastructure, and up to 33.33% subsidy for SC/ST farmers. The maximum subsidy amount is up to ₹75 lacs for general farmers and ₹1 crore for SC/ST applicants.

o    The group can also avail loan assistance at subsidized interest rates, typically with a 3% interest subsidy on the loan amount for infrastructure development.

6.     Loan Repayment and Flexibility:

o    Loans under the scheme come with flexible repayment terms, usually extending up to 7 years, depending on the size and type of infrastructure project.

Benefits of Forming a Community for Small Farmers Under the NABARD Warehouse Subsidy Scheme:

1.     Increased Storage Capacity:

o    By forming a community and registering as a group, small farmers can pool resources to build larger and more efficient storage facilities such as warehouses and cold storage, which individual farmers might not be able to afford on their own.

2.     Reduced Post-Harvest Losses:

o    Community-based storage facilities help farmers preserve their produce in optimal conditions, reducing post-harvest losses and improving the quality of the goods for better market pricing.

3.     Better Market Access:

o    With a community-based storage facility, farmers can store their produce until market prices are favorable, allowing them to avoid distress sales during the peak harvest season.

4.     Economies of Scale:

o    Forming a community helps small farmers leverage economies of scale by pooling their resources. This makes infrastructure projects like warehouses more affordable and effective for the group.

5.     Improved Financial Support:

o    As a registered Farmer Producer Organization (FPO) or cooperative, the community can access better financial resources, including subsidies, loans, and government schemes, which can help in the development of storage infrastructure.

6.     Strengthened Bargaining Power:

o    A registered community provides small farmers with greater bargaining power to negotiate better prices for their produce, both during storage and marketing, as they can sell in bulk.

Conclusion:

By forming a community of small farmers and registering it under the NABARD Warehouse Subsidy Scheme, they can access financial assistance, subsidies, and loan support for creating much-needed storage infrastructure. This helps reduce post-harvest losses, improves income stability, and provides better market access, ultimately empowering small farmers and improving their collective bargaining power.

Idol Dimension of warehouse

Under the NABARD Warehouse Subsidy Scheme, the ideal dimensions of a warehouse depend on the type of storage facility being constructed and the specific needs of the project. However, there are general guidelines and considerations for warehouse dimensions based on capacity, storage requirements, and project scale:

General Guidelines for Warehouse Dimensions:

1.     Minimum Storage Capacity:

o    For warehouses eligible under NABARD's Warehouse Infrastructure Fund (WIF), the minimum storage capacity should typically be 5,000 metric tons. This ensures the warehouse is commercially viable and meets the needs of larger agricultural or commercial operations.

2.     Height and Roof Clearance:

o    Ceiling height should be sufficient to allow stacking and easy movement of goods. Generally, a height of 6 to 8 meters is recommended for efficient storage and handling.

o    Roof clearance is critical for ensuring there is enough space for stacking goods and for the safe operation of handling equipment (like forklifts).

3.     Building Layout:

o    Warehouses should have multiple sections such as loading docks, storage zones, and management offices.

o    Loading/unloading zones should have enough space to accommodate large vehicles and facilitate smooth transportation of goods.

o    Adequate ventilation, lighting, and access points should be incorporated into the design.

4.     Foundation and Structure:

o    The foundation and structural dimensions depend on the materials to be stored, the type of warehouse (e.g., cold storage vs. general storage), and the geographical area.

5.     Expansion Potential:

o    Warehouses should be designed to allow for future expansion, especially for growing agricultural demands.

o    Modular designs allow easy scaling by adding additional storage sections.

6.     Warehouse Specifics Based on Type:

o    General storage warehouses may have simpler structural designs and could vary more widely in dimensions depending on the specific needs of the producer or cooperative.

7.     Regulatory and Safety Considerations:

o    The dimensions should also meet local regulatory and safety standards set by authorities. Fire safety, emergency exits, and compliance with environmental guidelines (like waste management) are key considerations.

Conclusion:

While there is no fixed "ideal" dimension set by NABARD for all warehouse projects, the general requirement is that the warehouse must be large enough (typically starting from 5,000 metric tons of capacity) to make it a commercially viable storage solution. It's essential to create a detailed project proposal with specific dimensions that align with the needs of the operation, the type of goods stored, and local conditions. The NABARD Warehouse Subsidy Scheme supports these dimensions by offering financial assistance and subsidies based on the scale and capacity of the storage infrastructure.