India is one of the largest producers and consumers of milk in the world. With a large population of livestock available and good market demand, a lot of individuals from farmers to entrepreneurs, are keen to invest in the dairy industry and start their dairy farms. 

The first step towards starting a business is to build a strong financial footing. Many times, people struggle to raise funds for the initial investment. With the government actively framing new policies to provide financial assistance to farmers, there are a good number of options available for aspiring dairy farmers and entrepreneurs to get a loan. Below are the top three options to get a loan for establishing a dairy farm.

 

1. Mudra Loan Under Pradhan Mantri Mudra Yojana
The Pradhan Mantri Mudra Yojana was started to extend financial assistance in the form of microcredit up to Rs. 10 Lakh to individuals and MSMEs. It also provides loans for activities allied to agriculture like dairy, pisciculture, poultry, and livestock, etc. The scheme covers three products namely ‘Shishu’ that covers loans up to Rs. 50,000, ‘Kishore’, covering loans up to Rs. 5 Lakh, and ‘Tarun’, covering loans up to Rs. 10 Lakh. 


How to Apply: Loans under the Mudra scheme can be availed through different banks and financial institutions enrolled under the scheme which includes several Public Sector Banks, Private Sector Banks, State-operated cooperative banks, and regional rural banks (RRBs) from regional sectors.  You can also apply for a loan for starting your dairy farm under the Mudra scheme online by registering here.

Documents required: For applying for a Mudra loan you need a duly filled application form, identity proof (Adhaar card, Voter’s Id card, Driver’s license, or passport) proof of address, photographs, and in certain cases documents like quotation of equipment/machinery needed to be purchased with the loan amount.


2. Agriculture Finance Scheme By IDBI Bank
The IDBI Bank has been actively extending financial assistance in the form of different financial products to the agriculture sector of the economy since its inception. Under its Agriculture Finance Scheme, the bank provides loans ranging from Rs. 20,000 up to Rs. 10 Lakh to individuals and groups of farmers for buying milch animals, constructing cattle sheds, and for purchase of dairy equipment.


How to Apply: You can avail of the loan by filling the application form at the bank branch or online by clicking here.


3. Cent Dairy Scheme By Central Bank of India
The Central Bank of India, under its Cent Dairy Scheme, provides loans for the establishment of dairy farms/units for milk production up to Rs. 3 Lakh. The loan amount depends on the cost of the dairy unit, the feasibility of the project, and the borrower’s repaying capacity. Loans up to Rs. 1.60 Lac are extended on the hypothecation of livestock and other assets purchased out of loan money, while the loans above Rs. 1.60 Lac are provided on creation of mortgage on land having market value covering 100% of the loan amount.

How to Apply: You can apply for the loan by visiting your nearest Central Bank of India branch and filling the application form.


4. Bonus: Private Financing Institutions
Apart from the above-mentioned three options, there’s another bonus option that can be considered if you are looking to expand your dairy farm or modernizing it. Bajajfinserv has come up with a business loan up to Rs. 45 Lakh for dairy farmers/entrepreneurs. The loan is provided without any collateral and comes with a Flexi-loan facility, under which you can withdraw money from a pre-approved credit limit as and when required. Interest is charged on the amount withdrawn and not on the entire loan amount.

 

How to Apply: You can apply for the loan by filling the application form online. After duly filling the application form, you need to upload your bank statements for the last 6 months. After your application is approved, the loan amount will be credited to your bank account within 24 hours.

Who are eligible to apply for the loan: Individuals between the age of 24 years to 70 years, with a credit score of 685 or higher, and vintage proof of running a dairy business from at least 3 years can apply for the loan.


The dairy business is one of the most rewarding businesses in India. It can also be very profitable, but it does require a lot of capital to get started. Getting a loan through banks may take some time, however, there are other options available if you know where to look. This list will help you get started with your new business!

 

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