New Delhi: The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved a Dairy Processing and Infrastructure Development Fund with an outlay of Rs10,881 crore for 2017-18 to 2028-29 to boost the dairy sector.

The new fund to be managed by the National Dairy Development Board (NDDB) and the National Dairy Development Cooperation (NCDC) will be used to provide loan for building an efficient milk procurement system and other processing infrastructure.

“The CCEA approved the Dairy Processing Infrastructure Development Fund (DIDF) with an outlay of Rs10,881 crore. This was a budget announcement. It will benefit improving milk cooperatives and also farmers," law minister Ravi Shankar Prasad told reporters after the meeting.

Under the DIDF, loan will be provided at an interest rate of 6.5% per annum with a repayment period of 10 years with initial two years of moratorium, an official statement said.

The state government will be a guarantor of loan repayment. If the end user is not able to contribute its share for the project sanctioned, the state will contribute the same, it said.

Initially, the loan under the DIDF will be given to 39 profit-making milk unions of 12 states, Prasad said.

Other milk cooperatives can apply for the loan under the DIDF in subsequent years after they become eligible on the basis of their net worth and profit levels.

Milk unions, state dairy federations, multi-state milk cooperatives, milk producer companies and NDDB subsidiaries can avail of the loan after meeting the eligibility criteria.

Loan will be provided for putting in place an efficient milk procurement system by setting up of chilling infrastructure and installation of electronic milk adulteration testing equipment, creation, modernisation and expansion of processing infrastructure and manufacturing faculties for value-added products.

Under the DIDF, Rs8,004 crore loan will be provided by NABARD to the NDDB and the NCDC.

Rs 2,001 crore will be the contribution by end-borrowers and Rs12 crore will jointly be chipped in by the NDDB and the NCDC, and Rs864 crore by the agriculture ministry towards interest subvention for the next 10 years.

The move would benefit 95 lakh farmers and help create additional milk processing capacity of 124 lakh litres per day and value added products of manufacturing capacity of 59.78 lakh litre per day. It is expected to provide direct and indirect jobs to 2.4 lakh people.