Farmer and Protected-Cultivation Industry Perspective | August 2026
Executive Summary
The National Horticulture Board (NHB) issued Public Circular No. NHB/CC/Guidelines/2026-27/2101 dated 21 August 2026, revising various provisions of its Commercial Horticulture and Cold Storage Scheme.
Among the changes, the financial assistance available for protected-cultivation projects in General Areas has been revised to 35%.
We respectfully submit that the revised assistance level merits further review in light of current project costs, financing conditions and the importance of protected cultivation to the development of modern horticulture.
Our primary request is that the Government reconsider the reduction and evaluate whether the earlier level of assistance can be retained, particularly after taking into account current market costs and admissible cost norms.
If the Government ultimately decides to retain the 35% rate, we respectfully request that it be implemented prospectively from 1 April 2027, with an appropriate transition mechanism for projects that were already substantially progressed under the earlier framework.
This approach would allow farmers, banks, implementing agencies and industry participants adequate time to adjust to the revised financial structure while ensuring a smooth implementation of the amended scheme.
1. The importance of a clear transition mechanism
Protected-cultivation projects generally require substantial planning and financial preparation before physical construction begins.
Depending on the project and circumstances, the process may include:
- crop and market assessment;
- technical feasibility studies;
- preparation of a Detailed Project Report;
- bank appraisal and loan sanction;
- application for Grant of Clearance;
- project execution;
- completion documentation;
- Joint Inspection;
- subsidy processing; and
- release of assistance to the financing institution.
The complete process can therefore extend over several months and, in individual cases, substantially longer.
Consequently, a change in financial assistance can affect projects that were planned and financially evaluated under the previous framework.
The revised circular provides for case-to-case consideration of ongoing and pending LoC/GoC applications and subsidy claims.
We respectfully suggest that a detailed, category-wise transition framework would provide greater certainty to farmers, banks and implementing agencies.
2. Projects at different stages
Projects may be at substantially different stages when a policy amendment comes into effect.
For example:
- some projects may already have approved assistance;
- some may have completed construction;
- some may be under construction;
- some may have received Grant of Clearance;
- some may have submitted GoC applications;
- some may have sanctioned bank loans;
- some may be under bank appraisal; and
- some may have completed substantial technical and financial preparation.
These categories involve different levels of financial commitment.
We therefore respectfully request that the Government consider specific transitional provisions for projects where there is documented evidence of a genuine pre-existing commitment.
A possible framework could be:
Project stage | Suggested transitional treatment |
Assistance already approved | Continue under the existing approval, subject to applicable conditions |
Project completed / claim submitted | Process according to the applicable approval and project conditions |
Construction underway following valid approval | Consider protection under the earlier assistance framework |
GoC already issued | Consider transition under the framework applicable at the time of clearance |
GoC application submitted | Provide a defined transition mechanism |
Bank loan sanctioned | Provide a reasonable transition/filling period |
Loan application under formal appraisal | Allow documented cases to be considered under transitional provisions |
New projects after the notified transition date | Apply the revised assistance structure |
The final categorisation may, of course, be determined by NHB based on its administrative and financial requirements.
3. Impact of the revised assistance level
The reduction from 50% to 35% can materially affect the financing structure of a protected-cultivation project.
For illustration, consider an eligible project cost of ₹2 crore:
Particular | At 50% | At 35% |
Illustrative eligible project cost | ₹2.00 crore | ₹2.00 crore |
Illustrative assistance | ₹1.00 crore | ₹70 lakh |
Balance outside assistance | ₹1.00 crore | ₹1.30 crore |
The difference in illustrative assistance is ₹30 lakh.
The actual assistance for an individual project will depend on the applicable scheme provisions, eligible components, ceilings and admissible cost norms.
However, the example demonstrates why a change in assistance can require a farmer or lending institution to reassess the project's financial structure.
For projects already under consideration, this may affect promoter contribution, borrowing requirements, collateral, cash-flow projections and repayment calculations.
4. The banking perspective
Protected-cultivation projects are frequently financed through institutional credit.
A bank evaluating such a project may consider:
- total project cost;
- promoter contribution;
- expected financial assistance;
- term-loan requirement;
- collateral and security;
- projected production;
- operating expenses;
- expected revenue;
- cash flows; and
- repayment capacity.
If the expected assistance changes after these assumptions have been incorporated into a project appraisal, the financing structure may require reassessment.
A clear transition mechanism would therefore benefit not only farmers but also banks and financial institutions.
It would reduce uncertainty and allow lenders to make consistent decisions regarding projects already under appraisal or sanction.
5. Current project-cost conditions
Protected cultivation requires investment in a range of specialised components, including:
- galvanised structural steel;
- aluminium profiles;
- greenhouse film;
- insect-proof and shade nets;
- irrigation systems;
- filtration and fertigation equipment;
- pumps;
- electrical systems;
- automation;
- foundations;
- water infrastructure;
- transportation; and
- installation and erection.
The prices of these components can vary depending on specifications, market conditions, location, freight and procurement arrangements.
Industry feedback indicates that project costs have increased during the recent period and that, in some cases, market prices may exceed existing admissible cost assumptions.
We therefore respectfully request that NHB periodically review admissible cost norms against prevailing market conditions.
Updated cost norms would help ensure that the assistance framework reflects realistic project economics.
6. Assistance and actual project expenditure
It is important to distinguish between the assistance percentage and the farmer's actual expenditure.
Financial assistance is subject to the applicable eligible components, ceilings and admissible cost norms.
If the actual market cost of a component exceeds the admissible cost, the difference is borne by the project promoter.
Accordingly, a review of the assistance percentage may appropriately be considered together with a review of admissible cost norms.
A coordinated review would provide a more complete assessment of the actual level of support available to farmers.
7. Tax and financing costs
Protected-cultivation projects also involve applicable taxes, financing expenses, transportation and other project-related costs.
The applicable GST rate varies according to the tariff classification of individual goods and components.
We respectfully request that the relevant authorities examine whether the overall tax and financing burden on certified protected-cultivation infrastructure is consistent with the broader objective of encouraging modern horticultural investment.
Any appropriate fiscal or administrative mechanism may be considered within the Government's existing policy framework.
8. Supporting modern horticulture
Protected cultivation forms an important part of modern horticulture.
It can support:
- high-value crop production;
- improved crop-environment management;
- efficient use of irrigation and fertigation;
- better production planning;
- improved quality consistency;
- climate-risk management; and
- technology adoption.
The sector also supports a wider ecosystem involving manufacturers, engineers, greenhouse designers, irrigation companies, automation providers, transporters, installation teams, agronomists and farm workers.
Maintaining a predictable investment environment can therefore benefit both farmers and the wider horticulture ecosystem.
9. Strengthening scheme implementation
We recognise that Government schemes require appropriate safeguards to ensure that assistance reaches eligible beneficiaries and that public resources are used effectively.
We support measures that improve:
- beneficiary verification;
- documentation;
- project inspection;
- prevention of duplicate assistance;
- financial transparency;
- ownership verification;
- digital monitoring; and
- compliance with scheme conditions.
Such measures can strengthen the effectiveness and credibility of the scheme.
At the same time, we respectfully suggest that governance improvements and changes to financial assistance can be considered separately, with appropriate transition arrangements for projects already under process.
10. Clarification of pending applications
The provision for case-to-case consideration of ongoing and pending LoC/GoC applications and subsidy claims would benefit from detailed operational guidance.
We respectfully request that NHB publish criteria covering, as far as administratively feasible:
- applications already submitted;
- GoCs already issued;
- sanctioned loans;
- projects under construction;
- completed projects;
- pending subsidy claims;
- applications under bank appraisal; and
- projects with documented pre-existing commitments.
Clear criteria would reduce uncertainty and help applicants and banks plan their next steps.
11. Prospective implementation
If the Government ultimately decides to retain the revised 35% assistance level, we respectfully request that implementation be prospective.
We suggest 1 April 2027 as an appropriate implementation date for genuinely new projects.
This would provide approximately seven months from the date of the circular for stakeholders to adjust.
During this period:
- farmers could reassess project feasibility;
- banks could revise appraisal assumptions;
- NHB could issue detailed transition instructions;
- State agencies could align their procedures;
- project developers could update quotations;
- suppliers could adjust commercial arrangements; and
- applicants could make informed investment decisions.
The proposed transition would not prevent the Government from implementing strengthened eligibility and compliance requirements in accordance with the revised circular.
12. Grandfathering of genuine existing commitments
If the revised financial assistance is retained, we respectfully request that projects with genuine and documented commitments before the effective date receive appropriate protection.
Possible categories could include projects with:
- sanctioned bank loans;
- issued GoCs;
- submitted GoC applications;
- construction already underway;
- completed construction;
- pending subsidy claims; or
- other documented financial commitments recognised by NHB.
The precise eligibility criteria can be established by NHB.
The objective would be to distinguish genuinely committed projects from entirely new applications while maintaining appropriate safeguards against duplication or misuse.
13. A predictable policy framework
Farmers and financial institutions make long-term investment decisions based on the policy framework available at the time of appraisal.
Government must naturally retain the ability to revise schemes as economic conditions and policy priorities evolve.
However, predictable transition arrangements can make such changes easier to implement.
For capital-intensive agricultural projects, a policy principle of advance notice and prospective implementation could provide greater certainty to:
- farmers;
- banks;
- project developers;
- manufacturers;
- State departments; and
- implementing agencies.
Major changes in assistance percentages, admissible costs or eligibility could, where administratively feasible, be announced sufficiently in advance and applied to new projects from the beginning of a financial year.
14. Recommendations
We respectfully submit the following recommendations for consideration:
1. Review the 35% assistance level
Reassess the revised assistance level in light of current project costs, financing conditions and the strategic importance of protected cultivation.
2. Review admissible cost norms
Update relevant cost norms periodically to reflect prevailing market conditions.
3. Provide clear transitional provisions
Issue category-wise guidance for ongoing and pending projects.
4. Protect genuine pre-existing commitments
Consider appropriate grandfathering for projects with documented financial or implementation commitments under the earlier framework.
5. If necessary, implement the revised rate prospectively
If the 35% rate is retained, consider applying it to genuinely new projects from 1 April 2027.
6. Maintain strong compliance safeguards
Continue strengthening beneficiary verification, inspection, documentation and monitoring.
7. Provide time-bound processing guidance
Publish indicative service timelines for GoC processing, inspections, subsidy approval and release wherever feasible.
8. Continue stakeholder consultation
Engage farmers, banks, horticulture experts, State agencies and industry representatives when making major changes to capital-intensive horticulture programmes.
Conclusion
The protected-cultivation sector recognises that Government schemes must evolve with changing economic and administrative requirements.
Our representation is intended to support a smooth and predictable implementation of the revised NHB framework.
We respectfully request that the Government review the reduction in assistance in light of current project costs and financing conditions.
If the 35% rate is ultimately retained, we request that it be implemented prospectively from 1 April 2027, with suitable transitional protection for genuine projects already committed under the earlier framework.
Such an approach would provide stakeholders with time to adjust while preserving the Government's ability to strengthen scheme administration and accountability.
The objective shared by Government, farmers and the protected-cultivation industry is the same: effective use of public resources, sustainable investment and continued development of modern horticulture in India.
A clear and predictable transition framework can help achieve all three objectives.
