Financial assistance up to 40% available for establishing farm machinery custom hiring centres

SMAM scheme aims to promote mechanization in areas with low farm power availability


Under its Sub Mission on Agricultural Mechanization (SMAM) scheme, the Indian government is offering financial assistance to rural entrepreneurs (rural youth and farmer as an entrepreneur), cooperative societies of farmers, registered farmers societies, farmer producer organizations (FPOs) and panchayats to establish custom hiring centres (CHCs) for agriculture machinery. The scheme aims at making farm machines available on rent for the small and marginal farmers (SMFs) through establishment of CHCs, and also provide an avenue of income generation at the village level.

The maximum permissible assistance per machine under the project is 40% of the machine cost. The CHCs having the project cost more than Rs 25 lakh will be established under the model of credit-linked back-ended financial assistance, which implies beneficiaries will be provided subsidy after taking loans from designated banks.

The bank will lock the financial assistance released to the beneficiaries for a period of four years. The beneficiary will repay the complete bank loan within the period of not less than four years. The beneficiary will not be allowed to transfer/sell/ mortgage the CHC to any one before the completion of six years.

Those interested in establishing CHCs may visit the agriculture/horticulture offices in their respective districts to seek guidance. They can also visit the website for detailed information.

Cost norms and pattern of financial assistance under SMAM for CHCs

Project category Maximum permissible project cost Pattern of assistance
Procurement subsidy for establishment of CHC up to Rs 10 lakh Project based 40% limited to Rs 4 lakh, whichever is less
Procurement subsidy for establishment of CHC up to Rs 25 lakh Project based 40% limited to Rs 10 lakh, whichever is less
Procurement subsidy for establishment of CHC up to Rs 40 lakh Project based 40% limited to Rs 16 lakh, whichever is less
Procurement subsidy for establishment of CHC up to Rs 60 lakh Project based 40% limited to Rs 24 lakh, whichever is less


Monitoring of CHCs

The established CHCs are provided technical assistance from Krishi Vigyan Kendras (KVKs)/enlisted manufacturers/approved testing centres, farm machinery training & testing institutes (FMTTIs) and Indian Council of Agricultural Research (ICAR) centres to maintain and train CHC entrepreneurs. The CHCs established under the SMAM are supervised by the district agriculture officer for its operation so that custom hiring charges are reasonable and affordable to small and marginal farmers.


Objectives of custom hiring enterprises

  • To promote mechanization in districts with low farm power availability.
  • To provide hiring services for various agricultural machinery/implements and post-harvest technology (PHT) equipment applied for different operations.
  • To expand mechanized activities during cropping seasons in large areas, especially in small and marginal holdings.
  • To involve manufacturers/Krishi Vigyan Kendras (KVKs) in operation and maintenance of machines in the hiring centres.
  • To Introduce improved/newly developed agricultural implements and machines in crop production.


Area of operation and composition of CHCs

  • CHCs are established in the districts identified for implementation in the state annual action plan (AAP).
  • The districts in state AAP include villages having low farm power availability and large areas under small and marginal holdings.
  • Each CHC of agricultural machinery/implements should have the capacity to cover a minimum area of 10 hectares (ha) per day and at least 300 ha in a cropping season. Machines can be hired for entire operations from land development to residue management.
  • Each CHC is set up on a specific crop-based, cost-based and cluster-based approach. Each centre should have small crop-specific machinery suitable for local requirements for mechanized farming under small and marginal holdings.
  • The following parameters are chosen for selection of village/town for setting up of CHCs:
  1. Low ratio of farm power availability.
  2. Low number of tractor population.
  3. Small & marginal operational Holdings
  4. Less productivity of food grains but potential to enhance productivity.
  • District-level agencies identify/invite applications to set up CHCs.
  • Any business model can be adopted for expanding the reach of mechanization through custom hiring centres. It is necessary to maintain, upgrade the CHCs from time to time.

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