Dairy Entrepreneurship Development Scheme (DEDS)

The Dairy Entrepreneurship Development Scheme (DEDS) was a crucial agriculture scheme launched by the Government of India in September 2010. Implemented through the National Bank for Agriculture and Rural Development (NABARD), the policy was specifically designed to address deep-rooted structural problems within the country’s vast but largely unorganized dairy sector.

The key challenge was the fragmented industry, which suffered from weak cold chain infrastructure, significant milk losses, and poor quality control due to outdated farming and handling practices. This combination limited profitability and self-employment opportunities in rural areas. The resulting policy was to promote entrepreneurship and inject capital for modernization across the dairy value chain.

DEDS aimed to provide financial benefits, primarily in the form of a back-ended capital subsidy and institutional bank credit, for eligible projects. The scheme’s broad target group included individual farmers, SHGs, FPOs, and private entrepreneurs across India. The eligibility covered activities from setting up small, modern dairy farms to establishing milk chilling, processing, and transportation units. Although the application window for this initiative closed in March 2020, DEDS successfully spurred investment and laid essential groundwork for future programmes aimed at clean milk production and rural development.

Overview of the Scheme

The Dairy Entrepreneurship Development Scheme (DEDS) was a Central Sector Scheme launched by the Government of India in September 2010. It was implemented by the Department of Animal Husbandry, Dairying and Fisheries (DADF) and was credit-linked through the National Bank for Agriculture and Rural Development (NABARD), which acted as the main implementing agency.

Key Components and Funding Pattern

The primary objective of this agriculture scheme was to promote setting up modern dairy farms for clean milk production, encourage heifer calf rearing for better breeding stock, and bring structural changes to the unorganized dairy sector by providing necessary infrastructure.

• Funding Pattern: The scheme was credit-linked, meaning assistance was provided through institutional credit from banks, with the government’s support coming as a back-ended capital subsidy.
  • Subsidy: 25% of the project cost for the General Category (33.33% for SC/ST farmers).
  • Bank Loan: The balance portion, with a minimum of 40% of the project cost.
• Coverage (Sectors): The DEDS provided assistance for a wide array of activities, including:
  • Establishment of small dairy units (up to 10 animals).
  • Rearing of heifer calves.
  • Purchase of milking machines/milk testers and bulk milk cooling units.
  • Establishment of dairy processing equipment for value-added products.
  • Setting up cold chain facilities and private veterinary clinics.

Current Status

The Dairy Entrepreneurship Development Scheme (DEDS) was implemented from September 2010 to March 2020 and is currently a closed scheme. Support for dairy infrastructure and development is now primarily channelled through initiatives like the National Programme for Dairy Development (NPDD), which was restructured in July 2021.

Objectives 

The Dairy Entrepreneurship Development Scheme (DEDS), a significant agriculture scheme, was designed with several clear objectives aimed at modernizing India’s dairy sector, boosting rural employment, and improving milk quality. The main purpose was to stimulate investment across the entire dairy value chain.

• Promote the establishment of modern, small dairy farms to encourage clean milk production practices.
• Generate self-employment opportunities in rural areas, especially for the youth and women.
• Support the purchase of quality dairy stock, like exotic and crossbred milch cows, to improve herd genetics.
• Encourage the establishment of facilities for processing and value addition of milk, such as making paneer or flavoured milk.
• Provide infrastructure for cold chain and transportation to reduce post-harvest losses and ensure better market access.
• Upgrade the technological base of the dairy sector by financing machinery like milking machines, bulk milk coolers, and milk testers.

Key Features / Benefits 

The Dairy Entrepreneurship Development Scheme (DEDS) offered substantial financial and developmental benefits to encourage investment and modernization in the dairy sector. The central features were centred around providing direct financial assistance through a back-ended capital subsidy linked to bank credit. This made it easier for eligible beneficiaries to access necessary funds for large and small projects.

• Capital Subsidy for Projects: This was the primary financial benefit. The government covered a portion of the project cost after the beneficiary successfully secured and repaid a bank loan installment.
  • Explanation: This was given as a back-ended subsidy, meaning the bank held the subsidy amount and adjusted it towards the last installments of the loan.
• Differential Subsidy Rates (General Category): General category beneficiaries were eligible to receive a 25% subsidy on the total project cost.
  • (Example: For a project costing ₹5 lakh, the subsidy amount would be ₹1.25 lakh).
• Enhanced Subsidy for SC/ST: Individuals belonging to Scheduled Caste (SC) and Scheduled Tribe (ST) categories received a significantly higher subsidy percentage.
  • Explanation: To promote inclusive development, SC/ST beneficiaries were entitled to a 33.33% subsidy on the capital cost of their project.
• Credit-Linked Investment: The scheme mandated that projects must be funded through institutional bank loans, which ensured financial discipline and viability.
  • Explanation: The subsidy was only granted if the beneficiary obtained a minimum of 40% of the project cost as a bank loan, guaranteeing the project was evaluated for feasibility.
• Support for Clean Milk Production: DEDS offered financial assistance for crucial equipment that directly improved milk quality and hygiene.
  • (Example: Farmers could get support for purchasing bulk milk cooling units and milking machines, crucial for reducing bacterial load and spoilage).
• Funding for Value Addition: The scheme supported entrepreneurs looking beyond basic milk production into processing and marketing of dairy products.
  • Explanation: Subsidies were available for setting up small-scale units for making value-added products like ghee, cheese, or fermented milk products.

Eligibility Criteria 

The eligibility criteria for the Dairy Entrepreneurship Development Scheme (DEDS) were intentionally broad to include various participants in the dairy sector, thereby maximizing its reach across India. The scheme was primarily credit-linked, meaning the beneficiary needed to secure a bank loan to qualify for the government’s subsidy.

• Individual Farmers and Entrepreneurs: Any farmer or person aspiring to start a dairy-related business was eligible.
  • Explanation: This was the primary target group, ensuring single-person units could benefit from the financial assistance provided.
• Organized Groups/Entities: This category included formal organizations working in the dairy sector.
  • Criteria: SHGs (Self-Help Groups), Dairy Cooperative Societies, Milk Unions, Milk Federations, and Panchayat Raj Institutions were all eligible entities.
• Special Categories (Priority): While general eligibility applied to all, preference was officially given to applicants from socially and economically weaker sections.
  • Priority Included: Women, SC/ST categories, landless farmers, small and marginal farmers, and farmers residing in drought-prone areas.
• Family Rule: To prevent misuse of the grant, only one member of a family could avail the subsidy for a particular component.
  • Condition: However, a second family member could apply if they established a completely separate unit with distinct infrastructure located at least 500 meters away from the first unit.

Key Mandatory Documents

To complete the application process, a detailed project report (DPR) approved by the bank and proof of identity/residence were essential. SC/ST applicants needed a valid Caste Certificate to claim the higher subsidy. The bank ultimately sanctioned the project after verifying the project’s viability and the applicant’s criteria.

Application Process

The Dairy Entrepreneurship Development Scheme (DEDS) utilized a credit-linked application process, meaning the financial institution – the bank – was the primary point of contact for the entrepreneur, not a central government portal.

The process primarily followed an offline route through scheduled Commercial Banks, Regional Rural Banks (RRBs), State Cooperative Banks, or other financial institutions eligible for NABARD refinance.

Step-by-Step Application Flow

1. Project Proposal Preparation: The entrepreneur must first create a detailed Project Report (DPR) covering the technical and financial aspects of the proposed dairy unit, aligning it with the scheme’s components (e.g., a 10-animal unit, milk cooling unit).
2. Submission to Bank: The applicant submits the project report and the completed application form to their chosen eligible bank branch.
   • Documents: Mandatory documents include Identity Proof (Aadhaar/Voter ID), Address Proof, Land Ownership/Lease documents, detailed Project Report (DPR), and the Caste Certificate (for SC/ST).
3. Bank Appraisal and Sanction: The bank appraises the project as per its lending norms. If the project is deemed viable, the bank sanctions the total project cost minus the applicant’s mandatory margin money (minimum 10%).
4. Subsidy Claim (Bank to NABARD): After the bank releases the first loan installment, the bank’s controlling office uploads the details to the NABARD DEDS Portal (ensure.nabard.org) to block the eligible subsidy amount.
5. Subsidy Release and Adjustment: NABARD sanctions and releases the subsidy amount to the financing bank. The bank then credits this amount to a reserve fund/escrow account for the borrower and adjusts it against the last installments of the loan, thus reducing the effective loan burden.

Tips for a Smooth Application

• Bank Liaison: Maintain regular contact with the bank manager, as they are the key facilitators of the entire process, including the subsidy claim.
• Viable DPR: Ensure your project report is realistic, technically sound, and financially viable; the bank will scrutinize this closely.
• Land Proof: Have clear legal documentation for the land where the unit will be established (ownership or long-term lease).

Challenges or Limitations 

While the Dairy Entrepreneurship Development Scheme (DEDS) offered substantial support, applicants often faced practical challenges in the subsidy process. These limitations were common to many credit-linked schemes and required careful preparation.

• Delay in Subsidy Release: Since the subsidy was back-ended (released after loan disbursal), funds often took time to reflect in the borrower’s account, impacting cash flow.
  • Solution: Factor in a 6–12 month waiting period for the final subsidy adjustment when planning your project budget.
• Bank Dependence: The bank’s willingness and speed in appraising the project and claiming the subsidy from NABARD largely dictated the process.
  • Solution: Build a strong relationship with the loan officer and follow up regularly on the status of the subsidy claim.
• Detailed Documentation: The requirement for a detailed Project Report (DPR) and clear land records was often complex for first-time or small farmers.
  • Solution: Seek professional help from a Krishi Vigyan Kendra (KVK) or a consultant to prepare a financially viable and complete DPR.
• Risk of Loan Default: The entrepreneur bore the full risk of the bank loan until the subsidy was adjusted, making initial years financially challenging.
  • Solution: Secure insurance for your livestock and use good management practices to ensure the business generates enough revenue to cover timely loan repayments.

Government Support & Future Outlook 

The Dairy Entrepreneurship Development Scheme (DEDS), while now discontinued (ceased operations in March 2020), paved the way for robust convergence with other agricultural missions.

• Linkage to Successor Schemes: The goals of promoting dairy infrastructure and quality control are now largely addressed by the National Programme for Dairy Development (NPDD), which was restructured in July 2021 and runs until 2025-26 with an enhanced outlay.
• Wider Agri-Linkage: The scheme’s focus on modernization and credit made it complementary to other missions like Rashtriya Krishi Vikas Yojana (RKVY), which encourages allied sector infrastructure projects.
• Practical Example of Synergy: An FPO that received DEDS subsidy for a Bulk Milk Cooler could later access training under NPDD or a disease control component under the Rashtriya Gokul Mission (RGM) to protect their high-value dairy assets.

Conclusion 

The National Programme for Dairy Development (NPDD), which effectively replaced the Dairy Entrepreneurship Development Scheme (DEDS), is crucial for modernizing India’s dairy sector by strengthening infrastructure and promoting quality milk production. This scheme offers significant benefits in the form of technical and financial support, primarily empowering farmers, entrepreneurs, and cooperative societies to enhance productivity and income. To access these opportunities, the vital first step is to check your eligibility and prepare the necessary documents to apply through the appropriate implementing agencies. We encourage interested stakeholders to verify the latest scheme details and guidelines on the official portal before proceeding. Explore detailed resources on this scheme and the full suite of programmes at ALL ABOUT AGRICULTURE. For one-on-one assistance, call us at +91 8484002628.