Overview

Most small and marginal farmers in India cannot afford to individually own high-cost machinery such as tractors, combine harvesters, laser land levellers, or multi-crop planters. To solve this, the Government of India supports two complementary custom-hiring models — Farm Machinery Banks (FMBs) run by community institutions, and privately-owned Custom Hiring Centres (CHCs) run by rural entrepreneurs — that rent out modern farm equipment to farmers by the hour or by the acre instead of requiring outright purchase.

These models are funded under the Integrated Scheme on Agricultural Mechanization (ISAM), the scheme formerly known as the Sub-Mission on Agricultural Mechanization (SMAM), which was renamed and consolidated effective 1 October 2024 under the central Krishonnati Yojana umbrella of the Ministry of Agriculture & Farmers Welfare. Implementation on the ground continues through State Agricultural Engineering Departments and the central mechanization portal, agrimachinery.nic.in. If you come across older material referring to "SMAM," it refers to the same scheme family that CHC/FMB support now falls under.

By lowering the cost of mechanization, this initiative helps small farmers avoid taking on debt to buy expensive machines, reduces local custom-hiring rental rates, supports timely sowing and harvesting, helps curb crop-residue burning through residue-management attachments, and creates viable rural enterprise and self-employment opportunities for youth, Self-Help Groups (SHGs), cooperatives, and Farmer Producer Organisations (FPOs).

Key Benefits

• Farm Machinery Bank (FMB) for FPOs / SHGs / Cooperatives / PACS: An 80% capital subsidy on the approved project cost, commonly capped around ₹8–10 lakh per group under central guidelines (exact caps can vary slightly by state notification). The group typically contributes the remaining ~20% as equity or loan margin.
• Custom Hiring Centre (CHC) for individual rural entrepreneurs/youth: A 40% capital subsidy in general areas and 50% in North-Eastern and hill states, calculated against a project-cost ceiling that central guidelines place at up to ₹60 lakh (state-specific CHC guidelines may set their own slabs, so confirm the current figure with your state agriculture department before finalising a machinery list).
• Hi-Tech Hubs for high-value crops (sugarcane harvesters, cotton pickers, paddy transplanters, and similar specialised equipment): a comparable 40–50% subsidy band is available for larger equipment clusters targeted at specific crops. Exact project-cost and subsidy ceilings for these hubs vary by state and year, so verify the latest notified figures on agrimachinery.nic.in or your state portal rather than relying on older estimates.
• Possible convergence with the Agriculture Infrastructure Fund (AIF): AIF offers a standard 3% per annum interest subvention on eligible loans up to ₹2 crore for farm-asset and post-harvest infrastructure, which can reduce the effective cost of financing the entrepreneur's own contribution where the CHC/FMB project also qualifies under AIF norms.
• Reduced drudgery and cost for the wider farming community: nearby farmers gain affordable, on-demand access to modern machinery without owning it, which improves timeliness of operations and overall farm economics.

Eligibility Criteria

1. Farm Machinery Banks: Registered Farmer Producer Organisations (FPOs), Primary Agricultural Credit Societies/Cooperative Societies (PACS), Self-Help Groups (SHGs), Gram Panchayats, and other registered farmer collectives.
2. Custom Hiring Centres: Individual rural entrepreneurs, unemployed rural youth, progressive farmers, and registered cooperatives/societies.
3. The applicant or entity should not have already availed a subsidy on the same category of machinery under another central or state scheme within the repeat-subsidy gap period specified in the current state guidelines.
4. A viable project proposal (machinery list with cost estimates) is required; where the project is loan-financed, a sanction letter from a bank or financial institution is needed.
5. Applicants must hold a valid Aadhaar number linked to an active bank account, and group applicants must have valid registration documents for their FPO/SHG/PACS/cooperative.

Documents Required

• Aadhaar Card and PAN Card of the applicant or authorised signatory.
• Registration certificate of the FPO/SHG/PACS/Cooperative Society (for group applications).
• Bank account passbook or a cancelled cheque showing the IFSC code.
• Land or premises documents, where a shed or storage facility is part of the proposal.
• A Detailed Project Report (DPR) listing the proposed machinery with quotations from empanelled manufacturers or dealers.
• Bank loan sanction letter, where the project is partly financed through a loan.
• Passport-size photograph and a mobile number linked to Aadhaar.

How to Apply

1. Visit the official portal: Go to the central mechanization portal at agrimachinery.nic.in, or your state's agricultural engineering/DBT portal where one exists.
2. Register: Sign up as a Farmer / FPO / SHG / CHC entrepreneur using your Aadhaar number with OTP verification.
3. Select the component: Choose "Custom Hiring Centre" or "Farm Machinery Bank" under the mechanization scheme and fill in the proposed machinery list along with the total project cost.
4. Upload documents: Attach the DPR, registration certificate, dealer quotations, and bank loan sanction letter (if applicable).
5. Verification and approval: The district or state agricultural engineering department reviews the proposal; approved applicants receive an administrative sanction/approval letter.
6. Procurement: Purchase the approved machinery from empanelled manufacturers or authorised dealers and submit the purchase invoices.
7. Physical verification and geo-tagging: An agricultural officer physically verifies the machinery or facility and completes geo-tagging where required.
8. Subsidy disbursal: On successful verification, the capital subsidy is credited directly into the applicant's linked bank account through Direct Benefit Transfer (DBT).

Important Points

• Subsidy percentages, project-cost ceilings, and caps are periodically revised and can also differ by state notification — always confirm the latest figures with your state agriculture department or on agrimachinery.nic.in before committing funds.
• This scheme is now administered under ISAM (Integrated Scheme on Agricultural Mechanization), the renamed and consolidated successor to SMAM within the Krishonnati Yojana framework — older documents referencing "SMAM" describe the same scheme lineage.
• Prefer machinery from empanelled and test-certified manufacturers listed on the official portal, since purchases from non-empanelled sources can lead to subsidy rejection.
• Physical verification and geo-tagging of the machinery/facility is a mandatory step before any subsidy is released — keep all purchase invoices and documents ready for this stage.
• Project proposals combining this subsidy with AIF financing should check current convergence rules, since norms for combining central schemes can change.

Frequently Asked Questions (FAQs)

What is the difference between a Farm Machinery Bank and a Custom Hiring Centre?

A Farm Machinery Bank (FMB) is typically set up by a community institution — an FPO, SHG, PACS, or cooperative — to provide subsidised rental machinery to its own members and nearby farmers, and receives up to 80% capital subsidy. A Custom Hiring Centre (CHC) is usually run as an individual or private rural enterprise offering machinery on hire to the general farming community, and receives a 40–50% capital subsidy.

Who can apply for this scheme — individuals or only groups?

Both. Individual rural entrepreneurs, unemployed rural youth, and progressive farmers can apply to set up a CHC, while FPOs, SHGs, PACS, cooperatives, and Gram Panchayats can apply to set up an FMB.

What is the subsidy amount for a Farm Machinery Bank?

FMBs set up by FPOs, SHGs, cooperatives, or PACS are eligible for an 80% capital subsidy on the approved project cost, commonly capped around ₹8–10 lakh per group under central guidelines, with the group contributing the remaining amount.

What is the subsidy for a Custom Hiring Centre, and is it higher in hill states?

A CHC receives a 40% capital subsidy in general areas and 50% in North-Eastern and hill states, calculated against a project-cost ceiling that central guidelines place at up to ₹60 lakh. State-specific guidelines may notify different slabs, so check with your state agriculture department.

Is SMAM the same scheme as ISAM?

Yes. The Sub-Mission on Agricultural Mechanization (SMAM) was renamed and consolidated as the Integrated Scheme on Agricultural Mechanization (ISAM) effective 1 October 2024, placed under the central Krishonnati Yojana umbrella. CHC and Farm Machinery Bank support continues under this renamed scheme.

Can this subsidy be combined with an Agriculture Infrastructure Fund (AIF) loan?

In many cases, yes — AIF offers a standard 3% per annum interest subvention on eligible loans up to ₹2 crore for farm-asset and post-harvest infrastructure, which can reduce financing costs for the entrepreneur's own contribution where the project also meets AIF eligibility norms. Confirm current convergence rules with your bank and district agriculture office before applying.

How long does it take to receive the subsidy after approval?

Timelines vary by state and depend on how quickly the applicant completes procurement, submits invoices, and undergoes physical verification and geo-tagging. Subsidy is disbursed via Direct Benefit Transfer only after this verification is completed, so keeping documents ready speeds up the process.

What kind of machinery can be purchased under a CHC or FMB?

Typical equipment includes tractors (45–60 HP, 2WD/4WD), rotavators, MB ploughs, disc harrows, laser land levellers, multi-crop planters and seed drills, zero-till seed drills, boom and drone sprayers, multi-crop threshers, straw reapers, and residue-management machines such as Super Seeders and Happy Seeders. The exact eligible list is published on agrimachinery.nic.in and may be updated periodically.