India’s protected cultivation industry is facing a new test as lower government support puts the economics of greenhouse farming under greater scrutiny. “Government support cannot continue indefinitely, but with greenhouse projects still heavily dependent on financial assistance and concessional financing, the sector may not yet be ready for a sudden transition,” says Ashish Anand, CEO of Agriplast Protected Cultivation Pvt Ltd

According to Ashish, the latest revision of assistance for protected cultivation under the National Horticulture Board (NHB), reducing support from 50% to 35% in general areas, has therefore raised concerns across the industry. For him, the issue is less about whether support should eventually be reduced and more about how that transition is managed.

“I personally welcome this move,” Ashish mentions, adding that subsidies should gradually be phased out as the industry matures. However, he believes the current change needs to be accompanied by measures that improve the underlying economics of greenhouse farming.

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More than 90% of greenhouse projects in India currently depend on subsidy support. The NHB assistance has also worked alongside the Agricultural Infrastructure Fund (AIF), which has helped banks and financial institutions become more comfortable financing protected cultivation projects.

Under AIF, eligible projects have benefited from a 3% interest subvention, reducing the effective borrowing cost, as well as a six-month moratorium on EMI payments. This is particularly important for greenhouse projects, where the structure requires substantial investment before generating revenue.

“Banks and the financial institutions were very comfortable financing projects. A combination of concessional financing and subsidy reduced the financial burden on growers while making projects more bankable. The concern now is that changing several parts of this equation at once could significantly alter project economics,” Ashish explains.

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The industry’s concern extends beyond the reduction in assistance. Ashish notes that the new rules are also being applied retrospectively to some projects that were approved or built under the earlier framework. This includes changes to eligibility, family-unit definitions and the way subsidies can be claimed, potentially leaving growers with financing commitments based on support they may no longer receive.

“People planned their projects and finances based on the government approval they received. If that support is subsequently reduced or withdrawn, they still have the same bank loan to repay. This could also lead to defaults, higher NPAs and ultimately make banks more reluctant to finance protected cultivation projects,” he warns.

These concerns are compounded by the rising cost of building greenhouses. Ashish estimates that prices for materials including steel, aluminium and polyfilms have risen by around 15-30% over the past year. At the same time, a subsidy calculated on an admissible project cost does not necessarily cover the actual cost incurred by a grower, while GST and financing and application-related charges add further expenses.

“As a result, the headline 35% assistance can translate into considerably less support against the farmer’s actual investment,” he highlights.

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For projects that previously offered a potential return on investment within roughly 18-30 months, the economics could become considerably more challenging. Ashish believes the ROI period could extend towards three-and-a-half to four years or longer, depending on the project.

He notes that timing is significant because greenhouse structures also require maintenance and replacement costs. “Polyfilm, for example, typically needs replacement after 3-4 years. A farmer hasn’t arrived at breakeven and then has to invest once again.”

This is where the uncertainty surrounding AIF becomes particularly important for the sector. While the reduction in NHB assistance directly affects project economics, changes to concessional financing could also influence how willing banks are to finance new projects.

Ashish believes there is a way to move towards lower subsidies without undermining the industry’s development by making support more closely linked to performance.

“Rather than simply subsidising the construction of a greenhouse, assistance could be connected to productivity, quality or other measurable outcomes. This could also encourage better standards among greenhouse developers and growers.”

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Market economics is another missing piece. Despite the higher production potential of protected cultivation, greenhouse-grown produce does not consistently command a premium. Ashish says only a minority of growers currently achieve premiums of around 15–20%.

He believes certification and stronger market differentiation could help change this. “Government support for certifications such as GlobalG.A.P., along with clearer identification and market channels for greenhouse-grown produce, could allow growers to capture greater value for consistent quality and year-round availability. Lowering the GST burden is another measure that could help offset the reduction in direct assistance.”

Ultimately, Ashish argues that the objective should not be to preserve subsidies indefinitely, but to create the conditions in which growers can eventually operate without them. “India’s protected cultivation sector is still developing its financing ecosystem, technical expertise, market linkages and production base. Any transition will need to account for the costs and risks growers face on the ground.”

“The question, therefore, is not whether India should eventually build a protected cultivation industry that can stand on its own. It is whether the sector has been given enough time and the right mechanisms to get there,” Ashish concludes.

For more information:
Ashish Anand
Agriplast Protected Cultivation Pvt Ltd
Tel: +91 8754017190
Email: [email protected]
www.protectedcultivation.com