Owning a tractor is a dream for many farmers in India as it reduces workload and increases agricultural productivity. But tractors are expensive, and not every farmer can afford them. To make tractors affordable, the Government of India offers tractor subsidy schemes, and banks/NBFCs provide tractor loans at low interest rates.
This blog covers everything: subsidy details, eligibility, documents, banks/NBFCs, and FAQs.
What is a Tractor Subsidy Loan?
A tractor subsidy loan is a financial product where farmers can purchase a tractor through bank/NBFC loans, and the government provides a subsidy (20%–50% of the cost) to reduce repayment burden.
For example:
Tractor Cost = ₹6,00,000
Subsidy (30%) = ₹1,80,000
Loan Required = ₹4,20,000
Eligibility Criteria
Must be a farmer (individual, joint farmers, cooperative society, or SHG).
Should own or lease agricultural land.
Age: 18–60 years (varies by bank/NBFC).
Good credit history preferred.
Tractor must be used for farming purposes only.
Documents Required
Aadhaar Card, PAN Card, Voter ID (Identity Proof).
Address proof (Utility bill, Ration Card, Aadhaar, Passport).
Land ownership proof / lease papers.
Income certificate or bank statement.
Dealer’s quotation for the tractor.
Passport-size photos.
Government Tractor Subsidy Schemes
- PM Kisan Tractor Yojana
20%–50% subsidy on tractor purchase.
Priority for small and marginal farmers.
- Sub-Mission on Agricultural Mechanization (SMAM)
40% subsidy for small/marginal farmers.
50% subsidy for SC/ST/women farmers.
- State Subsidy Schemes
States like Assam, Maharashtra, MP, and UP provide additional 30–50% subsidy.
Banks and NBFCs Offering Tractor Loans
Public Sector Banks
SBI Tractor Loan – Up to 90% financing, tenure 7 years.
PNB Krishi Tatkal – Subsidy-linked loans.
Bank of Baroda Tractor Loan – Affordable interest.
Canara Bank Tractor Loan – Available for new/used tractors.
Private Banks
HDFC Bank Tractor Loan – 90% finance, 84-month tenure.
ICICI Bank Tractor Loan – Subsidy-linked loans, fast processing.
Axis Bank Tractor Loan – Flexible repayment.
NBFCs
Mahindra Finance – Strong presence in rural areas.
Cholamandalam Finance – Easy documentation.
L&T Finance – Flexible repayment.
Magma Fincorp – Focus on small farmers.
Loan Amount & Repayment
Loan covers 70%–90% of tractor cost.
Subsidy: 20%–50%, depending on category.
Repayment: 3–7 years (quarterly/half-yearly/annual).
Steps to Apply for Tractor Subsidy Loan
- Check eligibility under Central/State subsidy schemes.
- Choose a bank/NBFC.
- Collect documents.
- Get dealer quotation.
- Submit application.
- Loan sanction + subsidy approval.
- Purchase tractor with loan + subsidy support.
Benefits of Tractor Subsidy Loan
Lower cost due to subsidy.
Easy repayment aligned with crop cycles.
Higher productivity with modern farming.
Support from banks, NBFCs, and cooperatives.
✅ Frequently Asked Questions (FAQs)
- What is the maximum subsidy available on a tractor loan?
The subsidy ranges from 20% to 50%, depending on the scheme, farmer category, and state policy. - Who is eligible for a tractor subsidy loan?
Farmers, joint farmers, SHGs, and cooperatives engaged in agriculture are eligible. - Can I get a subsidy if I already own a tractor?
Generally, subsidies are for first-time buyers, but rules may vary by scheme. - Is there a subsidy for women farmers?
Yes, women farmers often get higher subsidy benefits (up to 50%) under schemes like SMAM. - Which banks provide tractor subsidy loans?
SBI, PNB, Bank of Baroda, Canara Bank, ICICI, HDFC, Axis Bank, and many more. - Do NBFCs like Mahindra Finance provide subsidy-linked loans?
Yes, NBFCs disburse loans and coordinate with government subsidy schemes. - What is the loan repayment period?
Generally 3 to 7 years, depending on the bank/NBFC. - Do I need land in my name to get a tractor subsidy loan?
Yes, land ownership or valid lease documents are usually required. - Can SC/ST farmers get extra subsidy?
Yes, SC/ST farmers often receive 50% subsidy. - Is collateral required for tractor loans?
The tractor itself acts as primary security, though some banks may ask for guarantors. - Can I use the tractor for commercial purposes?
No, subsidy-linked tractors must be used primarily for agriculture. - How do I apply for PM Kisan Tractor Yojana?
Applications can be made through banks, state agriculture departments, or online portals. - Is subsidy available for second-hand tractors?
No, subsidy is generally provided only for new tractors. - How much down payment is required?
Down payment is usually 10%–20% of the cost after subsidy adjustment. - What is the interest rate for tractor loans?
Rates vary between 7%–12% annually, depending on the bank/NBFC. - Can joint farmers apply together?
Yes, joint farmers or SHGs can apply for a tractor subsidy loan. - Is Aadhaar mandatory for subsidy loans?
Yes, Aadhaar is mandatory for most government subsidy schemes. - How is the subsidy given to farmers?
Subsidy is either credited directly to the farmer’s account or adjusted against the loan amount. - Do I need to visit the bank physically for application?
Most banks/NBFCs require branch visits, though some offer online applications. - How long does it take to get a tractor subsidy loan sanctioned?
Approval usually takes 7–15 working days, depending on document verification and subsidy approval.
Final Words
A tractor subsidy loan is one of the best ways for farmers to buy tractors at affordable rates. With the government’s 20%–50% subsidy and flexible loans from banks/NBFCs, farmers can increase their agricultural productivity without financial stress.
If you are planning to purchase a tractor, check your state-specific subsidy schemes, approach a bank or NBFC, and apply with the right documents to make farming more efficient and profitable.
