For most farmers in India, a tractor is not just a machine, it’s an investment that can transform productivity, reduce labor costs, and increase income. But tractors are expensive, and paying the full amount upfront is often impossible for small and marginal farmers.

This is where government-backed loans and subsidies become truly life-changing. If you want to apply for tractor loan with subsidy, several national and state-level schemes can reduce your financial burden significantly.

In this complete guide, we’ll explain how tractor subsidies work, how to apply for them, what documents you need, and how banks decide loan limits. The entire process is explained in simple, clear language so that any farmer or agricultural entrepreneur can understand and act immediately.

What is a Tractor Loan with Subsidy?

A tractor loan with subsidy is a financial support system where farmers receive both:

1. A bank loan (to buy a tractor or farm equipment)
2. Government subsidy (a percentage of the tractor cost paid by the government)

This brings down the overall cost and makes tractors much more affordable.

How Does the Subsidy Work?

• The government pays 25% to 50% of the tractor’s total price.
• The remaining amount can be taken as a bank loan.
• Once your application is approved, the subsidy is credited directly to your bank or to the dealer after verification.

This system is mostly operated under schemes like PM Kisan Tractor Yojana, Agriculture Infrastructure Fund (AIF), and various State Agriculture Subsidy Schemes.

Benefits of Applying for a Tractor Loan with Subsidy

1. Lower cost of tractor purchase

Instead of paying ₹8–12 lakh, farmers often pay nearly half the amount depending on the subsidy percentage.

2. Easy EMI options

Banks offer EMI plans ranging from 3–7 years to make repayment comfortable.

3. Government reduces farmer’s financial burden

Small and marginal farmers benefit the most because higher subsidies are available for them.

4. Credit score improvement

Regular repayments improve credit scores, making it easier to get future loans.

5. Can be used for attached implements

Many subsidy schemes also cover:

• Rotavators
• Seeders
• Cultivators
• Trolleys
• Harvesters

This increases overall productivity.

Eligibility to Apply for Tractor Loan with Subsidy (2025 Rules)

Before applying, make sure you meet the basic eligibility guidelines.

General Eligibility Criteria

• The applicant must be an Indian farmer, rural entrepreneur, or member of a farmer group.
• Age: 18 to 60 years
• Must have cultivable land in their name (1–10 acres depending on scheme).
• Should have no major loan default history.
• Tractor must be used for agricultural purposes only.
• Valid bank account linked with Aadhaar.

Who Gets Higher Subsidy?

These categories receive extra benefits:

• Small and marginal farmers
• Women farmers
• SC/ST farmers
• Farmers from hilly/tribal areas
• Farmers applying through FPOs or cooperatives

Documents Required to Apply for Tractor Loan with Subsidy

Here is the complete list of documents usually required by banks and the agriculture department.

Personal Documents

• Aadhaar Card
• PAN Card
• Voter ID / Driving License
• Passport-size photographs

Land Ownership Documents

• 7/12 extract
• Land tax receipt
• Pattadar passbook (for some states)
• Lease agreement (if applicable)

Financial Documents

• Bank passbook or statement (6 months)
• Income certificate (if required)
• Credit report (banks check this automatically)

Loan & Purchase Documents

• Quotation/proforma invoice of tractor
• Model number
• Dealer details
• Subsidy application form

Additional Documents for Subsidy

• Caste certificate (SC/ST category)
• Farmer certificate from local authority
• Self-declaration for tractor usage

Tip: Carry both originals and photocopies to avoid delays.

How to Apply for Tractor Loan with Subsidy (Step-by-Step Process)

The process includes two parts:

1. Bank loan approval
2. Government subsidy approval

Let’s break it down in simple steps.

Step 1: Choose the Tractor Model and Get a Quotation

Visit authorized dealerships of brands like:

• Mahindra
• Swaraj
• John Deere
• Sonalika
• New Holland
• Powertrac

Ask for a proforma invoice. This is needed for both bank loan and subsidy.

Step 2: Visit Your Bank for Loan Application

All major banks offer tractor loans:

• SBI
• PNB
• Bank of Baroda
• HDFC
• ICICI
• Cooperative banks
• Gramin banks

What Happens at the Bank?

• Submit your loan application
• Provide land documents
• Attach quotation and ID proofs
• Bank checks eligibility, credit score, and income

Loan Amount

Banks generally finance 70% to 90% of the tractor cost.

Step 3: Field Verification by the Bank Officer

A field officer visits your farmland to verify:

• Land details
• Tractor requirement
• Purpose of purchase

This step is crucial for loan approval.

Step 4: Loan Approval and Down Payment

After verification, the bank approves your loan.
You will have to pay a down payment, usually 10% to 25% of the tractor price.

Step 5: Apply for Subsidy (Online or Offline)

Depending on your state, the subsidy application can be done:

• Through the State Agriculture Department portal
• Offline at Krishi Vibhag office
• At your nearby CSC center

General Steps to Apply for Subsidy

1. Fill out the Tractor Subsidy Application Form
2. Upload/submit land documents
3. Upload quotation and bank loan sanction letter
4. Submit Aadhaar and bank details
5. Select tractor model and dealer
6. Await field verification
7. Approval and release of subsidy

Step 6: Subsidy Verification & Approval

Agriculture department officers check:

• Eligibility
• Land details
• Tractor usage category
• Whether previous subsidies were claimed

Once approved, you’ll receive an SMS.

Step 7: Tractor Delivery

After subsidy approval, the tractor is delivered from the dealer.
The bank directly pays the dealer.
You will receive:

• Tractor
• Invoice
• RC registration
• Warranty documents

Step 8: Subsidy Credit to Your Account

The subsidy is either:

• Sent directly to your bank account (DBT), OR
• Adjusted in the loan amount (reducing EMI)

This varies from state to state.

Government Schemes That Provide Tractor Subsidy (2025)

1. PM Kisan Tractor Yojana

• Subsidy: 20% to 50%
• Target: Small and marginal farmers
• Application mode: Online/offline

2. Agriculture Infrastructure Fund (AIF)

• Provides interest subvention
• Reduces loan interest by 3%
• Best for FPOs and cooperatives

3. Rashtriya Krishi Vikas Yojana (RKVY)

• Offers subsidies to modernize farm equipment
• Covers tractors, rotavators, seeders, etc.

4. State-Level Tractor Subsidy Schemes

Different states offer their own subsidy programs:

Examples:

• Maharashtra: 40%–50% subsidy
• UP: e-Krishi Yantra Subsidy
• MP: 30%–50% subsidy for SC/ST farmers
• Rajasthan: Krishi Yantra Anudan Yojana
• Bihar: DBT Agriculture scheme

These programs often open in phases, so keep checking state portals.

Interest Rates for Tractor Loans in 2025

Interest rates vary across banks and credit profiles.

Average Interest Rates

• Nationalized banks: 8%–11%
• Private banks: 10%–14%
• Cooperative banks: 7%–10%

Factors that Impact Interest Rate

• Credit score
• Income
• Landholding
• Repayment history
• Bank’s internal policy

Repayment Options and EMI Plans

Banks offer flexible repayment periods:

Loan Tenure

• 3 years (short term)
• 5 years (medium term)
• 7 years (long term)

Types of EMI

• Monthly EMIs
• Quarterly EMIs (popular among farmers)
• Half-yearly EMIs
• Bullet payments (rare cases)

Common Mistakes to Avoid While Applying for Tractor Loan with Subsidy

1. Giving incorrect land details

Always provide updated land records.

2. Choosing an unauthorized dealer

Only buy from recognized brand dealers.

3. Not checking subsidy window dates

State portals open subsidy slots for limited periods.

4. Poor credit score

Check your credit report before applying.

5. Not keeping photocopies of all documents

Keep extra copies for verification.

Frequently Asked Questions (FAQs)

1. Can I apply for a tractor loan without land?

No. Land ownership is necessary for tractor subsidy and most loans.

2. What is the minimum down payment required?

Usually 10% to 25% of the tractor cost depending on bank policy.

3. Do women farmers get higher subsidy?

Yes. Women farmers often receive 5%–10% higher subsidy.

4. How long does the subsidy approval take?

Average approval time is 15–45 days, depending on the state.

5. Can I buy a second-hand tractor with subsidy?

No. Subsidy is available only for new tractors.

6. Do banks require guarantors for tractor loans?

Sometimes. If credit score is low, banks may ask for a co-applicant.

Conclusion

Purchasing a tractor becomes much easier and more affordable when you apply for tractor loan with subsidy. Government schemes combined with bank loans offer farmers a powerful financial support system that reduces the overall cost and improves productivity.

With the right documents, correct planning, and choosing a suitable tractor model, you can complete the process smoothly. Whether you are a small farmer or expanding agricultural operations, a tractor can significantly improve efficiency and income.

Use this complete guide to apply confidently and take the next step toward modernizing your farm.