The Government of India is expanding support for agricultural mechanization to make modern farm machinery more accessible to small and marginal farmers. Through the Sub-Mission on Agricultural Mechanization (SMAM Scheme) under the Rashtriya Krishi Vikas Yojana (RKVY), farmers can receive financial assistance for purchasing agricultural machinery, while Custom Hiring Centres (CHCs) and Farm Machinery Banks (FMBs) are being promoted to reduce the cost of farm equipment access. The initiative is particularly focused on regions with low farm power availability and farmers who may find individual ownership of expensive machinery difficult. Also read the State-Wise Tractor Subsidy 2026 blog at Krishi Vikas.com.
What is the SMAM Scheme?
The Sub-Mission on Agricultural Mechanization (SMAM) is a Centrally Sponsored Scheme implemented nationally by the Department of Agriculture & Farmers Welfare through State Governments. Its key objective is to increase the reach of farm mechanization, particularly among small and marginal farmers. The scheme also promotes shared access to machinery through Custom Hiring Centres and Farm Machinery Banks. This approach allows farmers to use modern equipment without necessarily having to bear the full cost of purchasing and maintaining individual machines.
SMAM Subsidy for Agricultural Machinery
Under SMAM, farmers can receive financial assistance of 40–50% of the cost of eligible agricultural machinery and equipment, subject to applicable scheme guidelines and limits. The assistance is intended to encourage farmers to adopt modern machinery for activities such as land preparation, sowing, crop management, harvesting and other farm operations.
Key SMAM Financial Assistance
| Component | Financial Assistance |
| Agricultural machinery for farmers | 40–50% of machine cost |
| Custom Hiring Centres | 40% of project cost, for projects up to ₹250 lakh |
| Farm Machinery Banks | 80% of project cost, for projects up to ₹30 lakh |
| Farm Machinery Banks in North-Eastern States | 95% of project cost |
The exact assistance available can vary according to the applicable machinery, farmer category, State-level implementation and scheme guidelines.
Custom Hiring Centres Help Farmers Access Machinery
One of the major components of SMAM is the promotion of Custom Hiring Centres (CHCs). Small landholdings can make individual ownership of tractors, harvesters, implements and other machinery economically difficult. CHCs address this challenge by allowing farmers to hire machinery when required instead of purchasing it outright. SMAM provides financial assistance of 40% of the project cost for eligible CHC projects costing up to ₹250 lakh. This model can improve machinery availability while reducing the financial burden associated with ownership, maintenance and storage.
Farm Machinery Banks Promote Shared Equipment
The scheme also supports the establishment of Farm Machinery Banks (FMBs). Eligible FMB projects costing up to ₹30 lakh can receive financial assistance of up to 80% of the project cost. For the North-Eastern States, the assistance can go up to 95% of the project cost. FMBs can play an important role in improving access to agricultural machinery in areas where individual ownership is less viable.
Focus on Modern and Precision Agriculture
SMAM is not limited to conventional agricultural equipment. The Government is also encouraging the adoption of modern farm machinery and advanced mechanization technologies.
These include:
- Precision agriculture equipment
- Agricultural drones
- Advanced farm machinery
- Women-friendly agricultural implements
- Modern crop management equipment
The scheme also supports machinery testing and certification, demonstrations, training and capacity building to improve awareness and encourage technology adoption among farmers.
Crop Residue Management Linked With SMAM
Alongside SMAM, the Crop Residue Management (CRM) Scheme is being implemented in Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Delhi. The programme promotes the use of subsidized agricultural machinery and Custom Hiring Centres to support sustainable crop residue management and reduce stubble burning. Since 2023–24, the CRM Scheme has been integrated with SMAM under RKVY with a 60:40 Centre-State funding pattern. The integration strengthens the role of mechanization in managing crop residues and promoting more sustainable farming practices.
Horticulture Mechanization Gets Support Under MIDH
Mechanization support is also available for horticulture activities through the Mission for Integrated Development of Horticulture (MIDH). The programme supports activities such as the procurement of power-operated machines and tools, including plant protection equipment and new machinery. This can help improve operational efficiency and reduce the physical drudgery associated with horticultural operations.
Agriculture Infrastructure Fund Supports CHCs and FMBs
The Agriculture Infrastructure Fund (AIF) provides another financing avenue for eligible agricultural infrastructure projects.
Support is available through mechanisms such as:
- Interest subvention
- Credit guarantee coverage
- Medium- and long-term debt financing
Eligible projects can include Custom Hiring Centres and Farm Machinery Banks, providing additional financial support for expanding farm machinery infrastructure.
ICAR Driving Research in Agricultural Mechanization
Research and development in agricultural mechanization is being undertaken through the Indian Council of Agricultural Research (ICAR). The agricultural research ecosystem includes six All India Coordinated Research Projects (AICRPs) with 105 centres, along with All India Network Projects and Consortia Research Platforms. The Government is also reviewing developments in global agricultural technology and adopting suitable innovations and best practices where appropriate.
100% FDI Allowed in Agricultural Machinery Manufacturing
The Government also permits 100% Foreign Direct Investment (FDI) under the automatic route in the agricultural machinery manufacturing sector. The policy is aimed at encouraging global Original Equipment Manufacturers (OEMs) to establish production facilities in India.
Greater participation from domestic manufacturers and private enterprises is expected to support:
- Domestic machinery production
- Technology development
- Innovation
- Advanced mechanization
- Expansion of the agricultural machinery ecosystem
Support for Agri Startups and Digital Mechanization
Agricultural startups developing innovative machinery and digital solutions are also being encouraged through the RKVY-RAFTAAR programme. Support can include incubation, innovation challenges and funding.
The Government is also promoting private-sector-led machinery rental services through Custom Hiring Centres and machinery rental platforms, giving farmers another option to access expensive equipment without purchasing it. Testing and certification procedures for agricultural machinery have also been simplified to support quality standards and faster market access for manufacturers.
No Exclusive India-South Korea Mechanization Partnership Yet
The Government clarified that there is currently no specific proposal for an exclusive collaborative research, technology transfer or commercialization partnership with South Korea or other technologically advanced countries solely for agricultural mechanization.
However, India does undertake international cooperation in agriculture, including agricultural mechanization, through existing bilateral and multilateral institutional mechanisms.
Such collaborations can cover areas including:
- Collaborative research
- Technology transfer
- Capacity building
- Exchange of technical expertise
- Other mutually agreed activities
What This Means for Farmers
The Government’s approach shows that farm mechanization is increasingly being viewed beyond simply selling tractors and machines. For small and marginal farmers, shared machinery models such as CHCs and FMBs can be particularly important because they provide access to costly equipment without requiring full individual ownership. At the same time, support for drones, precision agriculture, modern implements and digital machinery-rental platforms indicates a broader shift towards technology-driven and service-based farm mechanization. For farmers, the practical benefit will depend heavily on the availability of eligible machinery, local CHCs, State-level implementation and awareness of the assistance available.
Krishi Vikas Take
The Government’s mechanization strategy is moving towards a “use machinery when needed” model alongside traditional ownership. This is especially relevant for small and marginal farmers, for whom buying high-cost equipment may not always make economic sense. The combination of SMAM subsidies, CHCs, FMBs, AIF financing and private machinery-rental platforms can create a stronger farm equipment access network.
For the agricultural machinery industry, the focus on precision farming, drones, women-friendly implements, domestic manufacturing and startup innovation also signals growing demand for smarter, more accessible and service-oriented mechanization solutions. The next challenge is implementation at the ground level—ensuring that subsidized machinery and hiring services are actually available to farmers when and where they need them.
The information was provided by Minister of State for Agriculture and Farmers Welfare Shri Ramnath Thakur in a written reply in the Lok Sabha.
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