Agricultural Machinery Subsidy in Nepal: PMAMP Grants & CHCs

Nepali agriculture still relies heavily on human and animal power, yet farm labour is disappearing: outmigration of young workers, an average landholding of only about 0.68 hectares and rising wages make timely ploughing, transplanting and harvesting difficult. Mechanization — mini tillers on hill terraces, power tillers and tractors in the Tarai, reapers and combine harvesters for rice and wheat — is the government's answer, but machines are expensive relative to farm incomes, so subsidy programmes exist to bridge the gap.

The framework document is the Agricultural Mechanization Promotion Policy, 2071 BS (2014 AD). It aims to reduce drudgery and production costs, and commits the state to concessional, collateral-light loans or subsidies for farmers and farmer groups buying machinery, with capital subsidies of up to 50 per cent for commercial farms run by women and youth. It also requires machinery sellers and importers to provide quality, safety, operation and maintenance information in Nepali. The Agriculture Development Strategy (ADS, 2015–2035) reinforces mechanization as a pillar of commercialisation.

Mechanization support is now spread across all three tiers of the federal state: the federal level runs the flagship Prime Minister Agriculture Modernization Project (PMAMP) and the Centre for Agricultural Infrastructure Development and Mechanization Promotion; provinces run machinery grants through their agriculture ministries and district Agriculture Knowledge Centres (AKCs); and many municipalities fund their own 50–75 per cent schemes. In May 2026 the federal Ministry of Agriculture and Livestock Development (MOALD) was merged into a new Ministry of Agriculture, Forest and Environment.

The Prime Minister Agriculture Modernization Project (PMAMP, प्रधानमन्त्री कृषि आधुनिकीकरण परियोजना) began in fiscal year 2073/74 BS (2016/17 AD) as a ten-year project with a planned cost of about NPR 130.74 billion — the largest agriculture project financed solely by the Government of Nepal. Its official portal now presents it as the National Agriculture Modernization Program (NAMP), with the Program Management Unit at Khumaltar, Lalitpur. Agricultural mechanization is a core component, alongside irrigation, post-harvest infrastructure and commercial production support.

PMAMP organises commercial production geographically into four tiers: pockets (small commercial production centres of at least 10 hectares), blocks (at least 100 hectares), zones (production and processing centres of at least 500 hectares) and superzones (large production and industrial centres of at least 1,000 hectares). End-of-project targets are 15,000 pockets, 1,500 blocks, 300 zones and 21 superzones. A mid-2024 review reported in Nagarik News found roughly NPR 30.77 billion spent by FY 2079/80 (2022/23), with 16 superzones, 177 zones, 1,587 blocks and 8,710 pockets established by that point.

Within zones and superzones, PMAMP's Project Implementation Units (PIUs) finance machinery through cost-sharing (matching) grants — normally 50 per cent of the purchase price — to registered farmer groups, cooperatives and agro-enterprises working inside the command area. Grants have covered tractors and attachments, power tillers, rotavators, disc harrows, seed drills and zero-till drills, rice transplanters, reapers and reaper-binders, threshers, combine harvesters, laser land levellers, pumping sets and sprayers. Higher rates, commonly up to 85 per cent, have applied to shared infrastructure such as post-harvest collection centres and small irrigation works rather than to individually owned machines.

There is no single nationwide 'krishi yantra subsidy' rate: percentages are set programme by programme in annual budgets and published notices. In practice, 50 per cent cost-sharing is the standard benchmark across PMAMP zones, provincial AKC programmes and most local schemes. Documented examples include PMAMP's Banke rice superzone, which subsidised farm mechanization at 50 per cent, and Lumbini Province, which distributed combine harvesters to farmer groups at 50 per cent subsidy.

Rates can be more generous for targeted groups and remote areas: some local governments have offered around 75 per cent on power tillers, and provincial programmes have at times run schemes in the 50–85 per cent range for priority equipment or disadvantaged applicants. Mini tillers — the workhorse of hill mechanization — have long been distributed at around 50 per cent subsidy through district agriculture offices and their successors, a major reason for their rapid adoption in the mid-hills.

Because rates, ceilings and eligible equipment lists change every fiscal year, always read the specific call-for-proposals notice rather than assume a percentage. A typical notice specifies the machine categories, the maximum grant per applicant, the self-contribution required and the deadline. Grants are paid against verified purchase — reimbursed to the applicant or paid directly to the supplier — never handed out in cash upfront.

For the majority of smallholders who cannot justify owning a tractor or harvester, Nepal promotes the Custom Hiring Centre (CHC) model — a machinery bank, usually run by a cooperative, farmer group or agribusiness, that buys equipment with a government grant and rents out machine services to surrounding farmers at fixed hourly or per-area rates. The June 2024 review of PMAMP reported 599 custom hiring centres established under the project, equipped with about NPR 2.92 billion worth of machinery spanning production, processing and post-harvest operations.

CHCs are normally capitalised on roughly 50–50 cost-sharing: the government grant covers about half the machinery cost, the operating cooperative invests the rest and then earns revenue from custom services. Centres documented in Kailali, for instance, hold tractors, power tillers, rotavators, disc harrows, combine harvesters, threshers, seed drills, reaper-binders, pumping sets, zero-tillage drills and sprayers. A joint Food and Agriculture Organization (FAO)–CIMMYT review of Nepali CHCs found the model promising for scale-appropriate mechanization but stressed that business skills, operator training and maintenance systems are essential for centres to stay viable.

The practical takeaway: you do not need to win a grant to benefit from the subsidy system — you can hire a subsidised reaper, transplanter or harvester from the nearest CHC. Ask the local PMAMP Project Implementation Unit, AKC or your municipality's agriculture section for the closest centre and its service rates, which are typically far cheaper than hiring labour for the same work.

Eligibility rules are set in each programme's working procedure, but the pattern is consistent. Most grants for larger machines — tractors, combine harvesters — go to registered farmer groups, cooperatives, agri-firms and CHC operators rather than unaffiliated individuals, because shared machines serve more land per rupee of subsidy. Individual commercial farmers can apply under many provincial, AKC and local-government schemes, particularly for smaller equipment such as mini tillers, pumps and sprayers, and several programmes give scoring priority to women, returnee youth, Dalit and marginalised applicants.

Applicants must generally farm within the programme's command area — for PMAMP grants that means inside a designated pocket, block, zone or superzone for the relevant crop. Proposals are scored competitively by a selection committee against criteria such as land area under the crop, group membership, existing machinery, business plan and ability to pay the self-contribution share. Selected applicants sign an agreement before purchase, and payment of the grant portion follows physical verification of the machine.

There are three main doors. First, PMAMP/NAMP: its Project Implementation Units in zone and superzone districts publish annual calls for proposals (prastav aahwan) for machinery, custom hiring centres and infrastructure grants, usually early in the fiscal year (Shrawan/Bhadra, i.e., July–September), on pmamp.gov.np, PIU websites and local newspapers. Second, provinces: each province's agriculture ministry runs mechanization lines through the district-based Agriculture Knowledge Centres (AKCs) — created in the 2018 (2075 BS) federal restructuring to replace the former District Agriculture Development Offices — which publish their own subsidy notices each year. Third, local governments: many palikas budget 50–75 per cent machinery subsidies announced through ward offices and the municipality's agriculture section.

The sequence is broadly the same everywhere: watch for the notice, collect the form, prepare the documents and submit the proposal before the deadline — typically 15 to 30 days after publication. After committee evaluation and field verification, selected applicants sign a grant agreement, purchase the approved machine (often from an authorised supplier) and receive the subsidy share after inspection. No step requires a middleman, and no fee beyond any stated form charge should be paid.

Farmers should also know the system's weaknesses, which reviews have repeatedly flagged: operating procedures for machinery centres were slow to be finalised, and critics argue that well-connected 'paper farmers' capture a disproportionate share of grants. A mid-2024 evaluation found PMAMP had used only about 68 per cent of its allocated budget by FY 2079/80 and had missed several targets. Applying early, keeping documentation complete and following up in writing with the PIU or AKC improve the odds of a genuine farmer's proposal succeeding.

Grants are not the only support channel. Nepal Rastra Bank's concessional agricultural loan scheme, introduced under the Interest Subsidy for Concessional Loans Procedure, 2075 BS (2018), has provided a 5-percentage-point interest subsidy on commercial agriculture and livestock loans, which farmers have used to finance tractors and harvesters; new lending has been tightened since 2023, so confirm current availability with your bank. On the tax side, machinery has historically enjoyed concessional import treatment — tractors once attracted only 1 per cent customs duty (later raised to 5 per cent), and the 2017/18 Finance Act exempted power tillers of up to 1,800cc from the 13 per cent VAT applied to other tractors — but duty and VAT schedules change with every annual Finance Act, so check current rates with the Department of Customs.

Finally, treat any offer that sounds too generous with caution. Genuine subsidy programmes are announced through official notices with written procedures, published selection results and payment after verification; they never require advance payments to brokers. If a machine is supplied under a grant, keep the VAT invoice, agreement copy and verification record for warranty, insurance and audit purposes. For authoritative, current information, consult the PMAMP/NAMP portal (pmamp.gov.np), your provincial agriculture ministry and AKC websites, and the federal Ministry of Agriculture, Forest and Environment (moald.gov.np).