The Government of India has approved a one-time, interest-free loan scheme for tobacco growers in Andhra Pradesh. Under the Interest-Free Working Capital Assistance Scheme, the Ministry of Commerce & Industry will provide ₹50,000 per barn to growers of Flue-Cured Virginia (FCV) tobacco. The funds will be distributed directly to farmers through the Direct Benefit Transfer (DBT) system.
Key facts
- Loan amount: ₹50,000 per barn, interest-free
- Number of growers covered: approximately 44,000
- Total financial outlay: about ₹220 crore
- Eligible crop: Flue-Cured Virginia tobacco in Andhra Pradesh
- Distribution method: Direct Benefit Transfer (DBT)
- 2025–26 crop season auctions began: 25 March 2026
- Quantity auctioned so far: approximately 100 million kg
What is FCV tobacco and why this support
Flue-Cured Virginia tobacco is a specialty variety grown predominantly in Andhra Pradesh and Karnataka. It is a significant agricultural product for these states and has a substantial export market. The global tobacco market has been undergoing changes due to shifting demand patterns, geopolitical developments and evolving international trade dynamics. These external factors have affected the conditions under which growers can procure inputs and sell their harvest, making liquidity a challenge for many farming households.
How the scheme works
Under this one-time intervention, each barn owner cultivating FCV tobacco in Andhra Pradesh becomes eligible for the ₹50,000 assistance without having to pay interest on the loan. The amount will be credited directly into the bank account of the farmer through DBT, eliminating middlemen and ensuring swift transfer of funds.
The scheme targets approximately 44,000 growers across Andhra Pradesh. Based on this coverage, the Government estimates a total financial commitment of about ₹220 crore for the initiative.
What the money can be used for
The assistance is designed to address multiple financial pressures that tobacco growers face. Farmers can use the funds to meet immediate household expenses, repay loans taken from banks and other institutional lenders, and purchase seeds, fertilisers and other inputs needed for the upcoming crop season. By providing immediate liquidity, the scheme aims to reduce grower dependence on costly informal loans from private moneylenders, which often carry high interest rates.
How this connects to Government support for the sector
This loan scheme is part of a broader set of Government measures to support the FCV tobacco sector. The Ministry of Commerce & Industry is simultaneously engaging with exporters, buyers, growers and other stakeholders to facilitate procurement and enhance market participation. The Government is also working to promote exports and ensure smooth marketing of the crop. The 2025–26 season, which began auctions on 25 March 2026, has already seen approximately 100 million kg of FCV tobacco auctioned, indicating continued market activity.
What this means for you
If you are an FCV tobacco grower in Andhra Pradesh with a barn, you may be eligible for this ₹50,000 assistance. The interest-free nature of the loan means you repay only the principal amount, not the additional cost of interest. This reduces your overall borrowing cost compared to commercial loans. The direct transfer through DBT ensures the money reaches your account without delays or intermediaries.
The scheme recognises that farming is seasonal and cash flow is uneven throughout the year. By providing support before or during the crop season, the Government aims to ensure you can invest adequately in your crop and meet family needs without resorting to expensive private borrowing.
Eligibility and next steps
The scheme covers FCV tobacco growers in Andhra Pradesh. To receive the assistance, you will need to have a registered barn and likely proof of cultivation. Since funds are being transferred through DBT, ensure your bank account details are linked to your agricultural records. Further details on the application process, deadlines and verification procedures would be provided by the Ministry of Commerce & Industry and state authorities.