What exactly is the 3 percent interest subvention under AIF and how does it lower my EMI?

Interest subvention means the government pays a part of your loan interest so your effective interest cost goes down. Under the Agriculture Infrastructure Fund the widely stated benefit is a 3 percent per year interest subvention on the loan, available up to a loan ceiling per project, and for a fixed number of years from drawdown. So if your bank charges, say, 10 percent on the term loan, with the 3 percent subvention your effective rate works out to around 7 percent on the eligible portion. The subvention is usually credited or adjusted against your interest, not given as cash in hand. Two important points. First, the subvention applies up to a ceiling on the loan amount, so the part of the loan above that ceiling does not get the 3 percent benefit. Second, it is available for a limited number of years, after which you pay the full rate. This still meaningfully lowers your total interest outgo over the project life and helps the project cash flow in the early years. The exact ceiling, the number of years and whether any conditions apply can change, so confirm the current subvention amount and duration on the official AIF agriinfra portal or with your lending bank. This is general information and not financial advice.