Do you need sanction before you build
The most delicate page on this site, because getting it wrong in either direction can cost a claim. NHB has now answered it outright.
The two schemes that fund a mushroom project answer this question differently, and as of NHB’s current guideline only one of them is still silent. For NHB the answer is now a flat yes, in the document’s own words. For MIDH we searched twice and found nothing, which is not the same as there being nothing to find.
What we searched, and what we found
We searched MIDH’s Operational Guidelines, in full, for “commenc” (to catch commence, commencement, commencing) and for “prior”. Both return zero hits across all 99 pages that speak to construction. Every “sanction” hit in the document names the State Level Sanctioning Committee, an approval body, or a loan’s own sanction date, never a bar on work starting before approval.
OPERATIONAL GUIDELINES MISSION FOR INTEGRATED DEVELOPMET OF HORTICULTURE (MIDH Operational Guidelines 2025)
Department of Agriculture & Farmers Welfare, Government of India (published on nhb.gov.in)
Printed 31 December 2024
“Section 7.2, verbatim: "Revised cost norms and pattern of assistance, as given in Annexure-V to VIII, will be adopted. Detailed guidelines in respect of NHB and CDB and, including modalities of approval of projects will be issued separately for effective implementation of these…”Read the full clause
“Section 7.2, verbatim: "Revised cost norms and pattern of assistance, as given in Annexure-V to VIII, will be adopted. Detailed guidelines in respect of NHB and CDB and, including modalities of approval of projects will be issued separately for effective implementation of these schemes." Independently searched for "commenc", "prior" and "sanction" across the full document: no clause anywhere ties any form of prior approval to the start of construction.”
Section 7.2 (PDF p.11)
Read on 11 September 2026 by chirag.
MIDH’s own text explains part of why: it defers the approval procedure for NHB and CDB-related activities, including mushroom, to a separate document this corpus does not hold. Its silence on prior sanction may simply mean the rule lives somewhere we have not read yet, not that no such rule exists.
NHB is not silent, and the answer is no
This site used to tell you that NHB ran an In Principle Approval procedure but that no sentence anywhere stated that building first forfeits the claim. That was true of the guideline then in force. It is not true of the one in force now, which says it three separate times:
National Horticulture Board Operational Guidelines JANUARY 2025 (NHB Operational Guidelines, January 2025: nothing may be built before clearance)
National Horticulture Board, Ministry of Agriculture & Farmers Welfare, Government of India (Plot No. 85, Sector-18, Institutional Area, Gurugram 122015)
Printed January 2025
“Chapter 04, "Implementation of the project", item 4 (PDF p.52), verbatim: "Commencement of any project works at site before GOC is not permitted and shall lead to rejection of the application." The same chapter states it twice more: "Disbursement of Term Loan and implementation…”Read the full clause
“Chapter 04, "Implementation of the project", item 4 (PDF p.52), verbatim: "Commencement of any project works at site before GOC is not permitted and shall lead to rejection of the application." The same chapter states it twice more: "Disbursement of Term Loan and implementation of project is not permitted before issuance of Grant of Clearance to the project by NHB. Any disbursement of term loan before issuance of GoC will lead to rejection of proposal by NHB." (PDF p.50), and, in the Important Instructions, "Obtaining of Grant of Clearance (GoC) is must for starting the project work." The clause then names the preliminary works that ARE allowed first, out of the applicant's own margin money: land levelling and digging of pits, compound wall or fencing with gate, tube well or borewell as part of the project, root stock plantation with drip in the case of grape plantations, application for power, internal roads and drainage, and other statutory approvals. Note separately that the In-Principle Approval cum Letter of Comfort is no longer compulsory: "Unlike previous guidelines, the issuance of IPA cum LoC is not mandatory." It is the GoC, not the IPA, that gates construction.”
PDF p.52 (Implementation, item 4); PDF p.50; PDF p.49 (IPA no longer mandatory)
Read on 14 September 2026 by chirag.
Read which approval that is, because the change catches people out in exactly the wrong direction. The In-Principle Approval cum Letter of Comfort, the thing most applicants think of as “the NHB approval”, is no longer mandatory. It is now a facilitation you can request to help secure a term loan. What gates construction is the Grant of Clearance, which is mandatory, comes after your bank has sanctioned the term loan, and must be in hand before any work starts and before the bank disburses anything.
The guideline names the few things you may do first, out of your own margin money: land levelling and digging of pits, a compound wall or fencing with a gate, a tube well or borewell forming part of the project, applying for power, internal roads and drainage, and other statutory approvals. That list is short and it is the whole of it. Pouring a foundation is not on it.
What is settled, and what still is not
For NHB this is now settled and settled against building first. Commencement of any project works at site before the Grant of Clearance is not permitted and shall lead to rejection of the application. If you are going the NHB route, treat the clearance as the starting gun.
For MIDH it is still open. MIDH contains no clause tying prior sanction to the start of construction, but its own text says the approval procedure for this category lives in a document we do not have, so its silence may mean the rule sits somewhere we have not read rather than that no rule exists. We are not going to tell you it is safe to build first under MIDH, and we are not going to tell you it is forbidden. Confirm directly with your sanctioning department, and with your bank, before you commit spend.