Government subsidies, Grants & Schemes

Government Subsidies/ Grants/ Schemes for

Entrepreneurs

By CA. Nandkishor Malpani

CA Nandkishor Malpani M# 9823388620

MOST IMPORTANT FACTOR - CAPITAL

◦ Own Funds - Limitations

◦ Loan from Bank – Interest Cost


Want Discounts on

Capital Investments???


Subsidy is financial support by Government to economic sector for promotion of sector.

Subsidy may be in kind also.

Various types of subsidies are granted by Government as per the nature of sector, viz. capital subsidy, production subsidy, export subsidy, tax subsidy, Stamp duty consession, interest cost subsidy, power tarriff discounts etc.


(National Mission of Food Processing)

Objective – Setting up, technology upgradation,modernisation of food processing industries in fruits& vegetables, milk products, meat, poultry, fishery,oil seeds and such other agri-horticultural sectorsleading to value addition and shelf life enhancement.

Includes – Food flavours and colours, oleoresins,spices, coconut, mushroom, dall mill, rice mill, flourmill, oil mill, breakfast foods, bakery productsincluding biscuits, pastries, cakes, buns, rusk,confectionery including cocoa and chocolate andother ready to eat foods etc.


Financial Assistance –25% of the cost of plant & machinery & technical civil works subject to maximum of Rs.50 lacs.

Release of Grants – ( In two installments)First – On utilization of 50% of promoter’s

contribution & 50% of bank term loanSecond – On utilization of 100% of promoter’s

contribution & 100% of bank term loan


Objectives – Raising the processing of perishables considerably

with global share in food trade from 1.5% to 3% along with value addition.

To provide adequate/ excellent infrastructure facilities for food processing along with value chain from the farm to market including infrastructure near farm, logistics, centralized processing units. It is a cluster based approach.

High quality of produce, reduction in wastage, capacity building of producers, creation of effective supply chain along with employment generation.


Implementing Agency – Ministry of Food Processing Industry

Minimum Land Requirement – Between 50 acres to 100 acres depending upon the business plan, size of market and availability of raw material

Supporting Units – Surrounded by primary processing centres and collection centres for which land of 2 to 3 acres will be required


Pattern of Financial AssistanceCapital Investment subsidy – 35% of eligible

project cost, maximum of Rs. 25 Cr as upfront subsidy

Interest Subvention Subsidy – Rs. 10 Cr in three years on term loan from bank/ FI


Implementation ProcedureMega Food Park Projects are to be

implemented through Special Purpose Vehicles (SPV) to be promoted by food processors/ agri business operators/ infra developers either alone or in consortium.

The SPV will be required to be registered under Companies Act which will own and operate the food park.


Pattern of Release of GrantInstallment Of Rs. When and subject to conditions

1 10 Cr After final approval subject to possession of land with requisite permissions, incorporation of SPV, sanction of term loan, proportionate equity contribution

2 10 Cr After submission of Utilization Certificate of the first installment of grant and proportionate expenditure from the term loan and promoters contributions

3 5 Cr After submission of Utilization Certificate of the Second Installment of grant and proportionate expenditure from the term loan and promoters contributions


Land Requirement – Minimum 30 acres of land for Central Processing Centres. It may have or may not have primary processing centres or collection centres.

Financial Assistance – 35% of the eligible cost of capital subject to maximum of Rs. 15 Cr as upfront subsidy and Rs. 6 Cr as Interest Subvention for 3 years.


Pattern of Release of GrantInstallment Of Rs. When and subject to conditions

1 6 Cr After final approval subject to possession of land with requisite permissions, incorporation of SPV, sanction of term loan, proportionate equity contribution

2 6 Cr After submission of Utilization Certificate of the first installment of grant and proportionate expenditure from the term loan and promoters contributions

3 3 Cr After submission of Utilization Certificate of the Second Installment of grant and proportionate expenditure from the term loan and promoters contributions


Total Cost Rs.6000 x 5000 MT Rs. 3 Cr

40% Subsidy Rs. 3 Cr x 40% Rs. 1.20 CrCA Nandkishor Malpani M#

9823388620

Construction / Expansions /Modernisation of cold storages

Implementing Agency – National Horticulture Board (NHB)

Credit Link Back Ended Subsidy – 40% of the Capital Cost of Project

Maximum Subsidy Limit – Rs. 120 lacs Capital Cost per Ton - Rs.6000 Maximum Capacity – 5000 MT


Non Horticulture Products, viz. dairy incl all milk products, organic produces etc

Facility of complete cold chain from farm gate to consumer /producer to market including mobile cooling units

Financial assistance (grant-in-aid) – 50% of the total cost of plant and machinery and technical civil works

Maximum financial assistance – Rs. 10 Cr.

Size of Godown–Min.50 MT -Max.30,000 MT Location – Any place outside the limits of

Municipal Corporation area Subsidy Limits

Category Subsidy Rate Max. Ceiling

Projects belonging to Women /their self help groups/ co-operatives

33.33% of the capitalcost

Rs. 3 Cr


• Project Should not commence before santion of loan • Promoters cont min 25% • Minimum Bank Loan 50 % • Repayment more that 60 mths required

*** No maximum subsidy ceiling if the project of Co-operativesis assisted by National Co-operative DevelopmentCorporation (NCDC)

Category Subsidy Rate Max. Ceiling

Other than above 25% of the capitalcost

Rs. 2.25 Cr


Credit Linked Subsidy – Available only if projects arefinanced by Commercial Banks, Regional Rural Banks,State Cooperative Banks, State CooperativeAgricultural and Rural Development Bank, AgricultureDevelopment Finance Companies, Urban Co-operative Banks, financial institutions eligible forrefinance by NABARD and subsidy shall be releasedthrough NABARD or NCDC as per Financial Institutioninvolved.

No Interest is chargeable on subsidy

Repayment Schedule will include subsidy amount alsoand will be not less than 5 years from disbursementof loan.


Objectives

To provide additional agricultural marketing infrastructure and strengthen it for agricultural as well as allied activities of dairy, poultry, fishery, livestock and minor forest produce.

To provide infrastructure facility and promote grading, standardization and quality certification of agricultural produce so as to ensure price to farmers commensurate with quality of produce.

To promote direct integration of processing units with producers.

To create general awareness and provide education and training to farmers and entrepreneurs on various agricultural & marketing aspects.


Location – Any location

Subsidy –Rate of subsidy-25% of capital cost of

project, maximum of Rs. 50 lacs & 33.33% forNorth Eastern States, SC/ST, maximum of Rs.60 lacs.

Assistance would be credit linked and subjectto sanction of the infrastructure project bythe Banks.


No Interest on Subsidy Portion shall be charged.

Implementing Agency: The Directorate of Marketing & Inspection (DMI), Office of Department of Agriculture & Cooperation.

Projects will be financed through NABARD along with participating banks and NCDC.


Assistance – Upto 50% of assistance for seeds undervarious schemes for rice, wheat, Bajra, Jowar, Ragi, Barley,Oilseeds, Pulses, Maize, Oil Palm Sprouts, Cotton Seeds,Jute, etc.

Schemes1. Macro Management Mode of Agriculture- State Work

Plan2. Integrated Scheme on Oilseeds, Pulses, Oil Palm and

Maize3. Technology Mission on Cotton4. Technology Mission on Jute & Mesta5. National Food Security Mission6. Seed Village Programme7. Hybrid Rice Seed Production


Implemented by: Small Farmers Agri-Business Consortium (SFAC)

Nature of Projects- Agriculture or allied sector basically perishables namely horticulture, floriculture, medicinal and aromatic plants, minor forest produce, apiculture & fisheries; excluding poultry & dairy projects.

Capital Assistance – Minimum of following:◦ 10% of total project cost◦ 26% of project equity ( promoters contribution)◦ Rs. 75 lacs


Subsidy – Minimum 25% of the outlay and subject to maximum limits as prescribed for :

Establishment of small dairy units with cross- bred cows, rearing of heifer cows, graded buffaloes

Purchase of milking machines/ milkotesters/ bulk milk cooling units

Purchase of dairy processing equipments for manufacture of indigenous dairy products

Establishment of dairy product transportation & Cold chain

Dairy marketing outlet/parlour Establishment of private veterinary clinics


Objective – Setting up, modernization, expansion of coconut processing units for promotion and marketing of coconut related enterprises using any resources of coconut trees such as timber, coconut shell, tender coconut, leaves, charcoal, etc.

Subsidy -◦ For Setting up & Modernization – 25% of the project

cost limited to maximum of Rs. 50 lacs◦ For marketing activities – 50% of marketing project

cost limited to maximum of Rs. 10 lacs


CLCS (Credit Linked Capital Subsidy) Scheme is introduced by Ministry of Small Scale Industries for SSI Units in various industries.

Indicative List of Industries:◦ Pickles, Sauces, Bakery Products, Spice grinding, rice milling,

wheat flour mill, namkeen making, etc.◦ Interlocking pavements blocks, cement concrete blocks, concrete

pipe making◦ Foundries – Iron & Steel◦ Gold plating & Jewellery◦ Steel & Wooden Furniture◦ Rubber, leather, wood, plastic based sports goods◦ Readymade garments◦ Agricultural implements & post harvest equipments◦ Khandsari Industry, Edible Oil Extraction & Oil Cake manufacturing◦ Papad, Masala Making, Dal processing◦ Handloom Industry & Printing Industry


Objective – Technology upgradation of the current unit for improved productivity, quality of products, environmental conditions including packaging, pollution measures & energy conversation machinery.

Subsidy & Assistance –◦ Rate of subsidy – 15% on eligible plant & machinery

subject to maximum limit of Rs. 15 lacs◦ Ceiling on loans under the scheme – Rs. 1 Cr


Objective – For induction of state-of-the-art technology for textiles and jute industry

Eligible types of Industry –◦ Wool scouring and combing◦ Synthetic filament yarn texturising, crimping and twisting ◦ Spinning◦ Viscose Staple Fibre & Viscose Filament Yarn (VFY)◦ Weaving, knitting including non-wovens, fabric embroidery

Garment/Made-up manufacturing/Design studio◦ Processing of fibres, yarns, fabrics, garments and made-

ups◦ Silk reeling and twisting◦ Technical Textiles & Non-wovens◦ Cotton Ginning & Pressing


Benefits: ◦ 5% interest reimbursement of the normal interest

charged by the lending agency on RTL, or◦ 5% exchange fluctuation (interest & repayment) from the

base rate on FCL, or◦ 15% credit linked capital subsidy for SSI sector, or◦ 20% credit linked capital subsidy for powerloom sector

An option for ‘front ended’ subsidy provided w.e.f. 1st October, 2005, or

◦ 5% interest reimbursement plus 10% capital subsidy for specified processing machinery.


Tourism Projects like – Golf Course, Theme Parks, Amusement Park, Water/ Adventure Sports Parks, Health & Rejuvenation Centre, Convention Centre, Cruise Vessel, Rope ways, etc. or any such project creating tourist impact.

Grant in aid for preparation of Detailed Project Report (DPR) would be admissible at 50% of the actual cost subject to maximum of Rs. 50 lacs per project.


Subsidy - Lower of following:◦ Rs. 50 Cr, subject to maximum of 25% of project

cost◦ 50% of equity contribution by promoters

Capital Cost of project shall include:◦ Cost of land, building, material, labour, transport◦ Pre-operative cost such as designing, formulation,

development, engineering, technical fees, etc.


Credit linked subsidy – Subsidy will be released as 25%, 50%, 25% as in proportion with the investment and disbursement of funds by equity and loan from bank at different specified stages.

Monitored by - Ministry of Tourism through Joint Secretary & Directors.


Objective – Collateral Free Credit to Micro & Small Enterprises ( Fund & Non Fund Based)

Implementing Agency –Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE)

Eligible Units – Covers micro & small enterprises engaged in manufacturing or production of goods as well as service enterprises as defined in MSMED Act 2006.


Maximum credit limit to such enterprises –Rs. 1 Cr

Guarantee Cover Available under Scheme –75% of the sanctioned credit amount with a maximum guarantee cap of Rs. 62.50 lacs

Benefits – Best option to start up with micro unit in absence of any collateral security with minimal fees of 1.5% ( for project above 5 lacs)


Applicable to: Permanent registered SSI/ Ancillary/ Tiny/ Small Scale Service Business Enterprises (SSSBE) for ISO 9001/ ISO 14001/ HACCP Certifications.

Incentives – Reimbursement of 75% of actual charges for acquiring the certification to the maximum extent of Rs. 75,000/- per unit irrespective of number of certifications. Reimbursement will be done after acquiring the Certification only.


Scheme Implemented by – Khadi and Village Industries Commission ( KVIC) under control of Ministry MSME

Objectives – To generate employment opportunities in rural and urban areas through setting up of new self employment projects/ micro enterprises with continuous and sustainable employment.


Subsidy – 25% & 15% of capital cost of project for rural & urban area respectively.

Maximum cost of project –◦ Manufacturing Sector – 25 lacs◦ Business/ Service Sector - 10 lacs

Scheme is applicable to all new viable micro enterprises including village industries projects

Bank to sanction 90% of project cost as term loan


Package Scheme of Incentives – 2013

Government of Maharashtra

Industries, Energy & Labour Department


Applicable to –◦ Industries listed in First Schedule of the Industries (

Development and Regulation) Act, 1951◦ Manufacturing Enterprises as defined in the MSMED

Act 2006 ◦ Information Technology Manufacturing Units

registered with MIDC or the Development Commissioner, SEEPZ or STPI in the state◦ Bio- technology manufacturing units◦ Cold Storages◦ Mechanized Food/ Agro Processing Industries◦ Central Public Sector Units qualifying specified

criteria


Maharashtra is divided into different zones as per the development of the areas:1. Group A –Industrially developed areas2. Group B –Areas where some industrial development

has taken place but are less developed than Group A3. Group C – Areas which are less developed than those

covered in Group B4. Group D – Areas which are lesser-developed areas of

the State not covered in Group A/B/C.5. Group D+ - Least developed areas not covered under

Group A/B/C/D6. No Industry District – Having no Industries7. Naxalism Affected Area – Areas affected by Naxalism


Aurangabad Division in Various Zones◦ Covering Aurangabad, Jalna, Beed, Osmanabad,

Parbhani, Hingoli, Latur & Nanded

◦ All Districts as mentioned above, other than Aurangabad & Hingoli, fall in ‘Group D+’ zone

◦ Aurangabad Taluka – Group D, Other than Aurangabad Taluka D+

◦ Hingoli - No Industry District


Fixed Assets – It shall mean to include : ◦ Land / area in an effective possession, ◦ Building for unit including manufacturing facilities,◦ Plant & Machinery & Tools & Equipments, ◦ Cost of Development of Location viz, roads, fencing◦ Installation charges and pre-operative expenses◦ Technical Know How◦ Amount paid for supply of Power to Electricity

Distribution Company


Gross Fixed Capital InvestmentIn case of New Fixed Assets shall mean and include the value of new Fixed Assets acquired at site and duly paid for. It is subject to certain proviso.


Financial Incentives◦ Total quantum of basket of incentives for new

MSME/ Large Scale Units and the Eligibility period is produced below as per areas.

◦ Total quantum of basket of incentives will be linked to the Fixed Capital Investment.


Area Ceiling as % of Fixed Capital

No. of Years

Micro, Small & Medium

LSI Micro, Small & Medium

LSI

A --- --- 7 7B 20 --- 7 7C 40 30 7 7D 70 40 10 7

D+ 80 50 10 7No Industry

District90 70 10 7

NaxalismAffected Area

100 80 10 7

Note – Food/ Agro processing units will get 10% more incentives in addition along with one more year of eligibility.


Total Quantum of

Financial Incentives

Industrial Promotion

Subsidy Interest Subsidy

Power Tariff

Subsidy


Industrial Promotion Subsidy◦ Formula for calculation is :

VAT on Local Sales minus Input Tax Credit (ITC) or zero whichever is more + CST Payable + certain % of ITC

◦ Such Certain % ranges from 100% to 20% of ITC from Naxalism Affected Area to Group B Area.

◦ For Entire Vidarbha & Marathwada, such % is 65% of ITC.


Example of Industrial Promotion SubsidyMarathwada Zone - 65%VAT on Sales - Rs.100,000/-ITC - Rs. 50,000/-CST payable - Rs. 10,000/-Then Subsidy = 100,000 – 50,000 + 10,000+

(50,000 x 65%)= 92,500/-


Interest Subsidy◦ All units, other than in Group A, are eligible

◦ Subsidy is only on the amount of Interest actually paid to Banks/ Financial Institutions

◦ Interest Subsidy to be minimum of following:• Interest rate adjusted for any other interest subsidy received

or penal interest• 5% per annum

• Interest Subsidy will not exceed the bill amount paid for electricity consumed during the relevant year


Power Tariff Subsidy◦ All units, other than in Group A, are eligible

◦ Subsidy will be Re. 1/- per unit for the units located in Vidarbha, Marathwada, North Maharashtra and the districts of Raigad, Ratnagiri and Sindhudurg in Konkan region and Re. 0.50 per unit for other areas of Maharashtra State

◦ It will be available only for 3 years from date of commencement of commercial production for the energy consumed and paid.


Incentives other than the basket of Financial Incentives◦ Exemption from Electricity Duty New Units in Group C, D, D+, No Industry and

Naxalism Areas are exempted for period not exceeding 15 years

In Group A & B, 100% EOU, IT Manufacturing Units, Bio Technology Units are exempted for period not exceeding 7 years


Incentives other than the basket of Financial Incentives◦ Waiver of Stamp Duty

New as well as existing units for expansion/ diversification in Group C, D, D+, No Industry and Naxalism Areas are exempted

In Group A & B also, subject to certain conditions, exemption to units is available.


Government subsidies, Grants & Schemes

Small Business & Entrepreneurship

Transcript of Government subsidies, Grants & Schemes