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Government subsidies, Grants & Schemes

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  • 1. Government Subsidies/ Grants/ Schemes for Entrepreneurs By CA. Nandkishor Malpani CA Nandkishor Malpani M# 9823388620
  • 2.  MOST IMPORTANT FACTOR - CAPITAL ◦ Own Funds - Limitations ◦ Loan from Bank – Interest Cost CA Nandkishor Malpani M# 9823388620
  • 3. Want Discounts on Capital Investments??? CA Nandkishor Malpani M# 9823388620
  • 4.  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. CA Nandkishor Malpani M# 9823388620
  • 5. (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 sectors leading to value addition and shelf life enhancement.  Includes – Food flavours and colours, oleoresins, spices, coconut, mushroom, dall mill, rice mill, flour mill, oil mill, breakfast foods, bakery products including biscuits, pastries, cakes, buns, rusk, confectionery including cocoa and chocolate and other ready to eat foods etc. CA Nandkishor Malpani M# 9823388620
  • 6.  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 loan  Second – On utilization of 100% of promoter’s contribution & 100% of bank term loan CA Nandkishor Malpani M# 9823388620
  • 7.  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. CA Nandkishor Malpani M# 9823388620
  • 8.  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 CA Nandkishor Malpani M# 9823388620
  • 9.  Pattern of Financial Assistance  Capital 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 CA Nandkishor Malpani M# 9823388620
  • 10.  Implementation Procedure  Mega 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. CA Nandkishor Malpani M# 9823388620
  • 11.  Pattern of Release of Grant Installment 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 CA Nandkishor Malpani M# 9823388620
  • 12.  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. CA Nandkishor Malpani M# 9823388620
  • 13.  Pattern of Release of Grant Installment 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 CA Nandkishor Malpani M# 9823388620
  • 14. Total Cost Rs.6000 x 5000 MT Rs. 3 Cr 40% Subsidy Rs. 3 Cr x 40% Rs. 1.20 Cr CA 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
  • 15. CA Nandkishor Malpani M# 9823388620  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.
  • 16.  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 capital cost Rs. 3 Cr CA Nandkishor Malpani M# 9823388620
  • 17. • 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-operatives is assisted by National Co-operative Development Corporation (NCDC) Category Subsidy Rate Max. Ceiling Other than above 25% of the capital cost Rs. 2.25 Cr CA Nandkishor Malpani M# 9823388620
  • 18.  Credit Linked Subsidy – Available only if projects are financed by Commercial Banks, Regional Rural Banks, State Cooperative Banks, State Cooperative Agricultural and Rural Development Bank, Agriculture Development Finance Companies, Urban Co- operative Banks, financial institutions eligible for refinance by NABARD and subsidy shall be released through NABARD or NCDC as per Financial Institution involved.  No Interest is chargeable on subsidy  Repayment Schedule will include subsidy amount also and will be not less than 5 years from disbursement of loan. CA Nandkishor Malpani M# 9823388620
  • 19. CA Nandkishor Malpani M# 9823388620
  • 20.  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. CA Nandkishor Malpani M# 9823388620
  • 21.  Location – Any location  Subsidy –  Rate of subsidy-25% of capital cost of project, maximum of Rs. 50 lacs & 33.33% for North Eastern States, SC/ST, maximum of Rs. 60 lacs.  Assistance would be credit linked and subject to sanction of the infrastructure project by the Banks. CA Nandkishor Malpani M# 9823388620
  • 22.  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. CA Nandkishor Malpani M# 9823388620
  • 23.  Assistance – Upto 50% of assistance for seeds under various schemes for rice, wheat, Bajra, Jowar, Ragi, Barley, Oilseeds, Pulses, Maize, Oil Palm Sprouts, Cotton Seeds, Jute, etc.  Schemes 1. Macro Management Mode of Agriculture- State Work Plan 2. Integrated Scheme on Oilseeds, Pulses, Oil Palm and Maize 3. Technology Mission on Cotton 4. Technology Mission on Jute & Mesta 5. National Food Security Mission 6. Seed Village Programme 7. Hybrid Rice Seed Production CA Nandkishor Malpani M# 9823388620
  • 24.  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 CA Nandkishor Malpani M# 9823388620
  • 25.  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 CA Nandkishor Malpani M# 9823388620
  • 26.  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 CA Nandkishor Malpani M# 9823388620
  • 27.  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 CA Nandkishor Malpani M# 9823388620
  • 28.  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 CA Nandkishor Malpani M# 9823388620
  • 29.  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 CA Nandkishor Malpani M# 9823388620
  • 30.  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. CA Nandkishor Malpani M# 9823388620
  • 31.  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. CA Nandkishor Malpani M# 9823388620
  • 32.  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. CA Nandkishor Malpani M# 9823388620
  • 33.  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. CA Nandkishor Malpani M# 9823388620
  • 34.  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. CA Nandkishor Malpani M# 9823388620
  • 35.  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) CA Nandkishor Malpani M# 9823388620
  • 36.  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. CA Nandkishor Malpani M# 9823388620
  • 37.  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. CA Nandkishor Malpani M# 9823388620
  • 38.  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 CA Nandkishor Malpani M# 9823388620
  • 39. Package Scheme of Incentives – 2013 Government of Maharashtra Industries, Energy & Labour Department CA Nandkishor Malpani M# 9823388620
  • 40.  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 CA Nandkishor Malpani M# 9823388620
  • 41.  Maharashtra is divided into different zones as per the development of the areas: 1. Group A –Industrially developed areas 2. Group B –Areas where some industrial development has taken place but are less developed than Group A 3. Group C – Areas which are less developed than those covered in Group B 4. 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/D 6. No Industry District – Having no Industries 7. Naxalism Affected Area – Areas affected by Naxalism CA Nandkishor Malpani M# 9823388620
  • 42.  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 CA Nandkishor Malpani M# 9823388620
  • 43.  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 CA Nandkishor Malpani M# 9823388620
  • 44.  Gross Fixed Capital Investment In 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. CA Nandkishor Malpani M# 9823388620
  • 45.  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. CA Nandkishor Malpani M# 9823388620
  • 46. Area Ceiling as % of Fixed Capital No. of Years Micro, Small & Medium LSI Micro, Small & Medium LSI A --- --- 7 7 B 20 --- 7 7 C 40 30 7 7 D 70 40 10 7 D+ 80 50 10 7 No Industry District 90 70 10 7 Naxalism Affected Area 100 80 10 7 Note – Food/ Agro processing units will get 10% more incentives in addition along with one more year of eligibility. CA Nandkishor Malpani M# 9823388620
  • 47. Total Quantum of Financial Incentives Industrial Promotion Subsidy Interest Subsidy Power Tariff Subsidy CA Nandkishor Malpani M# 9823388620
  • 48.  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. CA Nandkishor Malpani M# 9823388620
  • 49.  Example of Industrial Promotion Subsidy Marathwada 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/- CA Nandkishor Malpani M# 9823388620
  • 50.  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 CA Nandkishor Malpani M# 9823388620
  • 51.  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. CA Nandkishor Malpani M# 9823388620
  • 52.  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 CA Nandkishor Malpani M# 9823388620
  • 53.  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. CA Nandkishor Malpani M# 9823388620
  • 54. CA Nandkishor Malpani M# 9823388620
  • 55. CA Nandkishor Malpani M# 9823388620