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
CA Nandkishor Malpani M#
9823388620

Want Discounts
on
Capital
Investments???
9823388620

 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.
9823388620

(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.
9823388620

 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
9823388620

 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.
9823388620

 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
9823388620

 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
9823388620

 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.
9823388620

 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
of the Second Installment of grant and
9823388620

 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.
9823388620

 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
of the first installment of grant and
of the Second Installment of grant and
9823388620

Total Cost Rs.6000 x 5000 MT Rs. 3 Cr
40% Subsidy Rs. 3 Cr x 40% Rs. 1.20 Cr
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 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

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.

 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
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• 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
9823388620

 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.
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 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.
9823388620

 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.
9823388620

 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.
9823388620

 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
9823388620

 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
9823388620

 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
9823388620

 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
9823388620

 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
9823388620

 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
9823388620

 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
9823388620

 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.
9823388620

 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.
9823388620

 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.
9823388620

 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.
9823388620

 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.
9823388620

 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)
9823388620

 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.
9823388620

 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.
9823388620

 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
9823388620

Package Scheme of
Incentives – 2013
Government of Maharashtra
Industries, Energy & Labour Department
9823388620

 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
9823388620

 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
9823388620

 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
9823388620

 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
9823388620

 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.
9823388620

 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.
9823388620

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.
9823388620

Total
Quantum of
Financial
Incentives
Industrial
Promotion
Subsidy
Interest
Subsidy
Power
Tariff
Subsidy
9823388620

 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.
9823388620

 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/-
9823388620

 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
9823388620

 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.
9823388620

 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
9823388620

 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

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