government subsidies, grants & schemes
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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???
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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 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.
CA Nandkishor Malpani M# 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 loanSecond – On utilization of 100% of promoter’s
contribution & 100% of bank term loan
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 9823388620
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
CA Nandkishor Malpani M# 9823388620
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.
CA Nandkishor Malpani M# 9823388620
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
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 9823388620
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
CA Nandkishor Malpani M# 9823388620
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
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.
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
CA Nandkishor Malpani M# 9823388620
• 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
CA Nandkishor Malpani M# 9823388620
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.
CA Nandkishor Malpani M# 9823388620
CA Nandkishor Malpani M# 9823388620
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
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.
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 9823388620
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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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)
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 9823388620
Package Scheme of Incentives – 2013
Government of Maharashtra
Industries, Energy & Labour Department
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 9823388620
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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 9823388620
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.
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 9823388620
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.
CA Nandkishor Malpani M# 9823388620
Total Quantum of
Financial Incentives
Industrial Promotion
Subsidy Interest Subsidy
Power Tariff
Subsidy
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 9823388620
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/-
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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.
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 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
CA Nandkishor Malpani M# 9823388620
CA Nandkishor Malpani M# 9823388620