Subsidy Schemes

Subsidy Schemes

To promote the development of the industrial sector, especially MSME sector, the government has introduced various schemes that provide financial subsidy to the eligible enterprises. Some of these subsidy schemes are specifically for certain industrial sectors, while some of them like CLCSS are available for a wide range of industries.

Some of the major subsidy schemes of the government and public institutions are provided below. These can be categorized as follows:

 

Subsidy Schemes for Specific Industries

 

Textile Industry - Technology Upgradation Fund Scheme (TUFS)

Ministry of Textiles introduced the Technology upgradation fund scheme (TUFS) for textiles and jute industry in April 1999 to facilitate induction of state-of-the- art technology by the textile units.
The benefits under the scheme include:

  • 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.


IDBI, SIDBI and IFCI were the nodal agencies for Non-SSI textile sector, SSI textile sector and Jute sector respectively. However, w.e.f. 1st October, 2005, 13 additional nodal banks have been appointed under TUFS for determining eligibility & releasing the subsidy for the cases financed by them.

To know more details on TUFS, click here.



Food Processing Industry - Scheme for Technology Upgradation/ Establishment/ Modernization for Food Processing Industries

This Scheme covers the following activities: Setting up/expansion/modernization of food processing industries covering all segments viz fruits & vegetable, milk product, meat, poultry, fishery, oil seeds and such other agri-horticultural sectors leading to value addition and shelf life enhancement including food flavours and colours, oleoresins, spices, coconut, mushroom, hops. The assistance is in the form of grant subject to 25% of the plant & machinery and technical civil work subject to a maximum of Rs. 50 lakh in General Areas and 33.33% upto Rs. 75 lakh in Difficult Areas.

To know more details on the scheme, click here.

 

Leather Industry – Integrated Development of Leather Sector (IDLS)

The scheme is aimed at enabling existing tanneries, footwear, footwear components and leather products units to upgrade leading to productivity gains, right-sizing of capacity, cost cutting, design and development simultaneously encouraging entrepreneurs to diversify and set up new units

The financial assistance under the Scheme will be investment grant to the extent of 30% of cost of plant and machinery for SSI and 20% of cost of plant and machinery for other units (i.e. non small scale units) subject to ceiling of Rs.50 lakh for technology up gradation /modernization and/or expansion and setting up a new unit. The rate of assistance would be @ 20% for all units (both SSI and Non-SSI) above Rs.50 lakhs subject to ceiling of Rs.2 crore.

The nodal agency for release of assistance, monitoring and interface and coordination with FIs, Banks and the Government is SIDBI.

To know more details on the scheme, click here.


Coir industry

The Coir Board runs various subsidy schemes for the coir sector, as provided below:

  • Rejuvenation, Modernization and Technology Upgradation of the Coir Industry

    A Central Sector Scheme on Rejuvenation, Modernization & Technology Up gradation of the Coir Industry was launched during 2007-08, on a pilot basis, to facilitate the sustainable development of the Spinning and Tiny/Household Weaving Units of the coir industry by providing proper work sheds and enabling replacement of traditional age old ratts with motorized ratts in the Spinning sector and replacement of traditional looms with the mechanized looms in the Tiny/Household sector in the first phase, during XI Plan. The main objectives of the scheme include modernization of Coir industry by adoption of modern technology in production and processing of Coir in the spinning and weaving sectors; Upgradation of the production and processing technology for improving the productivity and quality; and increasing the efficiency and productivity for enhancing the earnings of the workers and income of spinners/ tiny-household sectors, among others.

  • The norms of assistance are as below:

    • Spinning unit: The financial assistance or government grant/subsidy would be 40% of the project cost subject to a maximum of Rs. 80,000 (Rupees eighty thousand only) per unit.

    • Tiny/ household unit: The financial assistance or government grant/subsidy would be 40% of the project cost subject to a maximum of Rs. 2,00,000 (Rupees two lakh only) per unit.

    For more details, click here.

 

  • Extension of Financial Assistance to Coir units in the Brown Fibre sector

    The Coir Board runs a scheme for financial assistance to the coir units in the brown fibre sector. The rate of financial assistance under the scheme is 25% of the cost of equipments and infrastructural facilities subject to certain ceiling limits based on the type of unit.

    For more details on the scheme, click here.

 

  • Scheme for Extension of Financial Assistance for Generator Set / Diesel Engine

    The purpose of the scheme is to give one time subsidy to fibre/ curled coir production units in the brown fibre sector to carry out production at periods of power cut/ low voltage and to ensure supply of brown fibre and curled coir to meet the requirements of rubberized coir products, coir rope, yarn and mats and matting sectors.

    The quantum of subsidy for one unit will be 25% of the cost of generator set subject to a maximum of Rs.50,000/-. This will be a one time financial assistance and will be granted on the basis of expenditure incurred by the unit.

    For more details, click here.

 

 

Other Subsidy Schemes of the Central Government

 

Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)

The Scheme was launched in October, 2000 and revised w.e.f. 29.09.2005. The revised scheme aims at facilitating Technology Upgradation of Micro and Small Enterprises by providing 15% capital subsidy (12% prior to 2005) on institutional finance availed by them for induction of well established and improved technology in approved sub-sectors/products. The admissible capital subsidy under the revised scheme is calculated with reference to purchase price of Plant and Machinery. Maximum limit of eligible loan for calculation of subsidy under the revised scheme is also been raised Rs. 40 lakhs to Rs. 100 lakh w.e.f. 29-09.2005.

The Small Industries Development Bank of India (SIDBI) and the National Bank for Agriculture and Rural Development (NABARD) will continue to act as the Nodal Agencies for the implementation of this scheme.

To know more details, click here.

 

Quality Upgradation/Environment management for small scale sector through incentive for ISO 9000 /ISO 14001 /HACCP Certifications

In order to enhance the competitive strength of the small scale sector, the Government introduced an incentive scheme for their technological upgradation/quality improvement and environment management. The scheme provides incentive to those small scale/ ancillary undertaking who have acquired ISO 9000/ISO 14001/HACCP certifications. The scheme for ISO 9000 reimbursement in operation since March, 1994 has now been enlarged so as to include reimbursement of expenses for acquiring ISO 14001 certification also.

The Scheme envisages reimbursement of charges of acquiring ISO-9000/ISO-14001/HACCP certifications to the extent of 75% of the expenditure subject to a maximum of Rs. 75,000/- in each case. The Scheme is valid upto 31st March 2012.

To know more details, click here.

 

Market Development Assistance Scheme for Micro, Small & Medium Enterprises

The scheme offers funding for participation by manufacturing Small & Micro Enterprises in International Trade Fairs/ Exhibitions under MSME India stall; sector specific market studies by Industry Associations/ Export Promotion Councils/ Federation of Indian Export Organisation; initiating/ contesting anti-dumping cases by MSME Associations and reimbursement of 75% of one time registration fee (w.e.f. Ist January 2002); and 75% of annual fees (recurring) (w.e.f. Ist June 2007) paid to GSI (Formerly EAN India) by Small & Micro units for the first three years for bar code.

The permissible subsidy is as below:

  • The Govt. of India will reimburse 75% of air fare by economy class and 50% space rental charges for Micro & Small manufacturing enterprises of General category entrepreneurs.

  • For Women/SC/ST Entrepreneurs & Entrepreneurs from North Eastern Region Govt. of India will reimburse 100% of space rent and economy class air fare.

  • The total subsidy on air fare & space rental charges will be restricted to Rs.1.25 lakhs per unit.


To know more details, click here.

 

Financial Assistance on Bar Code

The basic objective of financial assistance is to enhance the marketing competitiveness of Micro & Small Enterprises (MSEs) by way of:

  • Providing 75% of one-time registration fee and annual recurring fee (for first three years) paid by MSEs to GS1 India.

  • Popularizing the adoption of bar codes on large scale amongst MSEs, and

  • Motivating and encouraging MSEs for use of bar codes through conducting seminars on Bar Code, etc.

To get more details on the scheme, click here.
 

 

Subsidy Schemes of NSIC

 

Raw Material Assistance

Raw Material Assistance Scheme aims at helping Small Scale Industries/Enterprises by way of financing the purchase of Raw Material (both indigenous & imported). This gives an opportunity to SSI to focus better on manufacturing quality products. The benefits of the scheme include:
 

  • Financial Assistance for procurement of Raw Material upto 90 days.

  • SSI helped to avail Economics of Purchases like bulk purchase; cash discount etc

  • NSIC takes care of all the procedures, documentation & issue of Letter of credit in case of imports.


For more details, click here.


Marketing Assistance

Under the Scheme, marketing support is provided to Micro, Small & Medium Enterprises through National Small Industries Corporation (NSIC) to enhance competitiveness and marketability of their products, through following activities:

  • Organizing International Technology Exhibitions in Foreign Countries by NSIC and participation in International Exhibitions/Trade Fairs

  • Organizing Domestic Exhibitions and Participation in Exhibitions/ Trade Fairs in India

  • Support for Co-sponsoring of Exhibitions organized by other organisations/ industry associations/agencies

  • Buyer-Seller Meets

  • Intensive Campaigns and Marketing Promotion Events

  • Other Support Activities


To know about the scale of assistance under each activity and other details on the scheme, click here.

 

Performance and Credit Rating

A scheme for performance and credit rating for SSIs has been formulated in consultation with Indian Banks’ Association (IBA) and Rating Agencies. NSIC has been appointed the nodal agency for implementation of this scheme through empanelled agencies.
Reimbursement of Performance and Rating Fee under this scheme is as below:

Turn Over of SSI

Reimbursement of Fee through NSIC

Upto Rs 50 Lacs

75% of the fee or Rs 25000/- (Whichever is less)

Above Rs 50 to 200 lacs

75% of the fee or Rs 30000/- (Whichever is less)

More than Rs 200 lacs

75% of the fee or Rs 40000/- (Whichever is less)

 

 

 

 

 

 

To know more details, click here.