With a vision to make Gujarat a global business destination for next- generation sustainable manufacturing & service industry driven by state-of-the art infrastructure, employment generation, inclusive and balanced regional development and thereby contribute significantly to “Aatmanirbhar Bharat”, Gujarat Industrial Policy 2020 has been issued.
This policy shall be valid for a period of 5 years from 7th August, 2020.
The policy covers many schemes including:
- Scheme for Assistance of MSME
- Scheme for Capital Subsidy to Large Industries and Thrust Sectors
- Scheme for Enhancement of Technical Competence & Manpower
- Scheme for Assistance for Logistic Park
- Scheme for Assistance for Environment Protection Measures
- Scheme for Assistance for Start-ups and Innovation
- Scheme for Assistance to Industrial Parks
- Scheme for Assistance to Industrial Infrastructure
- Scheme for Assistance in R&D Activities.
In this post we shall discuss the aspects relating to Scheme for Assistance to MSME.
Definitions:
- Micro, Small and Medium Enterprise: An enterprise which satisfies the condition of Micro, Small and Medium Enterprise as per the definition under the MSME Development Act, 2006 and subsequently amended from time to time by GOI and has obtained acknowledgement of “Udyog Aadhar Memorandum/ Udyam Registration”.
- Expansion: Expansion means where an existing/ new enterprise increases its investment in gross fixed capital by at least 50% (out of which at least 60% of investment is made in plant and machinery for which expansion is carried out) of its existing gross fixed capital investment on the date of initiating expansion and compared with the date of commencing production during the operative period of the scheme.
- Gross Fixed Capital Investment (GFCI): GFCI means the investment made in building, plant and machinery, utilities, tools and equipments and other assets (excluding land) required for manufacturing the end product.
- Pipeline Enterprises: The enterprises which have obtained first disbursement of term loan as effective step and could not start commercial production on or before 07/08/2020, shall be considered eligible as pipeline enterprise for incentive under previous scheme. Such enterprise should commence commercial production or or before 31/03/2021. However, the enterprise which has obtained first disbursement on or before 07/08/2020 may opt for new scheme. Term loan disbursement made during the policy period will be eligible for the enterprises which has opted for this scheme.
- Forward Integration, Backward Integration and Diversification:
- An investment made in GFCI for the product which is raw material of the enterprise will be termed as backward integration.
- An investment made in GFCI for the further value addition in the end product of the enterprise will be termed as forward integration.
- An investment made in GFCI for the product other than the end product of the enterprise will be termed as diversification.
Existing or New enterprise carrying out an activity of Forward Integration, Backward Integration and Diversification with an investment more than 25% (out of which minimum 60% investment should be in Plant & Machinery) of GFCI will be eligible.
Assistance to MSME
1. Capital Investment Subsidy:
(Only to Manufacturing Sector)
2. Interest Subsidy:
(Both to Manufacturing and Service Sector)
Note for Manufacturing sector:
- 1% additional interest subsidy to differently abled entrepreneur, women entrepreneur and registered startup in manufacturing sector.
- 1% additional interest subsidy to young entrepreneur below age of 35 years on the date of sanction of term loan.
- Eligible enterprise shall have to bear minimum 2% interest levied on term loan by Bank/ FI.
Note for Service sector:
- Only new MSME of Service sector (annexure A and B, mentioned at the end of this post) will be eligible for interest subsidy on term loan on new machinery, equipment and furniture/fixture (except land and building).
- 1% additional interest subsidy to registered start up in service sector and having Udyam registration as MSME.
- Service enterprises which has service tax (GST) registration are only eligible for incentive.
- The enterprise shall have to obtain shop and establishment registration from Muncipal Corporation for doing business, if enterprise is located in the area of Muncipal Corporation.
- Eligible enterprise shall have to bear minimum 2% interest levied on term loan by Bank/ FI.
- For annexure B services, additional conditions:
- Permanent employment of minimum 10 persons.
- Must have GST registration.
Conditions applicable to Capital Investment Subsidy and Interest Subsidy:
- Loan sanctioned by NBFC will not be eligible for incentive under this resolution.
- Only new building, new plant machinery/ equipment and second hand imported machinery will be eligible for incentives.
- Enterprise will have to employ at least 85% of the total employment and 60% of supervisory and managerial staff from local persons.
- Enterprise will have to remain in production for 7 years from the date of commercial production.
- If an enterprise is located in the geographical limit of more than one taluka, then the taluka in which the enterprise has the largest percentage of land area will be considered as the eligible category.
- Existing or New enterprise carrying out an activity of Forward Integration, Backward Integration and Diversification with an investment more than 25% (out of which minimum 60% investment should be in Plant & Machinery) of GFCI will be eligible.
- Date for applying subsidy: within 1 year from the DOCC or First Disbursement which ever is later.
3. Assistance for Quality Certification:
4. Financial support to MSME in ZED certification:
The enterprise will be eligible for subsidy @50% of all charges on the amount after deducting the assistance received from GOI for ZED Certification, up to a maximum amount of Rs. 50,000.
5. Assistance in implementation of Information and Communication Technology (ICT):
65% of the capital expenditure related to ICT facilities, maximum upto Rs. 5,00,000.
6. Assistance for Technology Acquisition:
Assistance for acquisition of appropriate technology from recognized institution for its product/ process during the operative period of the scheme will be provided by way of 65% of the cost payable subject to a maximum of Rs. 50 Lacs, including royalty payment for first 2 years.
7. Assistance for Patent Registration:
75% of cost/ expenditure incurred for any number of patent applications subject to maximum Rs. 25 Lacs per applicant for obtaining Patent registration of developed product/ process during policy period.
Maximum fee for attorney for national patent shall be capped at Rs. 50,000 for domestic patents and Rs. 2,00,000 per country for international patent within the overall cap of 75% of the cost/ expenditure of patent registration withing overall ceiling.
Fees paid to patent attorney, patent service center, patent registration and patent equipment purchased to develop patent will be eligible as cost/ expenditure (excluding travel/ hotel charges) for obtaining patent registration.
8. Assistance for saving in consumption of Energy and Water:
75% cost of energy/ water audit conducted by a recognized institution subject to maximum Rs. 50,000 for each will be reimbursed once during the operative period of the scheme.
25% of cost of equipment recommended by the Auditing Authority subject to maximum Rs. 20 Lacs one-time assistance will be eligible during the operative period of the scheme. The assistance on cost of equipment will be eligible subject to the condition that saving in energy/ water minimum by 10% of average monthly consumption of previous 12 months before audit.
9. Assistance for raising Capital through SME Exchange:
25% of the expenditure incurred on raising of fund through SME Exchange maximum to Rs. 5 Lacs one time after successful raising of equity as per approved scheme by SME Exchange during the operative period of the scheme.
10. Assistance for reimbursement of CGTMSE Fees:
Assistance as reimbursement @100% annual service fee paid to Bank/ FI by entrepreneur for availing of collateral free term loan under CGTMSE, for the period of 5 years. Service and Trading activity will not be eligible for this benefit.
11. Rehabilitation of Sick enterprises:
12. Assistance for Power Connection charges:
MSME, located in other than GIDC/ approved industrial park area which has paid charges to distribution licensee, during the operative period of the scheme, for new connection or to getting additional load in case of existing consumer (in case of expansion) or for shifting of connection or service line, will be eligible. Assistance @ 35% of charges paid to distribution licensee for LH/HT service line, maximum Rs. 5 Lacs.
13. Assistance in Rent to MSEs:
Any MSE in manufacturing activities which has acquired Rented/ leased shed will be eligible to get assistance @ 65% of rent paid by the enterprise with maximum limit of Rs. 1,00,000 p.a. The assistance will be provided for five years. The manufacturing activities should be consuming electricity/ power. Service and Trading activity will not be eligible for this benefit.
Annexure A: List of Eligible Service Activities
Annexure B: List of Service Sectors
- Financial Services
- Health Services
- Transport and Logistics Services
- Audio Visual Services
- Construction related Engineering Services
- Environmental Services
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