Investment Promotion Scheme (IPS) for MSME Sector: Assistance of Fixed Capital Investment Subsidy

DBT (direct benefit transfer): No

Scheme open date: 2015-07-03

Categories: Business & Entrepreneurship

Sub-categories: Setting up / start-up / entrepreneurship

Target beneficiaries: Business Entity, Industries

Tags: Fixed Capital Investment, Investment, MSMEs, Incentives, Entrepreneurship, Subsidy, Reimbursement, IPS

• - Micro Industries: 15% Subsidy with an upper ceiling of ₹15,00,000/-. - Small Industries: 15% Subsidy with an upper ceiling of ₹30,00,000/-. - Medium Industries: 15% Subsidy with an upper ceiling of ₹35,00,000/-. Note: If the eligible GFCI is over ₹10,00,00,000/- an additional ₹10,00,000/- will be given

What happens to the benefit of the incentive if a newly setup enterprise is sold or transferred to a new owner within the first five years of its establishment?

If a newly setup enterprise is sold or otherwise transferred to a new owner during the period of five years, the benefit of the incentive shall be available to such transferee or the new owner, only for the unexpired portion.

What is the definition of Expansion/ Diversification?

Expansion/Diversification means where an existing / New Enterprise increases its investment 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. Only one Expansion / Diversification will be eligible for assistance during the operative period of the Scheme.

What measures are in place to prevent misuse of the subsidy scheme?

Strict guidelines, documentation requirements, and verification procedures are in place to ensure that subsidies are availed by eligible enterprises for genuine purposes only.

What is the operative period of the scheme?

The operative period of scheme is from 20.05.2022 till 5 years that is 19.05.2027.

If an enterprise is established in 2023 and becomes eligible for the scheme what would be the time period in which benefits are applicable?

The enterprise can avail benefit commencing from date of production till 5 years even if that period falls beyond operative period.

What is the timeline of making an application?

The timeline to make application is within one year of first disbursement of loan or within one year of production whichever is later. the application submitted after one year will not be entitled to capital and interest subsidy.

How can an eligible unit apply to get the benefits of the scheme?

The eligible unit can apply by visiting the single window portal website which is "swp.dddgov.in", and once page pops-up the user have to go to departments tab and select district industries tab under which the user have to click on apply for investment promotion scheme: 2022 to 2027.

What is meant by Gross Fixed Capital Investment (GFCI)?

In case of Manufacturing Sector, Gross Fixed Capital Investment means the investment made in building, plant and machinery, utilities, tools and equipment, and other assets (excluding Land) required for manufacturing the end product. In case of Service Sector, the Gross Fixed Capital Investment means the investment made in plant and machinery, utilities, tools and equipment, and other assets (excluding land and building) required for the services provided.

Are secondhand machineries eligible for the benefits under the scheme?

No, only new machineries shall be eligible for the benefits under the scheme. However, the existing second hand machineries can be considered for ascertaining the expansion criteria as per scheme.

If a manufacturing unit is eligible under more than one scheme then can it select the scheme which allows most benefits?

Yes. The unit can select any one scheme to avail benefits if it comes under the eligibility of more than one scheme. However, units cannot apply for benefits for the similar subsidy in multiple schemes and can apply in schemes which are complementary in nature.

What capital expenditures are allowed to avail capital and interest subsidy in furniture manufacturing units?

Gross Fixed Capital Investment in new machinery, building and new equipment as done in other schemes are considered as allowable Gross Fixed Capital Investment to avail benefits of furniture sector incentives.

Which chartered engineer can certify for building, self fabricated machineries, solar certificates?

A qualified person who is certified by or member of the Indian Institution of Engineers (IIE).

What are dedicated industrial parks?

Dedicated industrial parks are mentioned in food processing incentives where an additional 10% will be accorded to food processing units setup in industrial parks having only food processing industries.

What should be considered while considering existing or new gross fixed capital investment for expansion?

Existing gfci includes building, machines, equipments, or any other capex directly used for manufacturing. Criteria for expansion shall be as per the scheme.

What period does enterprise have to remain in production if the subsidy is availed?

Enterprise will have to remain in production for 5 years from the date of commercial production and if it fails to continue production for 5 years, the amount of subsidy disbursed will be recovered as arrears of land revenue.

What conditions must an enterprise meet regarding the duration of production to avoid repayment of the capital investment subsidy, and what are the consequences if these conditions are not met?

Enterprise will have to remain in production for 5 years from the date of commercial production and if it fails to continue production for five years then the amount of capital investment subsidy disbursed will be recovered as arrears of land revenue.

If an enterprise is availing Capital Subsidy under a Scheme of the Central Government, what is the maximum total quantum of Capital Subsidy that can be received from both the Union Territory (U.T.) and the Central Government?

If enterprise is availing Capital Subsidy under Scheme of Central Government then total quantum of Capital Subsidy from U.T. and Central, in any case shall not exceed 35% of GFCI amount disbursed by Bank / Financial institution and should submit affidavit in this regard containing details of subsidy received from GOI or any other agencies.

What is the deadline for an enterprise to submit the application for Capital Subsidy through the online portal?

The enterprise shall have to submit the application through online portal within one year from the date of the first disbursement of loan or on or before one year from the date of commencement of commercial production whichever is later. The application submitted after one year will not be entitled to Capital Subsidy.

Which types of financial institutions loans are eligible for incentives under the Scheme according to RBI guidelines, and which are not?

Loan sanctioned and disbursed by Bank or Financial institution as per RBI guidelines will be eligible for incentive under the Scheme. Loan sanctioned by Non-Banking Financial Institutes will not be eligible for incentive under this resolution.

Which enterprises, whether existing or new, are eligible for diversification or expansion activities with investments exceeding 50% of GFCI, of which at least 60% must be allocated to plant and machinery?

Existing or New Enterprise carrying out an activity of Diversification or Expansion with an investment more than 50% (out of which minimum 60% investment should be in Plant & machinery) of GFCI will be eligible.

• https://www.myscheme.gov.in/schemes/ipsafcis
• https://swp.dddgov.in/assets/pdf/Notification_IPS_2022_DNH_DD.pdf
• https://swp.dddgov.in/assets/pdf/FAQs_IPS_2022.pdf

Guidelines

https://swp.dddgov.in/assets/pdf/Notification_IPS_2022_DNH_DD.pdf

FAQs

https://swp.dddgov.in/assets/pdf/FAQs_IPS_2022.pdf