Last updated: December 17th, 2019 4:57 PM

Incubation Scheme for MSMEs

Technology and its rapid expansion impacts almost all sectors. Technology is also playing a major role with the MSME sector in adapting to the global economy also in nation building. The need for Business Incubators (BI) is essential to accelerate technologies from ideas to actual successful businesses and generate large scale opportunities for employment.

Objectives of the Scheme

1. To adopt and continually maintain the latest technologies in manufacturing and knowledge-based innovative MSME ventures.
2. To support the MSMEs in expanding businesses in designing, applying strategy and execution.
3. To encourage, sustain and promote the untapped creativity of individuals.

Eligibility Criteria

All MSMEs registered under The Micro, Small and Medium Enterprises Development Act, 2006 as amended from time to time, and also MSMEs that are included as per the executive orders issued by the Office of DC (MSME) which is consistent with the MSME Act from time to time.

Components of the Scheme

Registration as Host Institute (HI)

• MSME-DIs/Technology Centres(TCs), DICs, Entrepreneurs Development Centres(EDCs), or any organization/institute of the Central/State Governments, NGOs involved in relevant activities, and Technical & Professional colleges, institutes and universities may apply to become a Host Institute and establish a Business Incubator.
• Host Institutes registered in the previous scheme should re-register themselves.
• North East Region institutes will be given preference for supporting Business Incubators.
• Host Institutes and Business Incubators must encourage women/SC/ST candidates' participation.

Procedure of Grant in Aid support

1. Host Institutes could submit proposals as per the format recommended by the concerned Implementing Agency.
2. After due diligence, Implementing Agency would forward the proposal with necessary recommendations to the National Monitoring & Implementing Unit.
3. The Evaluation Committee at the level of National Monitoring & Implementing Unit would consider and forward the deserving proposals to the Development Commissioner of the Ministry of MSME for approval.
4. Finally, Grant in Aid through shall be provided by the Government of India through the National Monitoring & Implementing Unit.

Classifications of Grant in Aid

• Support for Plant and Machinery
  • To procure and instal the plant and machinery (including software and hardware), the Host Institute can be funded up to a maximum of 1 crore rupees in two instalments of 50 lakh rupees each. If the cost exceeds 1 crore, the remaining amount has to be met by the incubatee.
  • The first instalment should be utilised within 6 months from the release of the fund, and the 2nd instalment will be released after 80% of 1st instalment is utilised and submission of relevant records.
• Support for nurturing and developing ideas
  • The duration of the idea/project is preferably one year up to a maximum of 15 lakh rupees per idea. Funds would be released in two instalments. For MSMEs/others, the amount of contribution would be 15% of the total cost of the project.
• SEED Capital support fund for setting up of Startups
  • Assistance up to 1 crore rupees to appropriate Incubatees will be provided. Financial assistance would be provided in the form of an interest-free loan, soft loan, grant, equity participation, or a combination of these, etc.