Last updated: December 17th, 2019 5:04 PM

Scheme for Assistance for Interest Subsidy to Service Enterprise

As a measure to advance the productivity and competitiveness of the Micro, Small and Medium Enterprises (MSE) and for their organizations in the country, the Government of Gujarat has initiated a measure known as the scheme for assistance for Interest Subsidy to Service Enterprise. The task of administering and implementing this scheme is entrusted with the Gujarat Industries Commissionerate. Gujarat Government provides financial assistance by way of Interest Subsidy, and Credit linked Interest Subsidy to Micro, Small and Medium Service Enterprises this MSME funding scheme. In this article, we will look at the Scheme for Assistance for Interest Subsidy to Service Enterprise in detail. Know more about the Technology Bureau for Small Enterprises

Objectives

The key objectives of the scheme for assistance for interest subsidy to service enterprise are explained in detail below:

• To upgrade the infrastructural facilities in new or existing industrial areas of MSMEs by providing financial assistance
• For creating the fixed assets in Micro, Small and Medium  Enterprises
• To improve the growth of Micro, Small, Medium enterprises by developing the technology, skills, and quality, market access, access to capital,
• To increase the potential of the MSMEs by forming self-help groups, consortia, up-gradation of associations
• To built facility centres for the testing, raw material depot, training centre, effluent treatment, complementing production processes.

Know more about the Interest Subvention Scheme for MSMEs 2018

Eligibility Criteria

The eligibility criteria to obtain the financial benefit under the Scheme for Assistance for Interest Subsidy to Service Enterprise are explained in detail below:

• The enterprise having Entrepreneurs Memorandum (EM part-II) / Udyog Adhar as a manufacturer under the MSME Development Act, 2006 with respective Director of Industries Commerce (DIC) as manufacturing enterprise is eligible for this scheme.

Eligible new unit

For availing the grant under the Scheme for Assistance for Interest Subsidy to Service Enterprise, the new unit has to commence production during the operative period of this scheme.

• The existing enterprises carrying out new investment at other location to manufacture same or new end product which has filed Separate Entrepreneurs Memorandum (EM-II) and commences commercial production during the operative period of the scheme will be considered a new enterprise.
• The new unit should have separately identifiable capital investment to get financial assistance under the scheme.
• The new unit should have a separately identifiable capital investment which means that the unit should not have any production linkages with the existing manufacturing process and the products should be a separate product in itself with independent marketability.
• The new enterprises should be in a separate building, should maintain separate books of accounts and the project should be appraised independently by a financial institution as a viable project.

Note: The new enterprise will be eligible for assistance as a new enterprise and one time for diversification or expansion during the operative period of the scheme.

Eligible Existing Unit

For carrying out expansion or diversification by the existing enterprise unit with investment in fixed capital more than 50% of the existing gross fixed capital investments as on date of the initiation of expansion. Out of which 60% of investments should have in plant and machinery. Such expansion or diversification should have been completed, and it should commence production during the operative period of the scheme.

• The existing enterprises carrying out new investment at the same premises to expand plant capacity for the same product and commences commercial production during the operative period of the scheme is eligible for this scheme.
• The existing unit carrying out new investment at the same location to expand plant capacity to manufacture the new product and commences commercial production of the expansion during the operative period of the scheme can avail the benefit under this scheme.

The fund will be provided for carrying out Modernization of existing unit with investment in plant machinery and equipment by more than 25% of its existing gross fixed capital investment. The modernization should be carried out by way of adopting a new technology/ production process and improving the quality of the product. One expansion, diversification and one modernization during the operative period are eligible to the new unit set up during the operative period of the scheme. Note: Old and second-hand machinery will not be eligible for assistance.

Assistance Details

An enterprise which has obtained the first disbursement during the operative period of the scheme will be eligible for the assistance.

Capital Investment subsidy for Manufacturing Unit

• Capital Investment subsidy  is eligible  on the term loan amount disbursed during the operating period by the Financial Institution (Except NBFC)

For Investment up to Rs.50 lakhs in Plant and Machinery

• Bank or Financial Institutes will disburse capital Investment Subsidy at 15% of the term loan amount with a maximum amount of Rs. 15 lakhs in Municipal Corporations areas.
• Bank or Financial Institutes will disburse capital Investment Subsidy at 20% of the term loan amount with a maximum amount of Rs. 25 lakhs in another area outside the municipal corporations’ area.

For Investment above Rs. 50 Lakhs to Rs.2 Crore in Plant and Machineries

• Capital Investment Subsidy at 12 % of the term loan amount will be disbursed by the Financial Institute or Bank with the maximum amount of Rs.15 lakhs in Municipal Corporations area.
• Capital Investment Subsidy at 17 % of the term loan amount will be disbursed by the Bank or Financial Institute with the maximum amount of Rs.25 lakhs in another area outside the municipal corporations’ area.

For Investment above Rs.2 crore to Rs.10 crore in Plant and Machinery:

• Capital Investment Subsidy at 10 % of the loan amount will be disbursed by the Bank with the maximum grant of Rs.15 lakhs in the Municipal Corporation areas.
• Capital Investment Subsidy at 15 % of the loan amount will be disbursed by the Bank or financial Institution with the maximum amount of Rs.25 lakhs in other areas outside the municipal corporation area.

Interest subsidy for Manufacturing Enterprise

An enterprise which has obtained the first disbursement during the operative period of the scheme will be eligible for the assistance. Interest subsidy will be reimbursed after the repayment of the term loan and interest to the Bank/Financial Institution.

Area	Rate of Interest subsidy	Maximum limit	Number of Years
Within Municipal Corporation area	5%	Rs. 25 lakhs per annum	5 years
Other areas outside Municipal Corporation	7%	Rs. 30 lakhs per annum	5 years

• 1% additional interest subsidy, if the enterprise is set up with the required equity contribution for the project at 100% by youth/shaving age less than 35 years as on the date of sanction of the term loan.
• 1% additional interest subsidy, if the enterprise is set up with the required equity contribution for the project at 100% by SC/ST/Physically Challenged and Woman Entrepreneurs.
• Maximum quantum of the interest subsidy will not exceed 7%.
• The assistance will be available to the unit set up anywhere in the State with permission from the appropriate local authority.

Interest subsidy to Service Enterprise

Only new MSME service enterprises having an Investment in equipment more than Rs. 5 lakh will be eligible for Interest subsidy. List of eligible service activities are given in the document:

• At 5% with the maximum amount of Rs. 25 lakhs per annum for 5 years on the term loan of equipment and machinery and  anywhere in the State will be provided
• At 1% additional interest subsidy, if the enterprise is set up by with required equity contribution for the project at 100% by physically Challenged or Women Entrepreneurs.
• In all maximum rate of interest, the subsidy will not exceed 6% anywhere in the State.

Documents Required

The documents required for the Scheme for Assistance for Interest Subsidy to Service Enterprise are given in the document:

Application Procedure

The application procedure to obtain the financial assistance under the Scheme for Assistance for Interest Subsidy to Service Enterprise

• The unit will have to apply in a prescribed application form within one year of the first disbursement of term loan for sanctioning.

The application form for Assistance for Interest Subsidy to Service Enterprise is given here:

• The unit has to furnish printout of application along with all documents certified by the authorised person to concern DIC in the prescribed format as specified in the checklist for sanctioning.
• On receiving of application, DIC will scrutinize all documents.
• After scrutiny of all required documents, General Manager- DIC  will issue provisional sanction letter or raise a query.
• On compliance of query, General Manager of DIC will issue provisional sanction letter.
• After receiving a provisional sanction letter, The unit will have to apply the claim for every six months.
• The unit has to submit printout of the claim along with all documents certified by the authorised person to concern DIC in the prescribed format as specified in the checklist for approving the claim.
• On receiving the claim application, DIC will scrutinise all supporting document.
• On 1st, 3rd, 5th, 7th and 9th claims, Industries Inspector DIC will visit the enterprises.
• Inspector will verify the documents, expenditure statements and fixed assets raised from the term loan and also verify local employment.
• After verification, the claim will be approved by General Manager - DIC.
• The amount will be disbursed through online banking( RTGS) in applicant account through DIC, subject to the availability of grant.

Other Conditions for the Interest Subsidy to Service Enterprise

• An enterprise shall have an option for date of avail the interest subsidy either from the date of the first disbursement of the term loan or from the time of first service bill of the service activities. This opted date will be the final date and period of 5 years will start from this date
• First service bill will consider as the date of commencement of service activities.
• The interest subsidy will be repaid to the unit which pays regular instalments and interest to the financial institution. If the unit becomes defaulter for any period, it will not be eligible for reimbursement of interest subsidy for that default periods.
• If the term loan is sanctioned after one year from the date of first service bill, such enterprise will not be eligible for Interest subsidy under the scheme.
• Interest subsidy will be reimbursed after the commencement of unit service activity.
• The unit shall have to file information about annual production, sales, power consumptions and other details for each year ended on 31st March.
• The unit will have to employ at least 85% of the total employment and 60% of supervisory and managerial employment from local persons.
• The enterprise has to give an undertaking on his letterhead signed by authorized signature to confirm that all the Government dues are paid as on date
• The unit will have to observe pollution control measures as prescribed by GPCB or other competent authority.
• Service enterprise will not be eligible for interest subsidy for any Expansion / Diversification / Modernization.