Package Scheme of Incentives, 2019 – Maharashtra Subsidy scheme on set up of factory

GR No: Resolution No. PSI -2019 / CR 46 / IND-8 Dated the 16 September, 2019

1. Operative Period: 1st April, 2019 to 31st March, 2024 or till the new Package Scheme of Incentives comes into force.

1.1 Coverage under the PSI -2019

The following categories of Eligible Industrial Units in the Private Sector, Cooperative Sector, State Public Sector / Joint Sector shall be eligible to be considered for incentives under the PSI- 2019

i) Industries listed in the First Schedule of the Industries. (Development and Regulation) Act, 1951, as amended from time to time.

ii) Manufacturing Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006. (MSMED Act, 2006)

iii) Information Technology Manufacturing Units registered with the Directorate of Industries or the Maharashtra Industrial Development Corporation (MIDC) or the Development Commissioner, Santa Cruz Electronic Export Processing Zone (SEEPZ) or Software Technology Parks of India (STPI) in the state.

iv) Bio-technology Manufacturing Units as specified by the Government from time to time.

v) Mechanized, Food / Agro Processing Industries in the following sectors:

• Dairy, Fruit and Vegetable Processing.
• Grain Processing.
• Fish / Meat / Poultry Processing.
• Consumer foods including Packed foods.
• Nonalcoholic beverages from fruits and vegetables.

(Note: Only secondary and tertiary agro and food processing units shall be eligible for incentives. This condition will not be applicable to processing / manufacturing units set up by Farmer’s Producer Companies and the units set up in government assisted Food Parks and carrying out primary processing activity also).

 1.2. Classification of Areas for PSI-2019

For the purposes of the PSI- 2019, detailed taluka-wise classification of different areas of the State as Group, A /B/ C/ D/ D + etc., on the basis of their level of industrial development shall be as given in Annexure-I to this G.R. where –

(i) Group A : Denotes industrially developed areas

(ii) Group B: Denotes areas where some industrial development has taken place, but are less developed than the areas under Group A

(iii) Group C: Denotes areas, which are less developed than those covered under Group B.

(iv) Group D: Denotes the lesser-developed areas of the State, not covered under Group A/ Group B/ Group C.

(v) Group D+: Denotes the least developed areas, not covered under Group A/ Group B/ Group C/ Group D.

(vi) No Industry District: Denotes District having no industries viz Hingoli and Gadchiroli.

(vii) Naxalism Affected Area: Denotes area affected by naxalism, as described in GR No NAVIKA-2008/C.R. 209/Ka. 1416 Dated 31.5.2009 (Annexure II) or as may be amended by the Government.

(viii) Aspirational Districts: defined by Government of India viz. Washim, Gadchiroli, Osmanabad and Nandurbar.

2. DEFINITIONS

2.1 Earlier Scheme: ‘Earlier Scheme’ shall mean and include the Package Scheme of Incentives implemented from time to time prior to PSI-2019.

2.2. Micro & Small Manufacturing Enterprises, Medium Manufacturing Enterprises / Large Scale Industries / Mega Projects and Ultra Mega Projects

(i) Micro, Small & Medium Manufacturing Enterprises (MSMEs) and Small Industries

MSMEs shall be construed as per their definition in the Micro, Small and Medium Enterprises Development Act, 2006. (MSMED Act, 2006) published vide GoI’s extraordinary gazette dated 30th September, 2006 and Units outside the definition of MSMEs published vide GoI’s extraordinary gazette dated 30th September, 2006, with total Gross Fixed Capital Investment (FCI) upto Rs. 50 crores. *

* Note: In case of expansion / diversification project, the sum total of Gross FCI of existing unit and Gross FCI of proposed expansion / diversification project should be upto Rs. 50 crore for qualifying for incentives under this category.

2.2 Existing Unit

An Existing Unit shall mean and include:

(i) A Unit which has been set up and is in production on or any time prior to the 1st April, 2019, or

(ii) A Unit which has been granted an Eligibility Certificate(EC) as defined in Para 2.7 or has availed of any incentives (excluding Stamp Duty) under any of the Earlier Schemes, or

(iii) A Unit which has filed a valid application for grant of an EC under the PSI-2013 with any of the Implementing Agencies on or before the 31st March 2019.

2.3 New Unit

A New Unit shall mean a Unit which is set up for the first time by an entity in the Private Sector / Co-operative Sector / State / Joint Sector in any Taluka where there is no Existing Unit set up by the said entity, provided that such Unit satisfies the following conditions:

a) It is not an Existing

b) At least one of the Effective Steps is completed on or after the 1st April, 2019 for setting up the unit.

c) It is not formed as a result of re-establishment, mere change of ownership, change in the constitution, reconstruction or revival of an Existing unit.

Explanation – 1. The incentives available to a New Unit under the PSI-2019 shall, however, be available to the Units which get established as result of purchase of the assets of the Existing / Defunct / Closed / Sick Units, subject to and to the extent mentioned in Annexure Ill to this Resolution.

2. If there is an existing unit of an entity in a taluka, the subsequent unit(s) set-up by that entity in the same taluka will be treated as expansion / diversification project(s) subject to fulfillment of criteria given in para 2.6 below. 

3. FINANCIAL INCENTIVES FOR

3.1 New MSME Units and Small Industries will be eligible for a basket of incentives mentioned in following Paras The total quantum of incentives will be linked upto the percentage actual eligible Fixed Capital Investment as per the Taluka category mentioned in table below. However, aggregate fiscal incentives provided by various departments or agencies of the State Government shall not exceed the basket of incentives (as percentage of FCI). The incentives will be granted to the units on first-cum-first serve basis.

Basket of Incentives for MSMEs

Provided that

a) The incentives at Para No. 4.8 will also be available to MSME Units in Group A and B areas as well.

b) The total quantum of incentives for the food / agro processing units (secondary and tertiary processing units and Primary Processing Units set up by Farmer’s Producer Companies and the units set up in government assisted Food Parks) mentioned in Para No. 1.2 (vi), eligible green energy / bio-fuel manufacturing units and Units carrying out Industry 4.0 activity, will be 20% over and above the limits mentioned above and such units will get two more years of eligibility to avail the incentives. However, in any case total incentives admissible to the eligible unit will not exceed 100 % of eligible FCI.

3.2 Expansion / Diversification Units: Existing / New Micro, Small and Medium Manufacturing Enterprises and Small Industries (including Manufacturing IT/BT) Units, qualifying as Expansion / Diversification Units, will also be eligible to get the incentives for Expansion / Diversification, equivalent to 80% of the incentives admissible for New Units. The eligibility period for availing of the incentives will however be reduced by one year than that admissible to a New Unit in case of Expansion / Diversification units.

3.3  Industrial Promotion Subsidy (IPS)

1) The eligible New / Expansion Micro, Small and Medium Manufacturing Enterprises, which are set up in different parts of the State, will be eligible for Industrial Promotion Subsidy (IPS), as per there taluka Categorization.

2) Eligible Micro, Small & Medium enterprises shall be offered Industrial Promotion Subsidy (IPS) on 100 % Gross State Goods & Services Tax (SGST) payable by the unit on the first sale of eligible products billed and delivered within Maharashtra. The modalities for disbursement of incentives shall be as per the guidelines issued vide GR dated 12.06.2018, 20.12.2018 and 08.03.2019 and the guide lines issued from time to time.

3.4  Interest Subsidy

All eligible new Micro, Small and Medium Manufacturing Enterprises will be eligible for interest subsidy in respect of interest actually paid to the Banks and Public Financial Institutions (excluding unsecured loans, private loans / borrowings, loans from NBFCs etc.) for claim period, on the amount of term loans taken for acquisition of new Fixed Assets required for the project accepted by the implementing agency. The amount of interest subsidy will be calculated @ effective rate of interest, after deducting the interest subsidy receivable from any agency of the State Government or under any Govt. of India Scheme and the penal / compound interest or 5 % per annum, whichever is less. The quantum of interest subsidy payable to the eligible unit every year will not exceed the bills paid for electricity consumed during the relevant year.

3.5 Exemption from Electricity Duty

All Eligible New Units in Group C, D, and D+ areas, No-Industry District(s), Aspirational Districts and Naxalism affected Area will be exempted from payment of Electricity Duty during applicable eligibility period. In Group A and B areas, only eligible 100% Export Oriented Units (EOUs), Information Technology Manufacturing Units and Bio-Technology Manufacturing units will also be exempted from payment of Electricity Duty for a period of 7 Years. Necessary Notification under the provisions of the Electricity Duty Act 1958 will be issued separately by the Energy Department.

3.6  Waiver of Stamp Duty

New Units as well as Units undertaking Expansion / Diversification will be exempted  from payment of Stamp duty during the Investment period in Group C, D, D+ Talukas, No Industry Districts, Aspirational Districts and Naxalism affected areas for acquiring land (including assignment of lease rights and sale certificate) and for term loan purposes. However, in Group A and B areas, stamp duty exemption would be available as given below:

• BT Manufacturing and IT Manufacturing Units in Public IT / BT Parks: 100%
• BT Manufacturing and IT Manufacturing Units in Private IT / BT Parks: 75%

Explanation: Eligible New / Expansion Units of PSI-2013 and PSI-2019 will be eligible for Stamp Duty Exemption during their admissible investment period.( mentioned in para 2.9) Necessary Notification under the provisions of the Bombay Stamp Act 1958 will be issued separately by the Revenue & Forest Department. 

3.7  Power Tariff Subsidy.

Eligible New Micro, Small and Medium Enterprises (MSME) and Small Industries will be eligible for power tariff subsidy. The subsidy will be to the tune of Rs 1/- per unit for the Units located in Vidarbha, Marathwada, North Maharashtra and the Districts of Raigad, Ratnagiri and Sindhudurg in Kokan Region, No Industry Districts, Naxalism Affected Areas and Aspirational Districts and Rs 0.50 per unit for the Units in other areas of the State for a period of 3 years from the date of commencement of commercial production, for the energy consumed and paid. The Units in Group “A” areas will however not be eligible for this incentive.

3.8 Additional Incentives for Strengthening MSMEs.

The followings incentives shall be admissible to the Expansion Projects of MSMEs so as to promote quality competitiveness, Zero Defect Zero Effect (ZED scheme), Research & Development, technology up-gradation, water & energy conservation, cleaner production measures and credit rating –

(A) Expansion projects of MSMEs and Small Industries will be eligible for following incentives

(i) 5% subsidy only on additional capital equipment acquired for Technology Up-gradation, subject to a maximum of Rs. 25

(ii) 75 % subsidy on the expenses incurred on quality certification limited to Rs. 1 Lakh.

(iii) 25% subsidy on additional capital equipment acquired for cleaner production measures, limited to Rs. 5 lakh

(iv) 75 % subsidy on the expenses incurred on patent registration limited to Rs.10 Lakh for the National patents and Rs. 20 lakh for the International patents.

(v) 75% of cost of water audit limited to Rs. 1.00 lakh

(vi) 75% of cost of energy audit limited to Rs. 2.00 lakh

(vii) 50% of the cost of Capital Equipment under the measures to conserve/recycle water, limited to Rs. 5 lakh

(viii) 50% of the cost of additional Capital Equipment for improving energy Efficiency, limited to Rs. 5 lakh

(B) Incentives for Credit Rating of MSMEs, 75% of the cost of carrying out Credit Rating by Small Industries Development Bank of India/ Government accredited Credit Rating Agency, limited to Rs. 40,000.

(C) During the policy period, first 250 SMEs in all areas of the State, based in Maharashtra, fulfilling the criteria for listing, which will be enlisted on the SME Stock Exchange, Mumbai will be be given refund of listing expenses equal to Rs. 6 lakhs or actual C.A. certified listing expenses, whichever is lower. The detailed modalities for getting this refund will be issued

Note: The Expansion Projects of MSMEs in Group “A” area fulfilling the eligibility criteria of PSI – 2019 will also be eligible for Stand-alone incentives as specified in para 4.8 (A), 4.8(B) and 4.8 ( C)

Author’s note: Illustration explaining SGST and interest refund mechanism

If any company wants to make investment in Wada which is D+ zone in such case, in following manner refund can be claimed.

Under the scheme, for unit in D+ zone, the State Government will refund 60% of total capital investment in the entity, over a period of 10 years. The refund will be given by way of SGST and Interest subsidy.

Thus, if Rs. 10 crore is capital investment in a D+ zone, the financial incentives available are as follow:

Hence, unit will be eligible to get refund of Rs. 60 lakhs in each year.

In above case, if unit has made sale of 6.4 crore. In such case, SGST paid @9% will be Rs. 57.60 lakhs on sale. In such case, total SGST eligible for refund will be Rs. 57.60 lakhs

Further, unit has taken bank loan and on such bank load paid interest @12% of Rs. 24 lakhs. So from such interest only 5% interest is allowed to take refund. Hence, up to Rs. 10 lakhs can be taken as refund. In such scenario following amount can be claimed as interest subsidy:

Based on above working, total maximum refund can be claimed as follow:

Hence, total refund can be claimed of Rs. 60 lakhs. In addition to such refund, unit can also claim subsidy of electricity duty, stamp duty waiver etc.

Author Name: Pathik Shah (CA, LLB)

Email – [email protected] M: 9870148084

Source-

https://maitri.mahaonline.gov.in/PDF/Package%20Scheme%20of%20Incentives%20-%202019.pdf