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

Description
The scheme “Assistance of Interest Subsidy” is a sub scheme under the “Investment Promotion Scheme IPS ” for MSME Sector. It was launched on 3rd July, 2015 for a period of five years by the Dept. of Industries, U.T. Administration Of Dadra & Nagar Haveli And Daman & Diu. Now it has been extended further from 20th May, 2022 and shall be operative till 19th May, 2027. Objective of the "Investment Promotion Scheme IPS ”: The scheme envisages to provide incentives and assistance to the MSME Sector in order to nurture them and protect them from market vagaries thereby making them vibrant and successful, maximize Women participation in the business sector, reduce unemployment among the local residents and incentivize the industries to employ resident laborers etc. Objective of the "Assistance of Interest Subsidy" Sub-scheme: Through this incentive, eligible industries will be eligible for Interest Subsidy on the term loan on equipment/ machinery etc. and furniture’s/ fixtures except land and building .

Exclusions
• The Enterprise will not be eligible for Interest Subsidy under this Scheme if, term loan is sanctioned after one year from the date of commencement of commercial production/ rendering services.

Benefits
• 50% Subsidy of interest charged by the Bank with an upper ceiling of ₹30,00,000/- per annum for a period of 5 years OR for the period of repayment of loan whichever is earlier.
• > **Note:**
• 10% additional interest subsidy to differently abled entrepreneurs, women entrepreneurs and registered Start up in manufacturing /service sector.
• 10% additional subsidy to young entrepreneurs below the age of 35 years on the date of sanction of term loan.
• <br>

Eligibility Criteria
1. Should be a New Manufacturing/ Service units or Existing Manufacturing / Service units which undertakes Expansion/ Diversification in MSME sector.
2. The unit should have commenced the commercial production between 20.05.2022 to 19.05.2027.
3. Unit should be located in the U.T. of Dadra and Nagar Haveli &amp;amp; Daman and Diu.
4. Enterprise will have to remain in production for 5 years from the date of commercial production.
5. Enterprise will have to observe Pollution Control measures as prescribed by PCC or other competent authority as per Notification [No. PCC/DMN/13(PART IV)/2020-2021/448 DATED 25/01/2021](https://www.daman.nic.in/websites/Pollution-Control-Committee/2021/448-25-01-2021.pdf). 1. Loan should be sanctioned by a Bank or Financial Institution as per RBI guidelines.
6. The enterprise shall have to submit the application 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.

Required Documents
• Corporate Identification Number (CIN) Document.
• Taxpayer Identification Number (TIN) Document.
• Permanent Account Number (PAN) Document.*
• Goods and Services Tax Number (GST) Document.
• Other Registrations Document.
• Copy of Udyam Registration /Industrial Entrepreneur Memorandum, as applicable.
• Copy of Partnership Deed and Firm Registration Certificate in case of partnership concern or Memorandum & Articles of Association and Date of Incorporation Certificate in case of Public/Private Limited companies.
• Copy of land purchase deed duly signed by the applicant (If the Enterprise is functioning in its own land).
• Copy of registered lease agreement for a minimum period of 5 years from the date of commencement of commercial production (If the Enterprise is functioning in a leased land/ building).
• Copy of sanction order from Electricity Department for power supply with copy of the latest bill.
• Authorization letter.
• Copy of Consent to Operate / Renewal from PCC, DNH & DD (as applicable for Notification No. PCC/DMN/13(PART VI)/2020-21/448 DATED 25/01/2021).
• Copy of Factory licensee.
• Undertaking.

Frequently Asked Questions
Q: 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?
A: 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.

Q: What is the definition of Expansion/ Diversification?
A: 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.

Q: What measures are in place to prevent misuse of the subsidy scheme?
A: Strict guidelines, documentation requirements, and verification procedures are in place to ensure that subsidies are availed by eligible enterprises for genuine purposes only.

Q: What is the operative period of the scheme?
A: The operative period of scheme is from 20.05.2022 till 5 years that is 19.05.2027.

Q: If an enterprise is established in 2023 and becomes eligible for the scheme what would be the time period in which benefits are applicable?
A: The enterprise can avail benefit commencing from date of production till 5 years even if that period falls beyond operative period.

Q: What is the timeline of making an application?
A: 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.

Q: How can an eligible unit apply to get the benefits of the scheme?
A: The eligible unit can apply by visiting 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.

Q: Are secondhand machineries eligible for the benefits under the scheme?
A: 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.

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

Q: What are the potential consequences if the Enterprise fails to make timely payments of interest or installments of a term loan to a Bank or Financial Institution?
A: If the Enterprise becomes defaulter in payment of interest or installment of term loan to Bank / Financial institution as per guidelines of RBI and as mentioned in certificate of Bank / Financial institution such default period will be deducted.

Q: What is the minimum interest rate that an enterprise must bear on a term loan from any bank or financial institution?
A: The eligible Enterprise shall have to bear a minimum of 2% interest levied on term loan by any Bank /Financial institution and shall submit an affidavit in this regard containing details of subsidy received from Government of India or any other agencies.

Q: Who shall directly receive the interest subsidy: the Bank/ Financial institution or the borrower?
A: The interest subsidy shall be directly credited to the Ban/ Financial institution.

Q: Is it compulsory to take a term loan for solar subsidy?
A: No. However, it is advisable.

Q: Which chartered engineer can certify for building, self fabricated machineries, solar certificates?
A: A qualified person who is certified by or member of the Indian Institution of Engineers (IIE).

Q: What are dedicated industrial parks?
A: 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.

Q: What is the deadline for an enterprise to submit the application through the online portal?
A: The enterprise shall have to apply on online portal within one year from the date of first disbursement of loan or on or before the date of commencement of commercial production, whichever is later.

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

Q: 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?
A: 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.