Investment Promotion Scheme (IPS) for Textile Sector: Assistance Of Interest Subsidy For Textile Sector

Description
The scheme “Assistance Of Interest Subsidy For Textile Sector” 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 further fillip to the specialized Textile sector such as Technical textiles, Fabrics, Carpets, Garments, Apparels and Industries Manufacturing Textile Machinery, Medical Fabrics, therefore making the U.T. a Special Hub for Technical Textiles, 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 For Textile Sector" Sub-scheme: Under this Scheme, credit linked interest subsidy will be provided for Textiles, Technical Textiles, Fabrics, Carpets, Garments, Apparels and Industries manufacturing Textile Machinery, Medical Fabrics and Textiles.

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.

Benefits
• 60% subsidy of interest charged by Bank with an upper ceiling of ₹60,00,000/- per annum for a period of 5 years OR, for the period of repayment of loan whichever is earlier.
• Additional 10% subsidy will be provided to Export oriented Carpet industry upto a maximum ₹70,00,000/- per annum.

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 & Daman and Diu.
4. Enterprise shall have to apply at online portal within one year from the date of eligibility.

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: Are there any time constraints for loan sanctioning to be eligible for the subsidy?
A: Yes, the enterprise will not be eligible for the interest subsidy if the term loan is sanctioned more than one year after the date of commencement of commercial production.

Q: Who is eligible for this scheme?
A: This scheme is applicable to both new enterprises and existing enterprises looking to expand or diversify during the scheme's operative period.

Q: What types of loans are eligible for the subsidy?
A: Loans sanctioned by a bank or financial institution as per RBI guidelines for industries located in the Union Territory (U.T.) are eligible for the subsidy.

Q: When should the enterprise apply for the subsidy?
A: The enterprise must apply through the online portal within one year from the date of eligibility.

Q: When will the reimbursement of the interest subsidy be made?
A: The interest subsidy is eligible either from the date of the first disbursement of the loan or from the date of commencement of commercial production, whichever is later. However, reimbursement of the interest subsidy will be made only after the commencement of commercial production of the enterprise.

Q: What happens if the Enterprise defaults on the payment of interest or installment of the term loan?
A: If the Enterprise defaults on the payment of interest or an installment of the term loan to the Bank or Financial Institution, as per the guidelines of the Reserve Bank of India (RBI) and as mentioned in the certificate of the Bank/Financial Institution, the period of default will be deducted from the subsidy period.

Q: Is the interest subsidy available for penal interest or other bank charges?
A: No, the interest subsidy is not available for penal interest or any other bank charges.

Q: Is there a minimum interest rate that the Enterprise must bear?
A: Yes, the eligible Enterprise must bear a minimum of 2% interest levied on the term loan by any Bank or Financial Institution. The Enterprise must submit details and an undertaking in this regard.

Q: How is the interest subsidy credited?
A: The interest subsidy will be directly credited to the Bank or Financial Institution where the term loan is held.

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: 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.