Central Interest Subsidy Scheme, 2007 - No.10(3)/2007-DBA-II/ NER - Indian Law

MINISTRY OF COMMERCE INDUSTRY (Department of Industrial Policy and Promotion) NOTIFICATION New Delhi, the 27th July, 2007 No.10(3)/2007-DBA-II/ NER In pursuance of the North Eastern Industrial and Investment Promotion Policy, 2007(NEIIPP, 2007) issued by Ministry of Commerce and Industry vide O.M. No.10(3)/2007-DBA-II/NER, dated the 1st April, 2007, the Government of India is pleased to make the following Scheme of interest subsidy on the working capital loans for industrial units in the North-Eastern Region (NER) comprising the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura with a view to accelerating industrial development in the region. 1. Short title: This Scheme may be called the Central Interest Subsidy Scheme, 2007. 2. Commencement and duration: It will be effective from the 1st April, 2007 and remain in force upto and inclusive of 31.3.2017. 3 . Applicability: Unless otherwise specified, all new industrial units as well as existing units which go in for substantial expansion and are located anywhere in NER, will be eligible for interest subsidy under this Scheme. The Scheme will also be applicable to the following service sector activities/industries: - II. Service Sector: (iv) Hotels (not below Two Star category), adventure and leisure sports including ropeways ; (v) Medical and health services in the nature of nursing homes with a minimum capacity of 25 beds and old-age homes ; (vi) Vocational training institutes such as institutes for hotel management, catering and food crafts, entrepreneurship development, nursing and para-medical, civil aviation related training, fashion, design and industrial training. II. Bio-technology industry III. Power Generating Industries: Power Generating plants upto 10 MW based on both conventional and non-conventional sources. 3.(a). The Scheme shall not be applicable to the industries listed in Annexure-I 4. Definitions: (a) Industrial unit means any industrial undertaking, suitable servicing unit other than that run departmentally by Government. (b) New industrial unit means an industrial unit for the setting up of which effective steps were not taken prior to 1.4.2007. (c) Existing Industrial Unit means an industrial unit set-up prior to the operative date of the scheme i.e.1.4.2007. (d) Substantial expansion means increase in the value of fixed capital investment in plant and machinery of an industrial unit by not less than 25 % for the purpose of expansion of capacity/modernization and diversification. (e) Effective steps means one or more of the following steps:- (i) that 10% or more of the capital issued for the industrial unit has been paid up. (ii) that any part of the factory building has been constructed. (iii) that a firm order has been placed for any plant and machinery required for the industrial unit. (f) Fixed Capital Investment means investment in land, building and plant and machinery. Total fixed capital investment will be assessed as follows: (A) Land : The actual price paid for the land to the extent needed for the purposes of the plant. Charges for the leased land will not be taken into account. (B) Building : Same as in the case of land. Rent of a hired building will not be taken into account. (C) Plant and machinery (for manufacturing sector). (a) In calculating the value of plant and machinery, the cost of plant and machinery as erected at site will be taken into account which will include the cost of productive equipment, such as tools, jigs, dies moulds; transport charges, insurance premium, etc. will also be taken into account. (b) The amount invested on goods carriers to the extent they are actually utilized for transport of raw materials and marketing of the finished products, will be taken into account. (c) Working capital including raw materials and other consumable stores will be excluded for computing the value of plant and machinery. (g) Fixed Capital represents the depreciated value of fixed assets owned by the factory on the closing day of the accounting year. Fixed assets are those which have a normal productive life of more than one year. Fixed capital covers all types of assets, new or used or own constructed, deployed for production, transportation, living or recreational facilities, hospitals, schools etc. for factory personnel. It includes the fixed assets of the head office allocable to the factory and also the full value of assets taken on hire purchase basis (whether fully paid or not) excluding interest element. It excludes intangible assets and assets solely used for post manufacturing activities such as sale, storage, distribution etc. (h) Physical Working Capital is defined to include all physical inventories owned, held or controlled by the factory as on the closing day of the accounting year such as the materials, fuels lubricants, stores etc, that enter into products manufactured by the factory itself or supplied by the factory to other for processing. Physical working capital also includes the stock of materials, fuels stores etc., purchased expressly for re-sale, semi-finished goods and work in progress on account of others and goods made by the factory which are ready for sale at the end of the accounting year. However, it does not include the stock of the materials, fuels, stores etc. supplied by others to the factory for processing. Finished goods processed by others from raw materials supplied by the factory and held by them are included and finished goods processed by the factory from raw materials supplied by others are excluded. (i) Working Capital is the sum total of the physical working capital as defined in para (h) above and the cash deposits in hand and at bank and the net balance of amounts receivable over amounts payable at the end of the accounting year. Working capital, however, excludes unused overdraft facility, fixed deposits irrespective of duration, advances for acquisition of fixed assets, loans and advances by proprietors and partners irrespective of their purpose and duration, longterm loans including interest thereon and investments. [ Note : Definition of Plant and Machinery and other components which could be taken into account for the purpose of this Scheme in respect of Service Sector, Bio-Technology industry Power Generating industries referred to in para 3 (I, II III) would be notified separately] 5. Extent of admissible subsidy: All eligible industrial units located anywhere in the North Eastern Region shall be given an interest subsidy to the extent of 3% on the working capital advanced to them by the Scheduled Banks or Central /State financial institutions, for a maximum period of 10(ten) years from the date of commencement of commercial production. 6. Norms for Working Capital calculation: For the purpose of this Scheme, the minimum working capital requirement of a unit shall be worked out @ 25 % of their annual turnover. Inventory norms may be applied , if necessary, after providing for aforesaid minimum level. In respect of such units for which norms have not been laid down/are not applicable (due to the units coming below the cut off point of ₹ 10 lakhs of working capital), the request of working capital should be considered favourably so long as the working capital is not very much above such minimum level. Special norms can also be evolved for inventory and receivables. Working capital below the minimum level may be justified under special circumstances in which the requirement is demonstrably lower, as in the case of ancilliary units in the small scale sector with assured supply of inputs and off-take of output. 7. Designated Agency for disbursement of Subsidy North Eastern Development Financial Corporation (NEDFi), Guwahati shall be the designated agency for disbursement of interest subsidy on the basis of the recommendation of the State Level Committee (SLC) of the concerned State Government. 8. Procedure for claiming interest subsidy: New industrial units eligible for subsidy under the Scheme will be required to get themselves registered with the State Industry Department concerned prior to taking effective steps for setting up. Similarly, existing industrial units undertaking substantial expansion should also get themselves registered with the State Industry Department prior to such expansion. All the units, whether new or existing would be required to indicate their assessment of the total new or additional fixed capital likely to be invested by them in the plant and machinery. 9. Procedure for disbursement of Interest Subsidy: (i) Each State Government concerned will set up a State Level Committee consisting of a representative each of the State Department concerned, State Finance Department, State Industry Department, State Directorate of Industries, NEDFi and the Financial Institution concerned from where working capital loan has been raised by the unit, to go into each case to decide whether the unit qualifies for the grant of interest subsidy under the scheme and also about the quantum of eligible subsidy under the scheme. (10) The subsidy will be disbursed to the industrial unit by NEDFi on the recommendation of the State Level Committee of the State Government concerned. 11. Rights of the Centre/State Government/Financial Institutions: If the Central government/State Government/Financial Institution concerned is satisfied that the subsidy or grant to an industrial unit has been obtained by misrepresentation of the essential facts, furnishing of false information or if the unit goes out of production within 2 years after commencement of commercial production or after having availed the subsidy under the scheme, the Central Government/State Government/Financial Institution concerned, may ask the unit to refund the subsidy after giving opportunity to the concerned to be heard. 12. Without taking prior approval of the Ministry of Industry, Department of Industrial Policy Promotion/State Government/Financial Institution concerned, no owner of an industrial unit will be allowed to change the location of the whole or any part of the industrial unit or effect any substantial contraction or dispose of a substantial part of its total fixed capital investment within a period of 2 years of receiving a part or the whole of the subsidy under the scheme. 13. In respect of all units to whom the grant or subsidy is disbursed by the NEDFi/State Government, certificate of utilization of the grant or subsidy for the purpose for which it was given shall be furnished to the Central Ministry of Industry (Department of Industrial Policy and Promotion) by the financial institution/State Government concerned within a period of one year from the date of receipt of the last instalment /full amount. 14. After receiving the subsidy, each industrial unit shall submit annual progress report to the Ministry of Industry, Department of Industrial Policy and Promotion/State Government concerned, about its working for a period of 5 years after going into production. 15. A High Level Monitoring Committee has been set up as in Annexure-II which would monitor implementation of the Scheme. (N.N.Prasad) Joint Secretary ANNEXURE-I Negative List: The following industries will not be eligible for benefits under NEIIPP, 2007:- (i) All goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which pertains to tobacco and manufactured tobacco substitutes. (ii) Pan Masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). (iii) Plastic carry bags of less than 20 microns as specified by Ministry of Environment and Forests Notification No.S.O. 705(E) dated 02.09.1999 and S.O.698 (E) dated 17.6.2003. (iv) Goods falling under Chapter 27 of the First Schedule to the Central Excise tariff Act, 1985 (5 of 1986) produced by petroleum oil or gas refineries. Value Addition Benefits under NEIIPP, 2007 will not be admissible to goods in respect of which only peripheral activities like preservation during storage, cleaning operations, packing, re-packing, labelling or relabelling, sorting, alteration of retail sale price etc. take place. ANNEXURE-II High Level Committee/Advisory Committee i. Secretary, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. Chairman ii. Secretary, Department of Revenue, Ministry of Finance, Government of India. Member iii. Secretary, Department of Banking and Insurance, Ministry of Finance, Government of India. Member iv. Secretary, Ministry of Development of North Eastern Region, Government of India. Member v. Adviser (Industry), Planning Commission Member vi. Adviser (NE), Planning Commission Member vii. Chairman-cum-Managing Director, North Eastern Development Finance Corporation (NEDFi), Guwahati. Member viii. Principal Secretary/Secretary (Industry), of all the State Governments of North Eastern Region. Member ix. Development Commissioner, Small Scale Industries, Government of India. Member x. Additional Secretary Financial Adviser, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. Member xi. Chief Controller of Accounts, Department of Industrial Policy and Promotion, Government of India Member xii. Joint Secretary, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India Member Secretary