Subsidy Scheme

To promote the development of the industrial sector, especially MSME sector, the government has introduced various schemes that provide financial subsidy to the eligible enterprises. Some of these subsidy schemes are specifically for certain industrial sectors, while some of them like CLCSS are availablefor a wide range of industries.

Some of the major subsidy schemes of the government and public institutions are provided below. These can be categorized as follows:

Subsidy Schemes of the Central Government

Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)-:

The Scheme was launched in October, 2000 and revised w.e.f. 29.09.2005. The revised scheme aims at facilitating Technology Upgradation of Micro and Small Enterprises by providing 15% capital subsidy (12% prior to 2005) on institutional finance availed by them for induction of well established and improved technology in approved sub-sectors/products.

Quality Upgradation/Environment management for small scale sector through incentive for ISO 9000 /ISO 14001 /HACCP Certifications-:In order to enhance the competitive strength of the small scale sector, the Government introduced an incentive scheme for their technological upgradation/quality improvement and environment management. The scheme provides incentive to those small scale/ ancillary undertaking who have acquired ISO 9000/ISO 14001/HACCP certifications.

Market Development Assistance Scheme for Micro, Small & Medium Enterprises-:The scheme offers funding for participation by manufacturing Small & Micro Enterprises in International Trade Fairs/ Exhibitions under MSME India stall; sector specific market studies by Industry Associations/ Export Promotion Councils/ Federation of Indian Export Organisation; initiating/ contesting anti-dumping cases by MSME Associations and reimbursement of 75% of one time registration fee (w.e.f. Ist January 2002); and 75% of annual fees (recurring) (w.e.f. Ist June 2007) paid to GSI (Formerly EAN India) by Small & Micro units for the first three years for bar code.

Financial Assistance on Bar Code-:The basic objective of financial assistance is to enhance the marketing competitiveness of Micro & Small Enterprises (MSEs) by way of:
• Providing 75% of one-time registration fee and annual recurring fee (for first three years) paid by MSEs to GS1 India.
• Popularizing the adoption of bar codes on large scale amongst MSEs, and
• Motivating and encouraging MSEs for use of bar codes through conducting seminars on Bar Code, etc.

Subsidy Schemes for Specific Industries

Textile Industry – Technology Upgradation Fund Scheme (TUFS)-:Ministry of Textiles introduced the Technology upgradation fund scheme (TUFS) for textiles and jute industry in April 1999 to facilitate induction of state-of-the- art technology by the textile units.
The benefits under the scheme include:
• 5% interest reimbursement of the normal interest charged by the lending agency on RTL, or
• 5% exchange fluctuation (interest & repayment) from the base rate on FCL, or
• 15% credit linked capital subsidy for SSI sector, or
• 20% credit linked capital subsidy for powerloom sector (An option for ‘front ended’ subsidy provided w.e.f. 1st October, 2005), or
• 5% interest reimbursement plus 10% capital subsidy for specified processing machinery.

Food Processing Industry – Scheme for Technology Upgradation/ Establishment/ Modernization for Food Processing Industries-:This Scheme covers the following activities:

Setting up/expansion/modernization of food processing industries covering all segments viz fruits & vegetable, milk product, meat, poultry, fishery, oil seeds and such other agri-horticultural sectors leading to value addition and shelf life enhancement including food flavours and colours, oleoresins, spices, coconut, mushroom, hops.

Leather Industry – Integrated Development of Leather Sector (IDLS)-:The scheme is aimed at enabling existing tanneries, footwear, footwear components and leather products units to upgrade leading to productivity gains, right-sizing of capacity, cost cutting, design and development simultaneously encouraging entrepreneurs to diversify and set up new units.

Coir industry
The Coir Board runs various subsidy schemes for the coir sector, as provided below:

Rejuvenation, Modernization and Technology Upgradation of the Coir Industry-:A Central Sector Scheme on Rejuvenation, Modernization & Technology Up gradation of the Coir Industry was launched during 2007-08, on a pilot basis, to facilitate the sustainable development of the Spinning and Tiny/Household Weaving Units of the coir industry by providing proper work sheds and enabling replacement of traditional age old ratts with motorized ratts in the Spinning sector and replacement of traditional looms with the mechanized looms in the Tiny/Household sector in the first phase, during XI Plan. The main objectives of the scheme include modernization of Coir industry by adoption of modern technology in production and processing of Coir in the spinning and weaving sectors; Upgradation of the production and processing technology for improving the productivity and quality; and increasing the efficiency and productivity for enhancing the earnings of the workers and income of spinners/ tiny-household sectors, among others.
• The norms of assistance are as below:
o Spinning unit: The financial assistance or government grant/subsidy would be 40% of the project cost subject to a maximum of Rs. 80,000 (Rupees eighty thousand only) per unit.
o Tiny/ household unit: The financial assistance or government grant/subsidy would be 40% of the project cost subject to a maximum of Rs. 2,00,000 (Rupees two lakh only) per unit.

• Extension of Financial Assistance to Coir units in the Brown Fibre sector-:The Coir Board runs a scheme for financial assistance to the coir units in the brown fibre sector.

• Scheme for Extension of Financial Assistance for Generator Set / Diesel Engine-:The purpose of the scheme is to give one time subsidy to fibre/ curled coir production units in the brown fibre sector to carry out production at periods of power cut/ low voltage and to ensure supply of brown fibre and curled coir to meet the requirements of rubberized coir products, coir rope, yarn and mats and matting sectors.