The Maharashtra Industrial policy, 2019 was introduced w.e.f 01st April,2019 and will remain in force for a period of five years. The Package Incentive Scheme (PSI-2019) provides incentives to MSMEs in form subsidies on SGST payments, power subsidies, interest subsidies, stamp duty and electricity duty exemptions. These benefits are available subject to certain conditions which are discussed in detail below:
- The MSME unit must be a manufacturing enterprise as defined in the MSMED Act,2006.
- The scheme shall be applicable to a new unit. A new unit is one whose one of effective steps such as acquiring land/shed, incorporation, Consent of MPCB etc. is completed on or after 01st April,2019 and is not formed as a result of reconstruction of existing unit. However, establishing a unit by purchasing assets of an existing enterprise shall qualify for PSI-2019.
- The scheme is also applicable to new unit or existing units for expansion/diversification The scheme also applies to small units outside the definition of MSME with gross fixed capital investment (GFI) up to Rs.50 Crores.
- Units manufacturing textiles covered under textile policy 2018-2023 will be eligible for the scheme in respect of only those incentives which are not offered by other state agencies.
- Units engaged in manufacture of Liquor, cigarette, bidi and other tobacco products and other banned products will not be eligible for the scheme.
Classification of Areas of States
For the purpose of this scheme the state has been divided into different categories of “talukas” based on the level of industrial development. The quantum of incentive to a unit is contingent upon the category of taluka in which it is located. The various categories of talukas, in order of most industrially developed to least ones are – A,B,C,D,D+, No industry districts, Naxal affected area. In addition, a special category of “aspirational districts” consisting of four districts has been carved out.
Before we dwell upon the intricacies of the scheme it is important to understand what an Expansion or a Diversification Project is – When an Existing / New Unit in any of the areas covered under Group “B”, “C”, “D”, D+, Naxalism Affected Areas, Aspirational Districts or No – Industry – Districts, makes, on or after 1st April, 2019, an additional fixed capital investment in additional manufacturing facilities for manufacture of the same product or for manufacture of different products then it qualifies as an expansion project. It must be noted that units covered under Group “A” making expansions are not covered within the scope of this definition and resultantly do no qualify for the incentives.
Fiscal Incentives to MSMEs under the scheme:
- Industrial Promotion Subsidy(IPS) : New and expanding MSME unit will be eligible for this incentive as per their taluka categorisation. Incentive subsidy will be offered on 100 per cent. Gross State GST payable by unit on sale of eligible products as detailed below.
||For the purpose of this policy, MSMSE shall include units as per the MSMED Act,2006, as well as the units with FCI of upto INR 50 Crores
||Vidarbha, Marathwada, Ratnagiri, Sindhudurg and Dhule
||No Industry District, Naxal affected areas* and Aspirational districts**
|*Naxalism Affected areas as per Government Resolution No. PSI-2013/(CR-54)/IND-8 Dated 01.04.2013 issued by Energy and Labour Department, Government of Maharashtra.
** Aspirational districts are Osmanabad, Gadchiroli, Washim and Nandurbar.
For instance, an eligible unit located in “C” category makes a fixed capital investment of Rs. 5 Crores then as per the scheme it will be eligible to subsidy of 40% on such investment amounting to Rs.2 Crore which will be awarded over a period of 7 years (i.e 28.57 lakhs per year) in form of refund of Gross GST payable on sales made by the enterprise. In a situation where the gross SGST for the year is less than the sanctioned incentive then such differential will be carried forward.
Note 1: Eligible units undertaking expansion will be entitled to equivalent of 80 per cent of the incentives tabled above and the eligibility period will be also be reduced by 1 year.
Note 2 : Food and agro processing unit, eligible green energy unit and bio fuel manufacturing units to get 20% above the limit mentioned above (subject to maximum of 100 per cent) and will get 2 additional years of eligible period.
- Interest Subsidy: This subsidy is allowed only to new units in respect of interest actually paid to Banks and Public Financial Institutions on term loan taken for acquiring Fixed Assets. The amount of subsidy is capped at lower of rate of interest (net of any other interest subsidy) and 5 per cent. 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.
- Other Subsidies to New units: Other forms of incentives available to only new units include-
1. Exemption from electricity duty ( In category “A” and “B” only 100% EOUs, IT manufacturing and Bio Tech manufacturing units will be exempted for 7 years)
2. Power subsidy for period of 3 years of Rs.1 per unit for units in Vidarbha, Marathwada, North Maharashtra and certain specified areas. Subsidy for other areas is Rs.0.5 per unit.
- Waiver of Stamp Duty: New units as well as units undertaking expansion will be eligible to the said waiver during investment period for term loan purpose or assignment of lease rights and sale certificates. Incentive in category “A” and “B” shall be restricted to IT and Bio Technology manufacturing units in certain IT/BT Parks.
- Additional Incentives to Expansion projects of all eligible MSMEs (including units in Category “A” ):
1. 5% subsidy only on additional capital equipment acquired for Technology Up-gradation, subject to a maximum of Rs. 25 lakhs.
2. 75 % subsidy on the expenses incurred on quality certification limited to Rs. 1 Lakh.
3. 25% subsidy on additional capital equipment acquired for cleaner production measures, limited to Rs. 5 Lakhs
4. 75 % subsidy on the expenses incurred on patent registration limited to Rs.10 Lakh for the National patents and Rs. 20 lakhs for the International patents.
5. 75% of cost of water audit limited to Rs. 1.00 Lakh
6. 75% of cost of energy audit limited to Rs. 2.00 lakh
7. 50% of the cost of Capital Equipment under the measures to conserve/recycle water, limited to Rs. 5 lakhs.
8. 50% of the cost of additional Capital Equipment for improving energy Efficiency, limited to Rs. 5 lakhs
- In addition to these all eligible MSME units will be entitled to Incentives for:
1. Credit Rating of MSMEs of 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.
2. During the policy period, first 250 SMEs fulfilling the criteria for listing, which will be enlisted on the SME Stock Exchange, Mumbai will be given refund of listing expenses equal to Rs. 6 lakhs or actual C.A. certified listing expenses, whichever is lower.
3. Eligible MSME units shall be provided a Green Industrialization Assistance for undertaking measures to conserve water, energy and environment covering waste management system, pollution control system, health and safety system, water harvesting devices, captive renewable power generation system and budgetary support from MPCB.
An eligible MSME unit must commence commercial production, acquire the fixed assets, put them in use having paid for the asset within a period of 3 years from date of submission of application. Any asset acquired prior to or beyond the investment period will not be considered for the incentive except vacant land which was acquired earlier and in respect of which no incentive has been availed under any other scheme.
Eligible Fixed Assets: For the purpose the scheme Fixed assets shall mean and include –
- Land for commercial use.
- Building including administrative or residential building as part of facilities in manufacturing process.
- Plant and Machinery including tools for sustaining the working of unit.
- Development Cost (fencing, roads, other infrastructure under the project).
- Installation and pre operating expense to extent capitalized.
- R&D units with benefit limited to lower of 25 per cent of investment or Rs.100 Crore
- Royalty on technical know how and drawings capped at 10% of capital cost.
- Amount paid for supply of power for development of infrastructure of the unit.
- Cold Storage which integral part of manufacturing process.