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Package-scheme-of-incentive

Package Scheme of Incentive :

package-scheme-of-incentive-2019 The government has been implementing a scheme since 1964, known as the ‘Package Scheme of Incentives,’ to promote the establishment of new industrial units or the expansion/diversification of existing ones in underdeveloped areas of the state. This scheme aims to encourage industrial dispersal and development in these regions.

Package Scheme of Incentive Package Scheme of Incentive The scheme, initially introduced in 1964, has undergone several amendments over the years. The latest version, referred to as the “Package Scheme of Incentives-2013” (PSI-2013), has been in effect since April 1, 2013.

Package Scheme of Incentive The State Government has recently announced the New Industrial Policy – 2019, aiming to sustain industrial growth by introducing innovative initiatives. Package Scheme of Incentive The policy seeks to enhance the favourable industrial environment in the state and provide a competitive edge to local industries on a global scale.

It emphasises granting fiscal and non-fiscal incentives to industrial units to foster higher, sustainable, and inclusive economic growth. The focus is on promoting balanced regional

Package Scheme of Incentive development and generating employment through increased private and public investment in the industrial sector. Consequently, it is essential to amend the Package Scheme of Incentives-2013 in line with the Industrial Policy-2019 and introduce a new “Package Scheme of Incentives 2019.” Package Scheme of Incentive This new scheme will establish criteria for eligibility, specify incentive amounts, and define monitoring mechanisms for administering incentives starting from April 1, 2019, until March 31, 2024, or until the implementation of a new Package Scheme of Incentives.

1.Period:-The Periodic Scheme of Incentives (PSI) for 2019, as amended by the Government, will be effective from April 1, 2019, until March 31, 2024, or until the new Package Scheme of Incentives is implemented.

Coverage:- The following types of eligible industrial units in the private sector, cooperative sector, state public sector, and joint sector will be eligible to receive incentives under the PSI-2019.

i) Industries listed in the First Schedule of the Industries Act.

ii) Manufacturing enterprises as defined in the MSMED Act of 2006.

iii) Information Technology manufacturing units registered with the Directorate of Industries, MIDC, Development Commissioner of SEEPZ, or Software Technology Parks of India (STPI) in the state.

iv)Biotechnology manufacturing units as specified by the Government periodically.
v) Mechanised food/agro-processing industries in sectors such as dairy, fruit and vegetable processing, grain processing, fish/meat/poultry processing, consumer foods including packed foods, and non-alcoholic beverages made from fruits and vegetables.

(Note: Only secondary and tertiary agro and food processing units will be eligible for incentives. Package Scheme of Incentive This condition does not apply to processing/manufacturing units established by Farmer’s Producer Companies and units established in government-assisted Food Parks that also carry out primary processing activities.)

Note: Units manufacturing the following products are not eligible for incentives under PSI – 2019:

(a) Beer and liquor manufacturing industries.

(b) Cigarette, bidi, or any other tobacco-containing product manufacturing industries.

(d) Any other product(s) banned by the Central or State Government.

Units engaged in all types of textile manufacturing, including cotton ginning and pressing, sizing, spinning, weaving, bleaching, dyeing, mercerizing, etc., as covered under the Textile Policy – 2018-23 of Maharashtra State, are eligible only for incentives not provided by other State Government agencies.

Classification Of Areas for PSI – 2019:-

Group A: Indicates industrially developed areas.

Group B: Indicates areas where some industrial development has occurred but are less developed than those in Group A.

Group C: Indicates areas that are less developed than those covered under Group B.

Group D: Indicates the less-developed areas of the State not covered under Group A/B/C.

Group D+: Indicates the least developed areas not covered under Group A/B/C/D.

No Industry District: Refers to districts with no industries, such as Hingoli and Gadchiroli.

Naxalism Affected Area: Refers to areas affected by naxalism, as described in Government Resolution No NAVIKA-2008/C.R. 209/Ka. 1416 dated May 31, 2009 (Annexure II) or as may be amended by the Government.

Aspirational Districts: As defined by the Government of India, including Washim, Gadchiroli, Osmanabad, and Nandurbar.

Promotion of Thrust Sectors:-

With the aim of promoting industrial development in high-tech emerging sectors and fostering employment generation, the State Government has identified the following thrust sectors. Package Scheme of Incentive Thrust sectors encompass:

Electric Vehicles (Manufacturing, Infrastructure, and Servicing)

Aerospace and Defence Manufacturing

Industry 4.0 (Artificial Intelligence, 3D Printing, Internet of Things, Robotics, Nanotechnology, among others)

Integrated Data Centre Parks (IDCP)

Textile Machinery Manufacturing

Biotechnology and Medical and Diagnostic Devices

Agro & Food Processing (Secondary and Tertiary Food Processing units)

IT & IT Enabled Services (ITeS)

Electronic Systems Design & Manufacturing (ESDM) and Semiconductor Fabrication (FAB)

Logistics & Warehousing

Green Energy/Biofuel Production

Sports and Gym Equipment Manufacturing

Nuclear Power Plant Equipment Manufacturing

Mineral/Forest-based Industries

Existing Unit:-

A unit that was established and commenced production before April 1st, 2019, and has been granted an Eligibility Certificate (EC) or availed any incentives under previous Package Scheme of Incentive schemes, and has submitted a valid application for the grant of an EC under the PSI-2013 before March 31st, 2019.

New Unit:-

A unit established for the first time in any taluka where there is no existing unit by the said entity, provided that it is not an existing unit and at least one effective step was completed on or after April 1st, 2019, for setting up the unit. It is not constituted as a result of re-establishment, mere change of ownership, alteration in constitution, reconstruction, or revival of an existing unit.

Expansion / Diversification:-

An investment will be considered an expansion project or a diversification project if it meets the following criteria:

Additional Fixed Capital Investment (FCI) is equal to or greater than 25% of Gross FCI (with a minimum FCI of Rs. 5 Crores for non-MSMEs and Rs. 25 Lakhs for MSMEs).
Existing installed capacity is increased by at least 25%.
Employment in the non-supervisory category has increased by at least 10%.
80% of the additional employment should be sourced from local individuals.

Effective steps include:-

Obtaining possession of land/shed/workshop with permission for industrial use.
Registration, for entities such as firms, LLPs, companies, trusts, societies, or cooperative societies.
Letter of Intent (LOI) for IT/BT manufacturing units.
For MSMEs: Consent to Establish from the Maharashtra Pollution Control Board (MPCB).
For entities other than MSMEs: Copy of the Industrial Entrepreneurs Memorandum (IEM).

Fixed assets shall be defined and include:-

Land or area in effective possession.
Buildings, including administration buildings, residential quarters, and all facilities registered for the manufacturing process.
Plant and machinery, including tools and equipment necessary for sustaining the operation of the eligible unit.
The expenses incurred for the development of the location where the eligible unit is situated.
Installation charges and pre-operator expenses.
Royalties paid for technology transfer and technical know-how, including the cost of drawings and know-how fees (up to a maximum of 10% of the capital cost).
Deposits with Maharashtra State Electricity Board (MSEB), Maharashtra Industrial
Development Corporation (MIDC), or any other government agency.
Research and Development (R&D) units, including standalone facilities of eligible industrial units, considered as part of Fixed Capital Investment (FCI) for availing fiscal incentives, up to 25% of FCI (maximum Rs. 100 crores).
Investment in captive power plants, including solar captive power plants, will not be considered part of the admissible FCI for incentives.
Cold storages integrated into the manufacturing process.

10.Financial incentives for MSMEs:-

MSMEs will be defined in accordance with the definition provided in the Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED Act, 2006), published in the Government of India’s extraordinary gazette dated September 30, 2006. Additionally, units falling outside the definition of MSMEs as published in the same gazette, with a total Gross Fixed Capital Investment (FCI) up to Rs. 50 crores, will also be eligible.

Note: For expansion or diversification projects, the combined Gross Fixed Capital Investment (FCI) of the existing unit and the proposed expansion/diversification project should not exceed Rs. 50 crore to qualify for incentives under this category. New MSME units and small industries will be eligible for a range of incentives. Package Scheme of Incentive The total amount of incentives will be linked to the percentage of actual eligible Fixed Capital Investment based on the taluka category mentioned in the table below. Incentives will be granted to units on a first-come-first-serve basis.

Expansion / Diversification Units:

Expansion or diversification units refer to existing or new micro, small, and medium manufacturing enterprises as well as small industries, including manufacturing IT/BT units, that qualify for expansion or diversification. Package Scheme of Incentive These units are eligible to receive incentives equivalent to 80% of the incentives available for new units. However, the period during which they are eligible for these incentives will be reduced by one year compared to new units. In other words, while expansion or diversification units can benefit from incentives, their eligibility period is slightly shorter than that of new units.

Financial Incentives to MSMEs & Small Industries:-

Here is the information presented in a table format:

Type of Subsidy	Eligibility	Quantum of Subsidy
Industrial Promotion Subsidy (IPS)	All eligible New/Expansion units	100% Gross SGST payable on 1st sale of eligible products billed and delivered within Maharashtra
Interest Subsidy	All eligible New Units	5% pa on term loan (not exceeding the bills paid for electricity consumed during the relevant year)
Exemption from Electricity Duty (Out of Basket of Incentives)	All eligible New Units (except units in Grp A&B areas)	Exempt from payment of electricity duty during applicable eligibility period
	In Grp-A &B areas	Only eligible 100% export oriented units, IT/BT manufacturing units will be exempted from payment of electricity duty for a period of 7 years
Waiver of Stamp Duty	All eligible New/Expansion Units (except units in Grp-A&B areas)	Exempt from payment of stamp duty for acquiring land (including assignment of lease rights & sale certificate) & for term loan purposes
	In Grp-A&B areas	IT/BT manufacturing Units in Public IT/BT Parks:100% -IT/BT manufacturing Units in Private IT/BT Parks:75%
Power Tariff Subsidy	Eligible New MSME & Small Industries in Vidarbha & Marathwada, North Maharashtra & districts of Raigad, Ratnagiri & Sindhudurg in Konkan Region, No Industries Districts, Naxalism Affected Areas & Aspirational Districts	Re.1/- per unit for a period of 3 years from the date of commencement of commercial production for energy consumed & paid. Other Area Rs.0.50 per unit for a period of 3 years from the date of commencement of commercial production for energy consumed & paid.

This table summarises the eligibility criteria and the extent of subsidies available for different types of units in Maharashtra.

Additional Incentives for Strengthening MSMEs (Out of Basket):

Here’s the information presented in a table format:

Type of Subsidy	Quantum of Subsidy
Technology Upgradation	5% subsidy only on additional capital equipment acquired for Technology upgradation, subject to a maximum of Rs.25.00 lakhs
Quality Certification	75% subsidy on expenses incurred – Limited to Rs.1.00 Lakh
Cleaner Production Measures	25% subsidy on additional capital equipment acquired for cleaner production measures – Limited to Rs.5.00 Lakhs
Patent Registration	75% subsidy on expenses incurred – Limited to Rs.10.00 lakhs for National Patents & Rs.20.00 lakhs for International Patents
Water Audit	75% of the cost of water audit limited to Rs.1.00 lakh
Energy Audit	75% of the cost of energy audit limited to Rs.2.00 lakh
Conserve/Recycle Water	50% of the cost of capital equipment – Limited to Rs.5.00 lakhs
Improving Energy Efficiency	50% of the cost of capital equipment – Limited to Rs.5.00 lakhs
Credit Rating	75% of the cost – Limited to Rs.40,000/-

This table outlines the different types of subsidies available for expansion projects of MSMEs and Small Industries in Maharashtra, along with the quantum of subsidy provided for each type.

Industrial Incentives in Maharashtra for Large Scale Units/ Project/S LSU under Package Scheme of Incentive 2019:

the information presented in a table format:

Taluka / Area Classification	Minimum Qualifying Fixed Capital Investment (INR crore)	Minimum Direct Employment (number of people)	Maximum Ceiling of basket as % of FCI	Incentive period in years
A & B (Only LSI)	750	1000	25%	7
C	500	750	40%	7
D	250	500	60%	7
D+	150	400	70%	7
Vidarbha, Marathwada, Ratnagiri, Sindhudurg & Dhule	100	300	80%	9
No Industry Districts, Naxalism Affected Areas and Aspirational Districts	100	250	100%	9

This table outlines the industrial incentives available in Maharashtra for Large Scale Units/Projects/LSU under the Package Scheme of Incentive 2019. It specifies the minimum qualifying fixed capital investment, minimum direct employment requirements, maximum ceiling of basket as a percentage of fixed capital investment, and the incentive period in years for different talukas and areas classifications.

Provided that

Large scale projects based on employment criteria must maintain the qualifying direct employment throughout the year, with 80% of employees being local residents. Package Scheme of Incentive Failure to meet the employment criteria in any month for which Industrial Promotion Subsidy is claimed will result in the ineligibility of subsidy for that year. The minimum direct employment specified in the table above must be achieved within two years from the date of commencing commercial production.
Investment in Captive Power Plants, including captive solar power plants, will be considered for determining the eligibility criteria mentioned in the table above for large scale projects. However, investment in captive power plants will not be incentivized, although it will be limited to 20% of the total project cost.

Expansion / Diversification Units:

Expansion or diversification units will be eligible to receive incentives equivalent to 80% of the incentives available for new units. Package Scheme of Incentive However, the period during which they can avail of these incentives will be reduced by one year compared to new units.

Financial Incentives to LSI & Special LSI:

Type of Subsidy	To Whom	Quantum of Subsidy
Industrial Promotion Subsidy (IPS)	All Eligible new & Expansion/Diversification LSI	50% of Gross SGST payable on 1st sale of eligible products billed & delivered within Maharashtra.
	All Eligible new & Expansion Special LSI (except units in Grp-A&B areas)	40% of NET SGST paid on 1st sale of eligible products billed & delivered within Maharashtra.
Exemption from Electricity Duty	All eligible New Units (except units in Grp A&B areas)	Exempt from payment of electricity duty during applicable eligibility period.
	In Grp-A &B areas	Only eligible 100% export oriented units, IT/BT manufacturing units will be exempted from payment of electricity duty for a period of 7 years.
Waiver of Stamp Duty	All eligible New/Expansion Units (except units in Grp-A&B areas)	Exempt from payment of stamp duty for acquiring land (including assignment of lease rights & sale certificate) & for term loan purposes.
	In Grp-A&B areas	IT/BT manufacturing Units in Public IT/BT Parks: 100%. IT/BT manufacturing units located within private IT/BT parks receive a subsidy of 75%. Large Projects & Mega & Ultra Mega Projects: 50% for first lease/conveyance deed only.

Mega Projects / Ultra Mega Projects:

Mega Projects / Ultra Mega Projects are industrial units that meet the minimum threshold limits of Fixed Capital Investment or Direct Employment as prescribed in the following table.

Taluka / Area Classification	Minimum Qualifying Fixed Capital Investment (INR crore)	Minimum Direct Employment (number of people)	Ceiling as % of FCI
A & B (Only LSI)	1500	2000	–
C	1000	1500	–
D	750	1000	–
D+	500	500	–
Vidarbha, Marathwada, Ratnagiri, Sindhudurg & Dhule	350	500	–
No Industry Districts, Naxalism Affected Areas and Aspirational Districts	200	350	–
Ultra-Mega Industrial Units (Entire State)	4000	4000	–

The template for the quantum of incentives for Mega Projects and Ultra Mega Projects will be decided by Package Scheme of Incentive the High Power Committee chaired by the Chief Secretary, Government of Maharashtra. However, the Cabinet Sub Committee for mega projects, chaired by the Chief Minister of Maharashtra, will have the authority to sanction customised packages of incentives and even offer special or extra incentives for prestigious Mega Projects/Ultra Mega Projects on a case-by-case basis with recommendations from the High Power Committee.

Package Scheme of Incentive For Mega Projects/Ultra Mega Projects, investment in Captive Power Plants, including solar power plants, will be considered when determining eligibility criteria, but such investments will not be incentivized. However, investment in captive power plants will be limited to 20% of the total project cost.
If a Mega Project/Ultra Mega Project is based on employment criteria, minimum direct employment must be generated within two years from the date of commercial production. Additionally, 80% of the employment must be local. Package Scheme of Incentive Projects based on employment criteria must maintain the qualifying direct employment on the company’s rolls throughout the year. Package Scheme of Incentive Failure to meet the employment criteria for any period of the year will result in the ineligibility of Industrial Promotion Subsidy for such year(s).
Furthermore, the total financial refunds/incentives received by Package Scheme of Incentive an industrial unit from all sources combined must not exceed the admissible Fixed Capital Investment as per the respective Taluka category.

16.Yearly Cap for the Package Scheme of Incentives 2019

Package Scheme of Incentive The amount of incentives disbursed annually to MSMEs, LSI, Special LSI, and Mega/Ultra Mega Units will be capped at the total quantum of incentives divided by the number of years specified in the eligibility period. Any surplus differential between the actual Package Scheme of Incentive sanctioned amount for a given year and the yearly disbursement limit can be carried forward. However, deficit differentials will not be carried forward to subsequent years.

SOURCES: https://www.ascconline.com/blog/package-scheme-of-incentives-2019/

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