Scheme for Assistance to Micro, Small and Medium Enterprises (MSME): Assistance for Interest Subsidy (Service Sector)

Scheme for Assistance to Micro, Small and Medium Enterprises (MSME) – Assistance for Interest Subsidy (Service Sector)

The “Scheme for Assistance to Micro, Small and Medium Enterprises (MSME)” initiated by the Industries and Mines Department of Gujarat aims to elevate the state as a significant global business hub. This initiative focuses on fostering sustainable manufacturing practices, enhancing the growth of MSMEs, and boosting export competitiveness.

Overview of the Scheme

The “Scheme for Assistance to Micro, Small and Medium Enterprises (MSME)” serves as a comprehensive framework launched by the Industries and Mines Department of Gujarat. Its primary goal is to empower the vibrant MSME sector, which plays a crucial role in job creation, contribution to GDP, and enhancing export capabilities. This initiative is effective from August 7, 2020, until August 6, 2025, targeting support for entrepreneurs while ensuring MSMEs attain global competitiveness.

A vital component of this initiative is “Assistance for Interest Subsidy (Service Sector)”, which provides interest subsidies on term loans for newly established MSMEs within the service sector. This subsidy is applicable for investments in new machinery, equipment, and furniture/fixtures, explicitly excluding land and buildings.

Benefits Available

Financial assistance under this scheme varies based on the category of the taluka:

Additionally, there is an extra subsidy of 1% for registered startups in the service sector with Udyam/MSME Registration.

Eligibility Criteria

• The enterprise must be a newly established Micro/Small/Medium enterprise.
• Eligibility is restricted to enterprises involved in the service sector (as specified in Annexure A & B).
• The term loan must be approved by a recognized Bank or Financial Institution.
• Applications must be submitted within one year of loan disbursement or prior to commencing commercial production.
• The enterprise must operate for a minimum of 7 years following subsidy approval.
• Compliance with pollution control regulations is mandatory.
• Only one type of investment (Forward Integration, Backward Integration, Diversification, or Expansion) qualifies for the subsidy.

Exclusions

Loans sanctioned by Non-Banking Financial Institutions (NBFCs) are not eligible for incentives under this scheme.

Application Process

Online Registration Procedure:

• Step 1: Navigate to the Investor Facilitation Portal (IFP). Click on “New Investor Registration” to access the registration form.
• Step 2: Complete the registration form and click “Submit”.
• Step 3: Confirm your E-mail ID using the verification link sent to your registered email.
• Step 4: Upon successful verification, your registration will be completed.

Post-Registration Steps:

• Step 1: Return to the Investor Facilitation Portal (IFP) and click on “Login”.
• Step 2: Enter the email address and password used during registration.
• Step 3: Click the “Login” button to access your account.
• Step 4: Fill in the requisite details and upload mandatory business documents to complete your application.

Definitions

Micro, Small and Medium Enterprise

An enterprise that meets the criteria of Micro, Small, and Medium Enterprises as defined under the MSME Development Act, 2006, and any subsequent amendments by the Government of India, and has secured acknowledgment through the “Udyog Aadhaar Memorandum / Udyam Registration.”

New Enterprise

A new enterprise is defined as an MSME that has completed Udyog Aadhar / Udyam Registration as dictated by the Government of India and begins commercial production within the operational period of the scheme.

Existing Enterprise

An existing enterprise refers to an MSME that has commenced commercial production prior to the announcement date of the scheme.

Expansion

Expansion occurs when an existing or new enterprise amplifies its gross fixed capital investment by a minimum of 50%, with at least 60% of this investment allocated to plant and machinery relevant to the expansion.

Gross Fixed Capital Investment (GFCI)

Gross Fixed Capital Investment encompasses investments in buildings, machinery, utilities, tools, and equipment, along with other assets (excluding land) necessary for manufacturing a final product.

Integration and Diversification

• Forward Integration: Investment made in GFCI for products that serve as raw materials for the enterprise.
• Backward Integration: Investments aimed at adding further value to the final product of the enterprise.
• Diversification: Investment made in GFCI for products distinct from the enterprise’s end product.

Term Loan

A term loan refers to a loan approved by a financial institution or bank (excluding NBFCs) for acquiring GFCI of the enterprise. Only the actual disbursed amount against the sanctioned loan qualifies for incentives under this scheme.

Pipeline Enterprises

These are enterprises that received their first loan disbursement but could not start commercial production before August 7, 2020. Such enterprises must commence production by March 31, 2021, to be eligible for incentives under the previous scheme. Enterprises that received initial disbursement before August 7, 2020, may opt for the new scheme, with disbursements made during the policy period being eligible.

For further information, please visit myScheme.gov.in.