Maharashtra Government Incentives Scheme 2019

Package Scheme of Incentives (PSI) 2019

• Introduced by the Government of Maharashtra to encourage industrial development in lesser developed areas of the state.
• Effective from 1st April 2019 to 31st March 2024.

Eligibility Criteria

• Applicable to new industrial units, expansion/diversification units, and existing units in the private sector, cooperative sector, state public sector, and joint sector.
• Units must be listed in the First Schedule of the Industries (Development and Regulation) Act, 1951, or be manufacturing enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.
• Information Technology manufacturing units, bio-technology manufacturing units, and mechanized food/agro processing industries are also eligible.
• Units manufacturing certain products (e.g. beer, liquor, cigarettes, etc.) are not eligible.

Classification of Areas

• Areas are classified into Group A, B, C, D, D+, and No Industry Districts based on their level of industrial development.
• Group A: Industrially developed areas.
• Group B: Areas with some industrial development.
• Group C: Less developed areas.
• Group D: Lesser-developed areas.
• Group D+: Least developed areas.
• No Industry Districts: Districts with no industries (e.g. Hingoli, Gadchiroli).
• Naxalism Affected Areas: Areas affected by naxalism.
• Aspirational Districts: Defined by the Government of India (e.g. Washim, Gadchiroli, Osmanabad, Nandurbar).

Definitions

• Earlier Scheme: Refers to the Package Scheme of Incentives implemented prior to PSI-2019.
• Micro & Small Manufacturing Enterprises: Defined as per the MSMED Act, 2006.
• Large Scale Industries: Defined as industrial units with an investment of more than Rs. 50 crores but less than Rs. 1000 crores.
• Mega Projects: Defined as industrial units with an investment of more than Rs. 1000 crores.
• Ultra Mega Projects: Defined as industrial units with an investment of more than Rs. 4000 crores.

Thurst Sectors

• Thrust sectors are identified to promote industrial development and generate employment.

• Examples of thrust sectors include:

  • Electric Vehicles
  • Aerospace and Defence Manufacturing
  • Industry 4.0
  • Integrated Data Centre Parks
  • Textile Machinery Manufacturing
  • Bio technology and Medical and Diagnostic Devices
  • Agro & Food Processing
  • Information Technology and IT Enabled Services
  • Electronic Systems Design & Manufacturing
  • Logistics & Warehousing
  • Green Energy/Bio Fuel Production
  • Sports and Gym Equipment Manufacturing
  • Nuclear Power plant equipment manufacturing
  • Mineral/Forest based Industries### Effective Steps for Setting Up a Unit

• At least one of the Effective Steps is completed on or after the 1st April, 2019 for setting up the Unit.

• The Unit is not formed as a result of re-establishment, mere change of ownership, change in the constitution, reconstruction, or revival of an Existing Unit.

Expansion / Diversification Project

• An investment shall be regarded as an Expansion Project or a Diversification Project if an Existing / New Unit makes an additional fixed capital investment in additional production / manufacturing facilities.
• The additional fixed capital investment should exceed 25% of the Gross Block of the Existing / New Unit.
• The investment should result in an increase of the existing installed production capacity by at least 25%.
• The expansion / diversification should increase the employment by at least 10% of the pre-expansion/diversification level.

Eligibility Certificate

• Eligibility Certificate is issued by the Implementing Agency to the Eligible Unit under the Package Scheme of Incentives.
• The certificate indicates the accepted Fixed Capital Investment, Actual Fixed Capital investment made, Finished Products, and other details along with Quantum of Incentives, Period of validity, and terms and conditions.

Eligibility Period

• The period of eligibility shall be computed from the Effective date of Eligibility and shall depend on the nature and location of the Eligible Unit.
• Incentives will be admissible to an Eligible Unit as per Para No. 4 and 5 subject to the fulfillment of the conditions of the PSI-2019.

Investment Period

• The investment period is the period for the unit to acquire the fixed assets at the site and put them to use for commercial production.
• The permissible Investment Period for Micro, Small, and Medium manufacturing Enterprises is three years, and for LSI units, it is four years.
• For Mega Projects / Ultra Mega Projects, the Investment period is five years from the date of application.

Operative Period

• The Operative Period is the minimum period of operation of the unit as laid down under the Government Resolution.

Effective Steps

• Effective Steps include:
  • Effective possession of land / shed / gala with permission for industrial use.
  • Registration, in case of Firm / Limited Liability Partnership (LLP) / Company / Trust / Society / Co-operative Society.
  • Letter of Intent for Information Technology (IT) / Bio Technology (BT) manufacturing Units from the Directorate of Industries or MIDC.

Fixed Assets

• Fixed Assets include:
  • Land / area in effective possession with permission for industrial use.
  • Building, including administrative building, residential quarters, industrial housing, and accommodation for all facilities.
  • Plant and Machinery, including tools and equipment.
  • Cost of development of the location of the Eligible Unit.
  • Installation charges and pre-operative expenses capitalized.
  • Research and Development - R & D units including stand-alone facilities of eligible industrial units.
  • Royalties paid on account of Technology transfer & Technical know-how.

Green Industrialization Assistance

• Eligible MSME units shall be provided a Green Industrialization Assistance for undertaking measures to conserve water, energy, and environment.
• Projects covered under the scheme include waste management systems, pollution control systems, health and safety systems, water conservation systems, and captive renewable power generation.

Gross Fixed Capital Investment

• Gross Fixed Capital Investment includes the capitalized value of new Fixed Assets acquired and put into use at the site of the eligible Unit and paid for during the eligible investment period.
• It includes new Fixed Assets, imported second-hand fixed assets, and intangible assets, including pre-operative expenses, interest capitalized, technical know-how, and deposits paid for utility services.### Eligibility Certificate (EC)
• Issued to eligible units by the implementing agency
• Specifies the Gross Fixed Capital Investment (GFCI) and the ceiling for incentives

Shifting of Units

• Units can shift from Group 'C' to 'C' or 'D' area, but not from Group 'C' to 'B' area
• A detailed shifting program with a timeline must be submitted to the implementing agency
• Eligibility certificate will be kept in abeyance during shifting period and made effective after completion of shifting

Gross Fixed Capital Investment (GFCI)

• Computed at the end of each year
• Includes additions to the approved project scheme made during the year
• Excludes original value of fixed assets shifted, disposed of, sold, written off, or replaced during the year

Incentives

• Ceiling will be reduced proportionately if GFCI is reduced due to shifting, disposal, sale, write-off, or replacement of fixed assets
• Excess incentives availed will be recoverable with 12% simple interest per annum

Re-appraisal of Project

• Can be done for projects with a change in project cost
• Requires permission from the implementing agency
• For mega and ultra-mega projects, prior approval from the Department of Industries is required

Eligible Investment

• Includes capitalized investment in fixed assets (net value) put to use at the site of the eligible unit or project
• Limited to the item-wise maximum limit approved by the term lending agency or financial institution

Direct Employment

• Means employees on the payroll of the company covered under the Maharashtra Profession Tax Act, 1975
• Excludes employees on the payroll of contractors

Finished Product

• Means the item(s) of manufacture by the eligible unit as per the approved project scheme
• Includes by-products or scraps generated during the main production activity

Sick Unit

• Means a Micro & Small Manufacturing Enterprise certified by the Directorate of Industries
• Can also refer to a Medium Manufacturing Enterprise or Large Scale Industry certified by the Board for Industrial and Financial Reconstruction (BIFR) or National Company Law Tribunal (NCLT)

Procedural Rules

• Laid down under Government Resolution, Industries, Energy and Labour Department, No. ID-7079/95227/(2540)/IND-8, dated 11th August, 1980
• Amendments to these rules will prevail in case of conflict

Year

• Refers to the financial year (1st April to 31st March)

Implementing Agencies

• Joint Director of Industries (Mumbai Metropolitan Region) for Mumbai and Mumbai Suburban Districts
• Concerned District Industries Centre for other districts

Financial Incentives for MSMEs

• Eligible units can avail a basket of incentives mentioned in Para Nos. 4.3, 4.4, 4.6, and 4.7
• Total quantum of incentives linked to the percentage of eligible Fixed Capital Investment (FCI)
• Incentives available for units in different taluka categories (A, B, C, D, and D+) with varying ceilings and eligibility periods