NORTH EAST
INDUSTRIAL DEVELOPMENT SCHEME (NEIDS), 2017
PREAMBLE
In pursuance of the
decision taken by the Cabinet in its meeting held on 21.03.2018, the Government
of India is pleased to announce North East Industrial Development Scheme
(NEIDS), 2017 for industrial units in the North Eastern Region comprising
States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim and Tripura to boost industrialization.
Scheme - 1. Scheme title.
The scheme may be called "North East
Industrial Development Scheme (NEIDS), 2017".
Scheme - 2. Coverage.
The scheme will cover States of Arunachal Pradesh,
Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura.
Scheme - 3. Commencement and duration.
It will be effective from 01.04.2017 and will remain
in force up to 31.03.2022.
Scheme - 4. Eligibility.
4.1 Unless
otherwise specified, all new industrial units in manufacturing sector and
services sector including Bio-technology and Hydel Power Generation Units upto
10 MW located in NER, will be eligible for incentives under the scheme.
4.2 The scheme
shall not be applicable to the industries listed in the Annexure-I.
4.3 All eligible industrial units will be entitled
to benefits under one or more components of this (present) scheme, even if such
units are getting benefits under other schemes of the Government of India.
4.4 The total
benefits from all components of the scheme put together shall be limited to the
total investment in plant and machinery subject to a maximum limit of Rs.200.00
crore per unit. Plant and Machinery for the service sector industrial unit
shall include cost of construction of building and all other durable physical
assets basic to the running of that particular service industry but exclude
cost of land and consumables, disposables or any other item charged to revenue.
4.5 Only new
industrial units shall be eligible under the scheme. A new unit will be
required to fulfil the following conditions:
(a) it is not formed by splitting up, or reconstruction of a business
already in existence.
(b) it is not formed by transfer to the new unit of plant or machinery
previously used for any other purpose.
(c) it has not relocated from elsewhere and/or is not an existing unit
reopened under a new name and style.
Scheme - 5. Definitions.
(a) 'Commencement of Commercial Production' means starting of manufacture of
finished products on commercial scale which is preceded by trial production and
installation of complete plant and machinery and on that day the plant must be
ready in all respects for manufacture of finished products in commercial
quantity and all raw materials, consumables, etc. required for manufacture are
available and as per date of registration with Central Excise/Goods and
Services Tax (GST) authorities.
(b) 'Effective steps' means one or more of the following steps:-
(i) that 10% or more of the capital issued for the industrial unit has been
paid up.
(ii) that any part of the factory building has been constructed.
(iii) that a firm order has been placed for any plant and machinery required
for the industrial unit.
(c) 'Finished Goods' means the goods actually produced by an industrial unit
and for which it is registered.
(d) 'Industrial Unit' means any industrial undertaking or eligible service
sector unit, other than that run departmentally by Government, which is a registered
business enterprise under Goods & Services Tax.
(e) 'Manufacturing Activity' means "an activity which brings about a
change in non-living physical object or article or thing (i) resulting in
transformation of the object or article or thing into a new and distinct object
or article or thing having a different name, character and use; or (ii)
bringing into existence of a new and distinct object, article or thing with a
different chemical composition or integral structure".
(f) 'Eligible Service Sector Unit' is an enterprise in the services sector
that requires significant capital expenditure and has significant employment
generation potential.
(g) 'New industrial unit' means an industrial unit which registers itself on
DIPP portal on or after the first day of April, 2017 but not later than 31st
day of March, 2022. Such units have to commence commercial production/
operation within 18 months of registration.
(h) 'Existing Industrial unit' means an industrial unit which commences
commercial production/ operation before 01.04.2017.
(i) 'Physical Working Capital' is defined to include all physical
inventories owned, held or controlled by the factory as on the closing day of
the accounting year such as the materials, fuels & lubricants, stores etc.,
that enter into products manufactured by the factory itself or supplied by the
factory to other for processing. Physical working capital also includes the
stock of materials, fuels & stores etc., purchased expressly for re-sale,
semi-finished goods and work in progress on account of others and goods made by
the factory which are ready for sale at the end of the accounting year.
However, it does not include the stock of the materials, fuels, stores etc.
supplied by others to the factory for processing. Finished goods processed by
others from raw materials supplied by the factory and held by them are included
and finished goods processed by the factory from raw materials supplied by
others are excluded.
(j) 'Raw Material' means any raw material actually required and used by an
industrial unit in manufacturing of the finished goods for which it is
requested.
(k) 'Working Capital' is the sum total of the physical working capital as
defined in Para (i) above and the cash deposits in hand and at bank and the net
balance of amounts receivable over amounts payable at the end of the accounting
year.
Working capital, however, excludes unused overdraft
facility, fixed deposits irrespective of duration, advances for acquisition of
fixed assets, loans and advances by proprietors and partners irrespective of their
purpose and duration, long term loans including interest thereon and
investments.
(l) 'Plant and Machinery' shall cover the cost of newly purchased industrial
plant and machinery as erected at site. Relocated / Recycled / Refurbished
plant and machinery is not eligible for assistance under the Scheme. Components
to be included / excluded for the purpose of scheme and for a manufacturing
unit is at Annexure II. The purchase of machinery should be from open market at
normal market price. It will be ascertained whether the purchase has been made
from a Related Party or without following an arms-length price discovery.
Scheme - 6.
The total incentives availed by an eligible
industrial unit under the scheme should not exceed the total investment in
plant and machinery subject to a maximum limit of Rs.200.00 crore per unit. The
following incentives will be provided to eligible industrial units on
reimbursement basis:
1.
Central Capital Investment Incentive for access to
credit (CCIIAC)
2.
Central Interest Incentive(CII)
3.
Central Comprehensive Insurance Incentive (CCII)
4.
Goods and Services Tax (GST) Reimbursement
5.
Income Tax (IT) Reimbursement
6.
Transport Incentive(TI); and
7.
Employment Incentive (EI)
6.1 There will be
an Empowered Committee chaired by Secretary, Department of Industrial Policy
and Promotion with Secretaries of Ministry of Development of North Eastern
Region, D/o Expenditure, representative of NITI Aayog and Secretary of the
concerned Ministries/Departments of Government of India dealing with the
subject matter of that industry as its members as also the concerned Chief
Secretary/Secretary (Industry) of the NER State where the beneficiary unit
claiming incentive is located for selection of beneficiaries under the scheme.
While examining the proposals for incentive, due consideration will be given to
factors like cost disadvantage, project viability, bank-ability, employment
generation and promoters' risk capital. Preference will also be given to
eligible industrial units under the Micro, Small and Medium Enterprises (MSME).
6.2 Central
Capital Investment Incentive for access to credit (CCIIAC)
(a) All eligible new industrial units in the manufacturing and service
sector located anywhere in the North Eastern Region will be provided Central
Capital Investment Incentive for access to credit (CCIIAC) @ 30% of the
investment in plant and machinery with an upper limit of Rs.5.00 crore.
(b) The project cost will need to be appraised by a Scheduled Commercial
Bank or Financial Institution before the proposal of assistance is approved by
the Empowered Committee of DIPP. The specific absolute amount of total
assistance shall be indicated in the government sanction. 10% of government
assistance will be allowed to be used for project financing in the beginning
and the balance 90% will be kept in an escrow account. The government
assistance will be reduced pro - rata in case the project is completed at a
lesser cost. Full assistance will be released on the basis of certificate
issued by Competent Authority of the bank that the capex on the project report
and sanction thereof is in place and Plant & Machinery has been put to use.
(c) The government does not commit itself to increase in the scale of
assistance in case of cost escalation. In case the project is foreclosed or
abandoned midway the entire assistance released by government will be refunded
to DIPP.
6.3 Central
Interest Incentive (CII)
(a) All eligible new industrial units located anywhere in the North Eastern
region shall be given an interest incentive @3% on working capital credit
advanced by the Scheduled Banks or Central/State financial institutions for
first 5 years from the date of commencement of commercial production/
operation. The incentive will be so restricted as to ensure that subsidized
interest rate is not below the Marginal Cost of funds based Lending Rates
(MCLR) of the lending institution.
(b) For the purpose of this Scheme, the working capital requirement of a
unit shall be capped at @ 25 % of their annual turnover. Inventory norms may be
applied, if necessary, after providing for aforesaid maximum level. In respect
of such units for which norms have not been laid down/are not applicable, the
request of working capital should be considered favorably by the Empowered
Committee so long as the working capital is not very much above such maximum
level. Special norms can also be evolved for inventory and receivables.
6.4 Central
Comprehensive Insurance Incentive (CCII)
(a) All eligible new industrial units located anywhere in the North Eastern
region will be eligible for reimbursement of 100% insurance premium on
insurance of building and Plant & Machinery for a maximum period of 5 years
from the date of commencement of commercial production/ operation.
(b) For the purpose of insurance incentive, Industrial Unit shall mean any
industry which is included in Fire Policy 'C' as per All India Fire Tariffs.
The policy shall be issued by the Insurance Company on market valuation to be
declared by the proposer.
6.5 Goods and
Services Tax (GST) Reimbursement
(a) All eligible new industrial units will be eligible for reimbursement of
Goods and Services Tax (GST) paid on finished products manufactured in the
North Eastern Region up to the extent of the central share of the CGST and IGST
for a period of 5 years from the date of commencement of commercial production
subject to the following condition:
(i) GST reimbursement on finished goods is applicable only on the net GST
paid, other than the amount of Tax paid by utilization of Input Tax credit
under the Input Tax Credit Rules, 2017.
6.6 Income Tax
(IT) Reimbursement
The industrial unit set up under this Scheme can
claim reimbursement of central share of income tax for first 5 years, including
the year of commencement of commercial production by the unit.
6.7 Transport
Incentive (TI)
(a) All eligible new industrial units can avail incentive on transportation
of only finished goods through Railways or the Railway Public Sector
Undertakings, Inland Waterways or scheduled airline for a period of five years
from the date of commencement of commercial production/ operation, subject to
production of actual receipts. The terms and conditions of Transport incentive
through different modes are as follows:
(i) Up to 20% of the cost of transportation including the incentive
currently provided by Railways or the Railway PSUs for movement of finished
goods by rail from the railway station nearest to the location of industrial
unit to the railway station nearest to the location of the buyer.
(ii) 20% of the cost of transportation for finished goods for movement
through Inland Waterways Authority of India from the port nearest to the
location of industrial unit to the port nearest to the location of the buyer.
(iii) 33% of cost of transportation of air freight by scheduled airlines and
Non-Scheduled Operator Permit (NSOP) holders approved by DGCA for perishable
items/goods (as defined by IATA) from the airport nearest to the place of
production to any airport within the country, nearest to the location of the
buyer.
6.8. Employment
Incentive (EI)
DIPP shall be paying additional 3.67% of the employer's
contribution to Employees' Provident Fund (EPF) in addition to Government
bearing 8.33% Employee Pension Scheme (EPS) contribution of the employer in the
Pradhan Mantri Rojgar Protsahan Yojana (PMRPY).
Scheme - 7. Mandatory requirement.
7.1 The Scheme requires that all eligible
industrial units would have to register under the Scheme with Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry, Govt. of
India, through the portal prior to being eligible for any benefit under this
scheme. In this regard, an online application process shall be developed under
which the applicants have to submit applications along with the DPR.
7.2 The Department of Industrial Policy and
Promotion would separately issue detailed instructions for the use of online
portal for NEIDS and registration of eligible units.
7.3 The final grant of registration/in-principle
approval will be decided by the Committee, which will, inter-alia, consider the
prima-facie eligibility of the industrial unit, availability of budget and
decide the eligibility for registration under the Scheme. No Industrial unit
will have the right to register under NEIDS or claim the benefits unless it is
specifically approved by the Central Government. No interest on account of
delay in payment of incentive can be claimed by the unit. The beneficiary of
this Scheme has to furnish an undertaking to abide by the terms and conditions
of the Scheme.
7.4 The units should start commercial production
within 18 months of approval.
7.5 Units which have commenced production on or
after 01st of April, 2017 will be allowed to register with DIPP on or before
30th of September, 2018.
Scheme - 8. Nodal agency.
8.1 The North East
Industrial Development Finance Corporation Ltd. (NEDFi) will be the nodal
agency for disbursal of incentives under various components of the Scheme.
NEDFi will release incentive only through e-transfer to designated bank
accounts of the eligible industrial units.
Scheme - 9. Process of Scrutiny of claims.
9.1 Incentive claims under Capital Investment
Incentive and Transport Incentive received in DIPP will be pre-scrutinized by a
recognized independent audit agency. NEDFi will conduct post-audit of 10% of
claims released every time. The Chief Controller of Accounts of DIPP will also
conduct post-audit of 20% of incentive claims released in each financial year.
9.2 Government reserves the right to modify any
part of the Scheme in public interest.
9.3 All concerned Ministries/Department of
Government of India are required to amend their respective Acts/ Rules/
Notification etc. and issue necessary instructions for giving effect to these
decisions.
Scheme - 10. Rights of the Centre/State Government/Financial Institutions.
10.1 If the
Central Government/State Government/Financial Institution concerned is
satisfied that an industrial unit has obtained incentive(s) by misrepresenting
an essential fact, furnishing of false information or if the unit goes out of
commercial production/ operation within 5 years after commencement of
commercial production/ operation, the Central Government/ State Government /
NEDFi may ask the unit to refund the grant or incentive after giving an
opportunity of being heard to the unit. The incentive(s) will be released
through digital payment and NEDFi would collect all information required by the
DBT Mission in respect of beneficiary industrial units. NEDFi may take an
affidavit in this regard from authorized signatory of the beneficiary unit. An indemnity
bond may also be signed between the industrial unit and NEDFi prior to
disbursement of incentives, providing for undertaking on the part of the
beneficiary unit to comply with all the requirement of the scheme.
10.2 Concealment
of input supplies or routing of third party or non-NER production for claims or
malpractices of similar kinds will render the industrial unit liable for
forfeiture of further claims and recovery of all previous subsidies with
interest @ 15% per annum.
10.3 Without
taking prior approval of the Union Ministry of Commerce & Industry
(Department of Industrial Policy and Promotion) /State Government/Financial
Institution concerned, no owner of an industrial unit after receiving a part or
the whole of the incentive will be allowed to change the ownership of the whole
or any part of industrial unit or effect any substantial contraction or dispose
of a substantial part of its total fixed capital investment within a period of
5 years after its going into commercial production. The unit will also be
required to keep DIPP informed about change in location or contact information.
10.4 In respect of
all units to whom the incentive is disbursed by NEDFi, certificate of
utilization of the incentive(s) in Form 12(C) of General Financial Rules, 2017
for the purpose for which it was given shall be furnished to the Department of
Industrial Policy and Promotion by the financial institution/State Government
concerned, within a period of three months from the date of receipt of the last
installment/full amount.
10.5 After
receiving the incentive(s), each industrial unit shall submit Annual Progress
Report (APR) to the Department of Industrial Policy and Promotion/ State
Government concerned, about its working for a period of 5 years after going
into production.
Scheme - 11.
Detailed guidelines for implementation of scheme
shall be issued separately.
Negative List:
The following industries will not be eligible for
benefits under NEIDS, 2017
(i) All goods falling under Chapter 24 of the First Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986) which pertains to tobacco and manufactured
tobacco substitutes.
(ii) Pan Masala as covered under Chapter 21 of the First Schedule to the
Central Excise Tariff Act, 1985 (5 of 1986).
(iii) Plastic carry bags of less than 20 micron as specified by Ministry of
Environment and Forests Notification No. S.O. 705 (E) dated 02.09.1999 and S.O.
698 (E) dated 17.6.2003.
(iv) Goods falling under Chapter 27 of the First Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986) produced by Petroleum or Gas refineries.
(v) Plantation, Refineries and Power generating Units above 10 MW.
(vi) Coke (including Calcined Petroleum Coke), Fly Ash, Cement, Steel Rolling
Mills
(vii) Units not complying with environment standards or not having applicable
Environmental Clearance from M/o Environment & Forests and Climate Change
or State Environmental Impact Assessments Authority (SEIAA) or not having
requisite consent to establish and operate from the concerned Central Pollution
Control Board/State Pollution Control Board also will not be eligible for
incentive under the scheme.
(viii) Low value addition activities like preservation during storage,
cleaning, operations, packing, repacking or re-labelling, sorting, alteration
of retail sale price etc. take place excluding high value packaging and
processing.
(ix) Any other industry/activity placed in negative list through a separate
notification as and when considered necessary by the Government. It will be
effective from the date of such notification.
(x) Gold and gold dore.
A.
Components to be included for
computing the value of Plant and Machinery under CCIIAC in the manufacturing
sector :
(i) Cost of Industrial Plant & Machinery including taxes and duties i.e.
cost of mother production equipment used for carrying out manufacturing
activities.
(ii) Cost of Productive equipment such as tools, jigs, dyes and moulds,
insurance premium etc. including taxes and duties.
(iii) Electrical components necessary for plant operation on the plant side
from where meter is installed up to the point where finished goods is to be
produced/ dispatched (i.e. H.T. Motors, L.T. Motors, Switch Boards, Panels,
Capacitors, Relay, Circuit Breakers, Panel Boards, Switchgears).
(iv) Freight charges paid for bringing Plant & Machinery and equipment
from the supplier's premises to the location of the unit.
(v) Transit Insurance premium paid.
(vi) The amount invested in goods carriers to the extent they are actually
utilized for transport of raw materials and marketing of the finished products.
B.
Components which will not be
considered for computing the value of Plant & Machinery under CCIIAC in the
manufacturing sector :
(i) Loading and unloading charges
(ii) Sheds/ buildings for Plant & Machinery
(iii) Miscellaneous fixed assets such as DG sets, Excavation/ Mining
equipments, handling equipments, electrical components other than those
mentioned at A (iii) above.
(iv) Working Capital including Raw Material and other consumable stores.
(v) Commissioning cost
(vi) Captive Power Plants
(vii) Storage equipments
(viii) Weigh bridge, Laboratory testing equipment.
C.
Admissibility of erection and
installation charges in the manufacturing sector
Erection and installation charges will be payable
on actual basis and will be restricted to the cost indicated in the Appraisal
Note of the Financial Institutions which provided loan to the industrial unit.