Uttar Poorva Transformative Industrialization Scheme (Unnati), 2024

[09th March 2024]

The Government of India is pleased to announce the Uttar Poorva Transformative Industrialization Scheme (UNNATI), 2024, for the North-Eastern Region.

Scheme 1. Scheme Title :-

This Scheme will be called Uttar Poorva Transformative Industrialization Scheme (UNNATI), 2024.

Scheme 2. Coverage :-

The Scheme will cover all 8 North-Eastern States, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.

Scheme 3. Commencement and Duration of the Scheme :-

It will be effective from 09.03.2024 and will remain in force up to and inclusive of 08.03.2034 and 8 more years for meeting committed liabilities.

Scheme 4. Brief about the Scheme :-

UNNATI, 2024 is designed to strengthen the Industrial Eco-System in the North East and attract New Investment. The Scheme is divided into two parts i.e Part A and Part B

Part A: Part A provides incentives to eligible new industrial units and those undergoing substantial expansion.

Part A will have three components namely Capital Investment Incentive (CII), Central Interest Subvention (CIS), and Manufacturing & Services Linked Incentive (MSLI)

4.2. Part B: Part B is for developing an industrial eco-system through activities such as (i) Project Monitoring Unit (PMU) and Project Implementation Unit (PIU); (ii) Third Party Evaluation and Impact Assessment; and (iii) Portal Development (aligned with National Single Window System, NSWS), Capacity Building workshops, IEC and others as decided by the Steering Committee

Scheme 5. Application period for registration :-

Registration shall commence from 09.03.2024 and will continue till 31.03.2026 subject to the guidelines issued in this regard. Notwithstanding the permissible period of registration till 31.03.2026, further grant of registration and receipt of application in the portal under the scheme will be stopped prior to this period if the projected financial liability of the units that are granted registration reaches 115% of the total financial outlay of the scheme. Further, details for registration will be issued separately in registration guidelines of the scheme.

5.1. Merely applying for registration will not entitle any applicant to claim incentives under this scheme. Further details for claiming incentives shall be provided in the claim guidelines of this scheme.

5.2. No unit will have the right to register under thisscheme or claim the benefits unless it is specifically approved by the competent authority as laid out in the guidelines.

Scheme 5.3.

The registration will be granted by the competent authority as laid out in the guidelines, which will, inter alia, consider the prima facie eligibility of the unit and availability of approved funds.

5.4. All units willing to avail of incentive(s) under this scheme have to apply for registration through the online portal.

Scheme 6. Grant of registration :-

All registration applications shall be disposed of by 30.09.2026 unless otherwise extended.

Scheme 7. Definitions :-

7.1. Approved Funds means financial outlay allocated under Parts A and B of this Scheme.

7.2. Arms length price as defined under the provisions of the Income Tax Act,1961.

7.3. (a) Unit means any industrial manufacturing entity or service sector enterprise registered under Goods & Service Tax Act, 2017 excluding the Industrial Unit in which Government has more than 50% stake/shareholding.

(b) New Unit

(i)       For the manufacturing sector, a unit registered under this scheme on or after 09.03.2024 but not later than 30.09.2026. Such a unit has to commence commercial production within 4 years from the date of grant of registration.

(ii)      For the Service sector, a unit registered under this scheme on or after 09.03.2024 but not later than 30.09.2026. Such a unit has to commence commercial operation within 4 years from the date of grant of registration.

(iii)     A new unit will be required to fulfill the following conditions:

It is not formed by splitting up, or reconstruction of a business already in existence.

It is not formed by transfer to the new unit of plant or machinery previously used for any other purpose.

It has not relocated from elsewhere and/or is not an existing unit reopened under a new name and style.

(iv)    New unit must have a new GSTIN and unit cannot use a GSTIN of any existing unit.

Provided that heritage property not in use before 09.03.2024 is restored thereafter for commercial or hospitality or tourism services on a commercial basis, it will also be considered as a new unit as per eligibility conditions to be further elaborated in detailed guidelines.

(c) Existing Unit means a unit that has commenced commercial production/operation prior to 09.03.2024 and having a valid GST Identification Number (GSTIN) in the concerned State of North-Eastern Region.

(d) Substantial expansion means an additional investment of a minimum of twenty-five percent (25%) of the total amount of investment already made in an existing unit in plant and machinery (for manufacturing sector) or construction of building and other durable physical assets (for service sector).

The additional investment should increase production capacity/enhancement of Services or diversification and should not be a mere replacement of existing plant and machinery.

7.4. (a) Manufacturing unit means a unit that carries out the processing of raw material or inputs in any manner that results in the emergence of a new product having a distinct name, character, and use. The term ?manufacturing unit shall be construed accordingly.

(b) Services unit includes Hotels & Hospitality, Tourism (Homestays, Adventure, Health Tourism, Eco-Tourism & MICE). Education (Vocational & Digital/e-learning). Bio-tech, Fin-tech & Financial Services. Healthcare (Secondary & Tertiary). IT-ITeS, BPO. EV Charging Stations and Tech-oriented start-ups/units providing services in the field of education, Primary Healthcare, and Agriculture.

(c) Commencement of Commercial Production (Manufacturing Sector) means starting manufacturing of finished goods on a commercial basis which is preceded by trial production and installation of complete plant and machinery for manufacturing finished products in commercial quantity and all raw materials, consumables, etc. required for manufacture are available.

(d) Commencement of Commercial Operation (Service Sector) means starting of operation/delivering of services on a commercial basis.

7.5. Raw material means materials or substances used by any unit to produce or manufacture the finished goods.

7.6. Finished Good means the goods produced and supplied by an industrial unit and for which it is registered under the Scheme.

7.7. Plant and Machinery in case of Manufacturing units shall cover industrial plant and machinery as erected at the site, which is newly purchased from the open market at an arms length price. It excludes relocated/recycled/refurbished plants and machinery. The details of core and non-core components of Plant & Machinery shall be provided in the guidelines.

7.8. Building and other durable physical assets in the case of service sector units shall cover new buildings and other durable physical assets for a service sector unit where purchases have been made following an arms length pricing. The details of durable physical assets shall be provided in the guidelines.

7.9. Zone A and Zone B Districts means Zone A (Industrially Advanced Districts) and Zone B (Industrially Backward Districts) based on NER Districts SDG Index prepared by NITI Aayog, UNDP and Ministry of Development of North Eastern Region. The list shall be provided by the Steering committee in consultation with NITI Aayog and State Governments of NER.

Scheme 8. Eligibility for availing incentives :-

8.1. All units eligible under the Manufacturing and Service sector will be granted incentive(s) under this scheme as defined under respective incentives.

8.2. Manufacturing sector units with a minimum investment of Rs. 1.0 crore in plant & machinery will be eligible for incentives under this scheme. For calculation of any incentive under the scheme the eligible value shall be determined based on the investment made in Plant & Machinery in manufacturing sector. The scheme shall not apply to the units that manufacture the products listed in the Negative list in Annexure -I.

8.3. Service sector units with a minimum investment of Rs. 50 Lakh in building and other durable physical assets will be eligible for incentives under this scheme. For calculation of any incentive under the scheme the eligible value shall be determined based on the investment made in building and other durable physical assets.

The scheme shall be applicable only for services listed in the Positive list in Annexure-II.

8.4. For Micro Industries the minimum investment limit shall be ?50 lakhs for both manufacturing and service sector.

8.5. For Micro industries (defined as per MSME industry norms), the Plant & Machinery calculation will include the cost of building construction as well.

8.6. All eligible units have to commence commercial production/operation within 4 years from the date of grant of registration. The unit shall be allowed to sell or supply* the finished goods produced/manufactured in the intermediate phases. It is envisaged that certain units may install plant & machinery in phases. Thus, there will be a provision of phased commencement of production (maximum 3 phases), but the incentives will only flow after the final commencement of production. The date of commencement of commercial production after the completion of all phases shall not be later than 4 years from the date of registration under the scheme.

(*Supply means supply of goods and services as defined under GST Act, 2017)

8.7. The final invoice for procurement of Plant & Machinery or for construction of building and durable physical assets must be on or after 09.03.2024 to be considered eligible under the scheme.

8.8. The maximum eligible benefit to one unit from all scheme components is Rs. 250 crores.

8.9. (a)Cost of Plant and Machinery (in manufacturing sector) that is essential for manufacturing of finished goods but excludes the cost of land, consumables, disposables or any other item charged to revenue.

(b) Cost of construction of Building and procurement of other durable physical assets for the service sector unit that are basic to running that particular unit in the service sector but excludes cost of land, consumables, disposables or any other item charged to revenue.

8.10. Units availing benefits under other schemes of the Government of India will not be eligible for same incentives under this Scheme. However, the eligible value of Plant & Machinery (Manufacturing Sector) or construction of building and durable physical assets (Service sector) for claiming other eligible incentives under UNNATI will be calculated by Department of Industries of the concerned State Government.

8.11. The beneficiary of this scheme has to furnish an undertaking to abide by the terms and conditions of the scheme.

The format of undertaking shall be provided in registration guideline.

8.12. Eligibility under this scheme will be subject to verification of investment (core and non-core) in plant and machinery (in the manufacturing sector) and cost of construction of building and other durable physical assets (in the service sector). However, the incentive will be eligible only for core segment in both manufacturing and service sector. Details will be laid down in the guidelines.

Scheme 9. Nodal agency :-

The North-Eastern Development Financial Corporation Ltd. (NEDFi) will be the nodal agency for the disbursal of incentives under various components of the scheme. The nodal agency will release incentives only through e-transfer to the designated bank accounts of eligible units.

Scheme 10. Governance and Implementation Mechanism :-

10.1. The scheme will be implemented under the supervision of the Government of India i.e. the Department for Promotion of Industry & Internal Trade (DPIIT) and implement through State machinery with the support of Project Monitoring Unit (PMU) and Project Implementation Unit (PIU)

10.2. Committees constituted for governance and implementation of this scheme, along with their Power and function, are as follows:

10.2.1. The Steering Committee :-

(a)      Constitution

(i)       Secretary, DPIIT as Chairperson

(ii)      Representative of Ministry of Development of North-Eastern Region

(iii)     Representative of the Ministry of Environment, Forest and Climate Change

(iv)    Representative of the Ministry of Micro, Small, and Medium Enterprises

(v)      Representative of NITI AAYOG

(vi)    Representative of CBIC

(vii)   Additional Secretary and Financial Advisor (AS&FA), DPIIT

(viii)  Chief Secretary/Principal Secretary of all North-Eastern States

(ix)    Joint Secretary, DPIIT, in charge of North-East Region Schemes Section

(x)      Special members can be invited from various Ministries if required

(b)      Power and functions:

(i)       The Steering Committee will monitor the smooth implementation and issue detailed guidelines for execution, and issue clarifications whenever interpretational issues arise.

(ii)      The Committee will decide on the proposals for implementation, monitoring and IT support as per needs and contingencies under the administrative cost component.

(iii)     The Committee shall also utilize the services of the Central Board of Indirect Tax and Customs (CBIC) and Central Board of Direct Tax (CBDT) and shall periodically invite appropriate officers like jurisdictional Chief Commissioners of GST, Income Tax, and Commissioner of GST as Special Invitees, for seeking their inputs with particular emphasis on preventing fraudulent or non-genuine claims.

(iv)    The Committee will get done inspections to prevent misuse of the Scheme through the engagement of an independent third party or empanelment of qualified personnel for verification.

(v)      The detailed guidelines on eligibility under the service sector (including Homestays, Adventure Tourism, Eco-Tourism, Waste Management, and Vocational Education) shall be issued by the Steering Committee.

(vi)    Decision-making on the proposals for Part B of the Scheme.

(vii)   The Committee shall be authorized to amend the categorization of districts into Zone A and Zone B.

However, this amendment in Zone A and Zone B categorization shall be in consultation with the NorthEastern States.

(viii)  The outlay for Part A and Part B is fungible and can be done at the discretion of the Steering Committee with the approval of the Department of Expenditure.

(ix)    60% of the outlay of Part A is earmarked to the states and can be changed between the states at the discretion of the Steering Committee with the approval of the Department of Expenditure, under exceptional circumstances and with reasonable justification.

10.2.2. The State Level Committee :-

(a)      Constitution:

(i)       Chief Secretary of the state as Chairperson

(ii)      Sr. most State Secretary, Department of Industries

(iii)     Sr. most State Secretary, Department of Finance

(iv)    Representative of DPIIT (not below the rank of Under Secretary)

(v)      Any other member(s) representing the relevant sectors related to the projects under consideration may be nominated by the Chief Secretary as Special Invitee(s)

(b)      Power and functions: The State Level Committee will also monitor the overall implementation of the Scheme and put in place proper checks and balances for ensuring transparency and efficiency in processing and approval of claims under the Scheme to avoid, inter-alia, duplication of release of any incentive under the Scheme. Details of further delegation of powers for granting registration of unit, processing and sanction of claims will be worked out while preparing the detailed guidelines of the scheme.

10.2.3. Project Management Unit (PMU) and Project Implementation Unit (PIU) :-

Project Management and monitoring shall be done by DPIIT by deputing its own officers as well as independent thirdparty random checks to ensure compliance with all notifications and guidelines under the scheme. An appropriate Project Management Agency (PMA) shall be appointed at DPIIT level to assist them in project management ensuring timely implementation and smooth monitoring and evaluation of the project. 100% grant will be provided by Government of India towards expenditure incurred on PMA as per provision in the scheme i.e. up to 0.4 % of total outlay. Similarly, there will be a PIU appointed for each state by DPIIT and DPIIT will bear the costs up to 0.6% of the sanctioned outlay. The respective states have to bear any cost beyond the sanctioned outlay (which would be divided on a similar basis as earmarked funds), if any, from their own resources. The major roles and responsibilities of PMU & PIU are at Annexure- III.

Scheme 11. Incentives under the Scheme :-

Subject to eligibility, the following incentives are provided under this scheme:

(i)       Capital Investment Incentive (CII)

(ii)      Capital Interest Subvention (CIS)

(iii)     Manufacturing & Services linked incentive (MSLI)

11.1.1. Capital Investment Incentive (CII) :-

(a)      Eligibility:

The following units will be eligible to avail of this incentive:

                                           (i)            New units, as well as Expanding units will be eligible to avail of this incentive in both Zone A and Zone B.

                                          (ii)            An applicant (with the same name and GST number) can get incentives on maximum of one unit or application under this scheme in each state

(b)      All eligible units located in Zone A District in the States of North-Eastern Region will be provided Capital Investment Incentive @30% of the eligible investment made in plant and machinery (for the manufacturing sector) or for construction of building and installation of other durable physical assets (for services sector) with a maximum limit of Rs. 5.00 crore. For those sectors where GST is not applicable, the maximum limit of this incentive will be Rs. 10.00 crore.

(c)      All eligible units located in Zone B category blocks in the States of North-Eastern Region will be provided Capital Investment Incentive @50% of the eligible investment made in plant and machinery (for manufacturing), or for construction of building and installation of other durable physical assets (for services sector) with a maximum limit of Rs.7.50 crore. For those sectors where GST is not applicable, the maximum limit of this incentive will be Rs. 10.00 crore.

(d)      A new unit registered under the scheme will not be eligible to avail of the benefit under substantial expansion. A unit can avail of this incentive only once under the scheme.

(e)      Physical verification of the units is mandatory before availing of this incentive.

(f)       Detailed procedures for availing of the incentive shall be laid down in the guidelines.

11.1.2. Capital Interest Subvention (CIS) :-

(a)      Eligibility:

(i)       New units, as well as Expanding units of both the manufacturing and service sectors will be eligible to avail this incentive.

(ii)      Interest on loan up to the principal amount of Rs. 250crore for investment in eligible plant and machinery (manufacturing sector) or Building and all other durable physical assets (for service sector) shall be eligible for Capital Interest subvention. If the total principal amount of the loan (loan being defined as a whole and not as per draw-down amount in each tranche) is more than Rs.250 crore, then interest on the loan amount exceeding Rs. 250 crore would not be eligible for Capital Interest Subvention.

(iii)     The Capital Interest Subvention would be eligible on the amount disbursed and not on the principal amount sanctioned for the term loan.

(b)      All eligible units located in Zone A category blocks in the States of North-Eastern Region can avail of Capital Interest Subvention at the annual rate of interest of 3% for a maximum of 7 consecutive years from any date after the date of application for registration under this scheme. However, disbursement of the eligible amount under this incentive shall begin only after the commencement of commercial production.

(c)      All eligible units located in Zone B category blocks in the States of North-Eastern Region can avail of Capital Interest Subvention at the annual rate of interest of 5% for a maximum of 7 consecutive years from any date after the date of application for registration under this scheme. However, disbursement of the eligible amount under this incentive shall begin only after the commencement of commercial production.

(d)      This incentive is applicable on the loans availed from Scheduled Commercial Banks or Financial Institutions registered by Reserve Bank of India.

(e)      Detailed procedure for availing of the incentive shall be laid down in the guidelines.

11.1.3. Manufacturing & Services Linked Incentive (MSLI) :-

(a)      Eligibility: Only New units having a valid GST Identification Number (GSTIN) will be eligible for benefit under this incentive.

(b)      The upper limit of incentive under this component shall be 75% (for ZoneA) and 100% (for ZoneB) of the eligible value of investment made in plant and machinery (for manufacturing sector) or construction of building and other durable physical assets (for services sector).

(c)      All eligible units of ZoneA & Zone B will be granted a Manufacturing & Services linked incentive (MSLI) equal to 100% of the Net payment of GST, i.e. GST Paid less Input Tax Credit, for a maximum period of 10 years from the date of commencement of commercial production/operation or till the validity of the scheme whichever is earlier.

However, GST paid on exported goods or services will not be counted towards eligible incentive amounts under this component.

(d)      The amount of incentive paid in a financial year will be one-tenth of the total amount of eligible incentive under this component subject to full payment of GST as per GST return filed for the claim period.

(e)      In case the Net GST paid by any unit in a financial year is more than one-tenth of the total amount of eligible incentive, the balance can be carried forward to the subsequent financial year(s). Further, if the unit cannot claim the full eligible amount of incentives in the first 3 years, the same can be carried forward to subsequent years. However, this will not be carried forward beyond the eligible period of 10 years or beyond the schemes validity, whichever is earlier.

(f)       Detailed procedures for availing of the incentive shall be laid down in the guidelines.

These shall be prescribed in the detailed guidelines to be issued separately.

Scheme 13. Processing/ scrutiny of claims :-

13.1. Claims filed under the scheme will be pre-scrutinized by a recognized independent audit agency to be appointed by DPIIT.

13.2. NEDFi will undertake pre-scrutiny of 10% of claims before disbursement of incentives.

13.3. All concerned Ministries/Departments of Government of India must amend their respective Acts/Rules/Notification etc. and issue necessary instructions for effecting these decisions.

Scheme 14. Rights of the Governments :-

14.1. In case any unit availing incentives under this scheme goes out of production/ operation permanently or changes the location of the whole or any part of a unit or disposes of a substantial part of its total fixed capital investment within 10 years after the date of commencement of production/ operation, then the unit will not be eligible to claim any incentive with effect from the date it goes out of production/ operation or changes its location.

Further, all such units will be liable to refund the entire grant or incentive availed if it goes out of production/ operation permanently or changes the location of the whole or any part of a unit or disposes of a substantial part of its total fixed capital investment within 5 years after the date of commencement of production/ operation.

14.2. If it is established that a unit has obtained incentive(s) by misrepresenting/suppressing an essential fact, furnishing of false information, the unit has to refund the entire grant or incentive availed with interest of 15% per annum. It will also be liable for criminal proceedings.

14.3. Concealment of input supplies or routing of third party or malpractices of similar kinds will render unit liable for forfeiture of further claims and recovery of all previous incentive(s) paid with interest @15% per annum.

14.4. The incentive(s) will be released through digital payment and Nodal agency will collect all information required by the DBT Mission in respect of beneficiary units. The nodal agency shall take an affidavit cum indemnity bond in this regard from the authorized signatory of the beneficiary unit.

14.5.The Nodal agency shall furnish a Certificate of Utilization of the incentive(s) in Form12(C) of General Financial Rules, 2017 in respect of disbursements to the DPIIT within 3 months from the date of receipt of the last installment/full amount.

Scheme 15.

No interest on account of delay in incentive payment can be claimed by the unit.

Scheme 16.

Minister in charge is authorized for making modification in the scheme as deemed necessary for implementation of the scheme within the broad contours.

Annexure-I

Negative List: For the Manufacturing Sector

The following manufacturing industries will not be eligible for benefits under Uttar Poorva Transformative Industrialization Scheme (UNNATI), 2024 for the North-Eastern Region:

(i)       All goods falling under Chapter 24 of the Central GST Tariff Act, 2017 which pertains to tobacco and manufactured tobacco substitutes.

(ii)      Pan Masala as covered under Chapter 24 of the Central GST Tariff Act, 2017.

(iii)     Plastic carry bags of less than 20 microns 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 and any subsequent amendments.

(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 (that are fossil-fuel based).

(vi)    Units not complying with environmental standards or not having applicable Environmental Clearance from M/o Environment & Forests and Climate Change or State Environmental Impact Assessment Authority (SEIAA) or not having requisite consent to establish and operate from the concerned Central Pollution Control Board/State Pollution Control Board.

(vii)   Low-value addition activities in goods such as preservation during storage, cleaning, operations, packing, repacking or re-labelling, sorting, alteration of retail sale price etc. excluding high-value packaging and processing.

(viii)  Cement Industry

(ix)    Arms & Ammunition

(x)      Any other industry or activity placed in negative list through a separate notification as and when considered necessary by the Steering Committee

Annexure-II

Positive List: For Service Sector

The following service sector industries, details of which will be given in the guidelines, will be eligible for benefits under Uttar Poorva Transformative Industrialization Scheme (UNNATI), 2024 for the North-Eastern Region:

Annexure-III

Roles & Responsibilities of PMU & PIU

Role & Responsibilities of PMU will primarily include:

- Deploy resources at DPIIT, New Delhi for effective implementation of the scheme.

- Capturing, analysis of data and preparation of reports for tracking status of the scheme.

- Financial review to track progress of the scheme on behalf of DPIIT.

- Coordinate with technical design & development agency and provide inputs for maintenance of online platform and creation/maintenance of dashboard for the scheme.

- Evaluation of implementation of various components of the scheme at regular intervals.

- Monitoring of physical and financial progress for each approved component and monitor the same on a periodical basis.

- Coordinate with State government, NEDFi (disbursing agency) and PIU for effective implementation of the scheme at ground level.

- Screening of Documents & Claims and physical inspection on behalf of DPIIT for randomly picked up cases, as and when required based on direction of DPIIT.

- Capacity building activities at central and state level.

- Any other function specially assigned by DPIIT.

Role & Responsibilities of PIU will primarily include:

Deploy resources at states for effective implementation of the scheme.

Assist the concerned state government departments in assessment & appraisal of applications based on various parameters as per the requirements of the scheme, which may include:

o Project report

o Land papers (Revenue papers regarding ownership/rent deed duly registered by the registering authority/ lease deed in case of government land)

o Bank loan sanction letter

o Appraisal report of the bank/financial institution

o Certificate of mandatory/obligatory registration/approval from the concerned department, as applicable.

Assist the concerned state department and other stakeholders in undertaking steps necessary for evaluation of specific applications and obtaining the final decision of the Competent Authority for forwarding the cases/applications to DPIIT for grant of registration and disbursement of incentives.

Assist the concerned state government departments in verifying the information filed in the registration and claim applications.

Undertake development of implementation plan in coordination with the state government departments to collate and disseminate information regarding the scheme, related guidelines, registration and claim process.

Coordinate with Nodal officers of concerned departments at state level for sector specific projects.

Understanding training requirements of various stakeholders at the state level including government officials, agencies and investors.

End-to-end organizing & management of knowledge sharing workshops with the state government officials at district level, potential investors and applicants.

Assisting PMU team at central level in creation of knowledge and training collaterals.

Hold awareness workshops for investors at district level.

Identify key bottlenecks in application and claim process at state and district level. Assist officials at district/DIC level in resolution of challenges and bottlenecks encountered during appraisal of applications.

Periodically organise camps at districts/DIC level to fast-track application and claim processes.

Carrying out the necessary activities for Investment Promotion.

Any other function specially assigned by DPIIT.