Guidelines on Production Linked Incentive (PLI) Scheme for Food Processing Industry

Guidelines on Production Linked Incentive (PLI) Scheme for Food Processing Industry

Objective

The objective of the scheme is to support the creation of global food manufacturing champions promote Indian brands of food products; increase employment opportunities for off-farm jobs, ensure remunerative prices of farm produce and higher income to farmers.

The tenure of the Scheme is six years from Financial Year 2021-22 to Financial Year 2026-27.

Components

The scheme has three broad components.

The first component relates to incentivising manufacturing of four major food product segments viz. Ready to Cook/ Ready to Eat (RTC/ RTE) including millet-based foods, Processed Fruits & Vegetables, Marine Products & Mozzarella Cheese.

The Second component is for incentivising Innovative/ Organic products of SMEs across all the above four food product segments including Free Range – Eggs, Poultry Meat & Egg Products.

The third component relates to support for branding and marketing abroad to incentivise the emergence of strong Indian brands

Eligibility Criteria for different Categories of Applicants

Category-I:
Segments Minimum Sales of All Food Products in 201920 (Rs Crore) Minimum Investment (Rs Crore)Segments Minimum Sales of All Food Products in 2019
RTE/ RTC500100
Processed Fruits & Vegetables250  50
Marine60075
Mozzarella Cheese15010 MTPD Plant-Rs.23 cr
   
Category-II:
Udyog Aadhar/ Udyami Registered;Achieved Minimum Sales of Rs 1 crore during 2019-20 for each of the innovative/ organic products proposed to be incentivised; Applicant for Organic Product shall be registered with APEDA for the organic product proposed to be incentivised
 
Category-III:
Only Indian Brands are covered for selling food products completely manufactured in India;Branding & Marketing shall be undertaken either by the Applicant directly or through its subsidiary or any other Agency.

Rates of Incentives on Incremental Sales

YearRTC/ RTEProcessed F & VMarine Products *Mozzarella Cheese
2021-2210%10%6%10%
2022-2310%10%6%10%
2023-2410%10%6%10%
2024-2510%10%6%8%
2025-269%9%5%6%
2026-278%8%4%4%

Note : 10% Incentive Rate for Value Added Marine products, as specified at Appendix-B for all 6 years. **Base Year for calculation of Incremental Sales would be 2019-20 for the first 4 years. For 5th & 6th years, the Base year would shift to 2021-22 & 2022-23 respectively

Production linked incentive scheme for automobile and auto sector

Production linked incentive scheme for automobile and auto sector

The PLI scheme is launched with the intent to make India ‘Atmanirbhar’ and has the following objectives:  subsidy for automobile sector

  • Encourage domestic manufacturing
  • Promotion of exports
  • Import substitution

Government is reportedly considering strict eligibility criteria for automakers to qualify for financial subsidies under the production-linked incentive (PLI) scheme. The new rules are likely to favour the creation of large manufacturing capacities for global standards in the country.

The ministry of heavy industries and public enterprises along with the commerce ministry are planning to offer sops on the basis of the incremental increase in export revenues from the base year instead of just total revenue from goods shipped in a given year, according to a report in Livemint. Besides, the ministries are also planning to shift the base year to FY19 from FY20.

In order to include export to neighbouring countries, the ministries might reduce “long-distance” sales to 2,500 km from 3,000 km. At present, Maruti Suzuki India Ltd, Hyundai Motor India, and Ford Motor India are the top three passenger vehicle exporters in the country. On the other hand, Bajaj Auto Ltd and TVS Motor are the leading exporters of two-wheelers.

Last year, in November, the Centre announced the PLI scheme to incentivise firms in 10 sectors to drive local manufacturing and improve exports. The automotive sector, which comprises vehicle makers and parts suppliers, will receive subsidies worth Rs 57,000 crore–the biggest chunk–as part of the scheme.

The PLI scheme has set ambitious targets on investment with expectation that PLI would result in additional investment of over Rs 1 lakh crore over a five-year period with potential for additional employment generation of 58.84 lakh jobs.

Auto PLI

Proposed scheme for Auto sector:

 Budget allocation to the Auto sector is expect to be Rs570bn for ramping up manufacturing  by way of various incentive schemes.  

The scheme is expect to have four plans for the auto sector: Global Sourcing Scheme, Vehicle Champion Scheme, Component Champion Scheme and Production-Linked Incentive Scheme.  

The manufacturers are expecte to get a cashback of between 2% and 12% of the incremental· sales revenue and incremental exports revenue. The scheme is expect to rolled out on Dec 31, 2020.

 Eligibility criteria:

  • In the case of vehicle manufacturers: Global group revenue > Rs100bn; Global investment in fixed assets Rs35bn AND Revenue from outside India >= Rs10bn.
  • In case of component manufacturers: Global group revenue > Rs10bn; Global investment in fixed assets Rs3.5bn AND Revenue from outside India >= Rs2bn.

Proposed incentive scheme for auto sector

Budget allocation INR 57,002 Cr for  ramping manufacturing  in india  by way of  various incentive  schemes

Vehical manifacturingGlobal  group  revenue > INR 10,000 croreGlobal investment in fixed assets ( gross block )  of INR 3500 croreRevenue from outside India >=1,000 core
Component manifacturingGlobal  group  revenue > INR 1,000 croreGlobal investment in fixed assets ( gross block )  of INR 350 croreRevenue from outside India >=200 core

Proposed  Incentive scheme for auto Sector

Vehicle champion scheme

Production linked incentive scheme

Global Sources scheme

Component  Champion Scheme

Electronics Manufacturing

Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing

Incentives

4% – 6% Production Linked Incentive for a period of 5 years – PLI scheme for Electronics manufacturing

Target Segments

Mobile Phones & Specified Electronic Components

Tenure

Five (5) years Application Period 4 months initially

Base Year

Financial Year 2019-20

Eligibility

The number of applications allowed per applicant for support under the Scheme shall be restricted to one . Subject to thresholds of incremental investment and incremental sales of manufactured goods

Applicability Incentives applicable from 01.08.2020

Invoice Value:

Unit Price charged on an invoice raised by an applicant on sale of manufactured goods, net of credit notes, discounts or any other adjustments and applicable taxes

Net Sales Turnover

Net Sales Turnover shall mean the Gross Sale Turnover net of credit notes (raised for any purpose), discounts (including but not limited to cash, volume, turnover, target or for any other purpose) and taxes applicable

• Manufacturing: Processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character [CGST Act – 2017]

 Employment:

Jobs which are directly involved in the production process or with related activities beginning from when materials enter a production facility and up until the resultant manufacturing good leaves the production facility. Such employment shall include on-roll, contractual and apprentice workforce in the country only

Domestic Value Addition:

A divided by B A. Net Sales Turnover minus value of non-originating material and services used in manufacturing B. Net Sales Turnover

Non-Originating Material and Services:

Material and Services whose country of origin is other than the country in which that material / service is used in manufacturing and any material / service whose origin cannot be determined

Competent Authority:

Competent Authority under the Scheme shall be defined as per delegation of powers for appraisal and approval of Public Funded Schemes and Projects vide OM No. 24(35)/PFII/2012 dated 05.08.2016 issued by Department of Expenditure, Ministry of Finance or any subsequent modifications thereof

Domestic Company(ies):

Domestic Company(ies) shall be defined as those which are owned by resident Indian citizens as defined in the FDI Policy Circular of 2017. A company is considered as ‘Owned’ by resident Indian citizens if more than 50% of the capital in it is beneficially owned by resident Indian citizens and / or Indian companies, which are ultimately owned and controlled by resident Indian citizens.

Group Company(ies):

Group Company(ies) shall mean two or more enterprises which, directly or indirectly, are in a position to:

• Exercise twenty-six percent or more of voting rights in other enterprise; or

 • Appoint more than fifty percent of members of board of directors in the other enterprise. (As defined in the FDI Policy Circular of 2017)

Eligibility Criteria

1.Eligible companies should be engaged in manufacturing of goods in India as covered under Target Segments.

2. Eligibility shall be subject to thresholds of Incremental Investment and Incremental Sales of Manufactured Goods (covered under Target Segments) over the base year

3. An applicant must meet threshold criteria to be eligible for disbursement of incentive for the year under consideration.

 4. In case an applicant does not meet threshold criteria for any given year, the applicant shall not be eligible for incentive in that particular year. However, the applicant will not be restricted from claiming incentive in subsequent years during the tenure of the Scheme, provided eligibility criteria are met for such subsequent years

Qualification Criteria and Ceiling

Eligibility shall be subject to qualification criteria for applicants under different Target Segments in the Scheme are as defined

Segment Qualification Criteria Ceiling on eligible applicants*Segment Qualification Criteria Ceiling on eligible applicants*Segment Qualification Criteria Ceiling on eligible applicants*
Mobile (Invoice value of INR 15,000 and above)Consolidated Global Manufacturing Revenue of the applicant (including its Group Companies), in the target segment, should be more than INR 10,000 Crore in the base year5
Mobile – DomesticConsolidated Global Manufacturing Revenue of the applicant (including its Group Companies), in the target segment, should be more than INR 100 Crore in the base year. Applicants under this category can only be Domestic Companies5
Specified Electronic ComponentsConsolidated Global Manufacturing Revenue of the applicant (including its Group Companies), in the target segment, should be more than INR 50 Crore in the base year.10

Sale of Manufactured Goods

Specific Conditions of Incremental Sale of Manufactured Goods (Covered under Target Segments) .

Total Sales of Manufactured Goods covered under Target Segments for such year over the Base Year, irrespective of Invoice Value (whether below or above INR 15,000 in case of Mobile Phones) shall be considered.

Calculation of Incentive

Net Incremental Sales of Eligible Product x Rate of Incentive Where

• Net Incremental Sales shall be Net Sales Turnover of Eligible Product for the period to which claim for disbursement of incentive pertains minus the Net Sales Turnover of said Eligible Product as per baseline

• The incentive amount payable will be subject to ceilings on Net Incremental Sales Turnover on which incentive shall be applicable as determined by EC

 • The annual financial outlay will be appropriated proportionately depending on number of applicants under each target segment. At the end of the year, unappropriated incentive amount resulting from under performance by any applicant(s), will be allocated to the remaining eligible applicants relative to their performance under the Scheme. Illustratively, if there are five (5) eligible applicants under Mobile Phones (Invoice Value of INR 15,000 and above) target segment, the year-wise incentive ceiling per applicant will be 1/5th of the annual financial outlay for the said target segment. 17 Disbursement Process

PLI Scheme – Eligibility Criteria

SegmentProposed Incentive Rate (%)Incremental Investment over Base Year Incremental Sales of Manufactured Goods over Base YearIncremental Investment over Base Year Incremental Sales of Manufactured Goods over Base Year
Mobile (Invoice value of INR 15,000 and above) *Year 1: 6% Year 2: 6% Year 3: 5% Year 4: 5% Year 5: 4%INR 1000 Crore over 4 Years Cumulative Minimum Year 1: 250 Year 2: 500 Year 3: 750  Year 4: 1000  Year 1: INR 4Year 1: INR 4,000 Crore Year 2: INR 8,000 Crore Year 3: INR 15,000 Crore Year 4: INR 20,000 Crore Year 5: INR 25,000 Crore
Mobile – DomesticINR 200 Crores over 4 Years Cumulative Minimum Year 1: 50 Year 2: 100 Year 3: 150 Year 4: 200Year 1: INR 500 Crore Year 2: INR 1,000 Crore Year 3: INR 2,000 Crore Year 4: INR 3,500 Crore Year 5: INR 5,000 Crore
Specified Electronic ComponentsINR 100 Crores over 4 Years Cumulative Minimum Year 1: 25 Year 2: 50 Year 3: 75 Year 4: 100Year 1: INR 100 Crore Year 2: INR 200 Crore Year 3: INR 300 Crore Year 4: INR 450 Crore Year 5: INR 600 Crore

PLI Scheme – List of Specified Electronic Components

 1. SMT components

 2. Discrete semiconductor devices including transistors, diodes, thyristors, etc.

 3. Passive components including resistors, capacitors, etc. for electronic applications

4. Printed Circuit Boards (PCB), PCB laminates, prepregs, photopolymer films, PCB printing inks

5. Sensors, transducers, actuators, crystals for electronic applications

6. System in Package (SIP)

7. Micro / Nano-electronic components such as Micro Electrome chanical Systems (MEMS) and Nano Electromechanical Systems (NEMS)

8. Assembly, Testing, Marketing and Packaging (ATMP) units

Production linked incentive scheme for textile industry

Production Linked Incentive Scheme For Textile Industry

Objective

The ₹10,683-crore scheme covers 10 technical products, 40 man-made items subsidy for textile industries Production Linked Incentive Scheme For Textile

The Textile Ministry is likely to impose caps on the incentive that can claim by a company under

the Production Linked Incentive (PLI) scheme for man-made fiber and technical textiles to ensure that big players do not corner a large part of the funds, according to sources.

“A cap on the maximum amount that can claimed under the PLI scheme by a textile company is likely

to put in place so that a big player can’t take most of the amount

that has earmark for the sector and there is a more even distribution,”

The PLI scheme was launche for 10 sectors in November 2011

to promote domestic manufacturing by providing financial incentives on incremental turnover for five years.

The textile sector has allocated ₹10,683 crore under the scheme which,

the Ministry has decided, will offere for incremental production in 40 identified man-made fibre items and 10 technical textiles products.

“The 40 MMF lines identified for the PLI push are the ones where India’s share in world market is negligible while

the 10 technical textile products are the top globally trad lines,” the source said.

As soon as the Union Cabinet approves the PLI scheme for the textile sector, which is in the last stages of discussion and finalisation, it will be notified by

the Textiles Ministry and the modules for registering interested players will made, the source said.

According to sources in the industry who have been part of the government’s discussion on the contours of the PLI scheme,

the incentive rates offere for the textiles sector is one of the highest (compared to other sectors).

It is likely to fixed at 9 per cent of turnover in the first year for companies with a turnover between ₹100 crore and ₹500 crore and 7 per cent for those above that.

In the subsequent four years it would keep tapering.

Eligibility norms

While the minimum turnover for eligibility under the scheme could be ₹100 crore, it need not be for the specific item for which a company wants to claim PLI.

“In case a textile company is presently engage in production of cotton, woollen or jute products but wants to get into a technical textile item that is covered under the PLI scheme, it can eligible if it meets the minimum turnover criteria through production of the other items.

While the incremental production has to of the item for which PLI is being claime

the applicant has to maintain the level of turnover of the items it was originally manufacturing

,” the source said. To claim incentive under the PLI scheme, the industry will have to get registere with the government.

“The eligibility is for both domestic sale and exports as restricting it to exports would make

the scheme incompatible at the WTO,” the official said.

PLI scheme for textile industry production linked incentive scheme for textile industry

for textile industry PLI scheme for textile industry production linked incentive scheme for textile industry

While the incremental production has to be of the item for which

SCHEME SEGMENTS AND INCENTIVES

Scheme Part- 1:

Any person, which includes firm / company willing to invest a minimum ₹300 Crore in
Plant, Machinery, Equipment and Civil Works (excluding land and administrative building cost) to produce
products of Notified lines, shall be eligible to apply for participation in this part of the scheme

Scheme Part-2:

Any person, which includes firm / company willing to invest a minimum ₹100 Crore in
Plant, Machinery, Equipment and Civil Works (excluding land and administrative building cost) to produce
products of Notified lines, shall be eligible to apply for participation in this part of the scheme

Incremental turnover and Incentive Rate

Incentive under the scheme will be provided on incremental turnover only
as per the rate indicated as under

Scheme Part-1Scheme Part-2
Performance
Year
Incremental turnover on minimum ₹300cr investmentRate of
incentive in
%
Incremental
turnover on
minimum
₹100cr
Rate of
incentive
in %
Year 1
(FY 2024-2025)
₹600 Crore15₹200 Crore11
Year 2
(FY 2025-2026)
25%1425%10
Year 3
(FY 2026-2027)
25%1325%9
Year 4
(FY 2027-2028)
25%1225%8
Year 5
(FY 2028-2029)
25%1125%7

Industrial policy 2019 Maharashtra subsidy for msme industries

Industrial policy 2019 Maharashtra

Policy objectives

  • To retain leadership positions in industrial investment
  • sustain high level of employment generation
  • promote regional balanced environmentally sustainable and inclusive industrial growth

Incentive for micro small and medium enterprises msme

Msme includes units per as per the definition of government of India – msme act 2006 as well as small industries with fixed capital investment of up to INR 50 crores


Incentive componentZone AZone BZOne CZone DZone D+Specified  areasNo of industry area
Eligible period7710101010
Ceiling  as % of FCI304050680100


100 percent exemption within the investment period for acquiring land including assignment of lease rights sale certificate and for term loan

State goods and services tax


Investment promotion subsidy of sgst paid paid by unit on the first sale of eligible product billed and deliver to the same entity within Maharashtra


Electricity Duty exemption

In zone A&B electric ity exemption only to 100 per cent export oriented name and IT/BT units for 7 years
Eligible new name in C  D D D+ , no industries district and naxalism area will be entitled to exemption from payment of electricity Duty for tenure equal to the eligibility period



Power subsidy


Subsidy for eligible unit shall be for 3 year from the date of commencement of commercial production

Unit located in vidharbha marathwada , north Maharashtra and district of Raigad . Ratnagiri and sindhudurgh will be extent of INR 1 per unit consume d

Other areas to the tune of INR .50 per unit consume


Intrest subsidy


Subsidy @ 5 per cent per annum up to maximum value of electricity consumed

Other incentives


Eligible msme unit in agro &food processing green energy biofuel and industry 4.0 shall be granted 20% additional fiscal assistance and two year additional eligibility period shall be applicable



NON fiscal Benefits


Reservation of 20% land MIDC areas LSI are defined as industrial unit satisfing the minimum threshold limits of fixed capital investment or direct investment of direct employment prescribed

Incentive for lagre scale industries

Incentive componenetZone AZone BZOne CZone DZone D+Specified  areas
Minimum FCI(INR)750cr500cr250cr150cr100cr100cr
Minimum direct employmet100750500400300250
Ceiling as % of FCI2540607080100
Eligible period777799

Stamp Duty exemption


100 percent exemption within the investment period for acquiring land including assignment of lease rights  sale certificate and for term loan

In case OF A and B , exemption is given only to information technology and biotechnology manufacturing units in IT and BT parks



State goods and services tax (sgst )


Investment promotion subsidy of SGST paid by unit on the first sale of eligible products billed and delivered to the same entity within Maharashtra. This shall be provided on first cm- first serve basis



Electricity Duty exemption


In zone A& B electricity exemption only 100% export oriented makes and IT /BT units for 7 years
Eligible new names in C, D, D+ no industries  

Other incentives

Eligible msme unit in agro &food processing green energy biofuel and industry 4.0 shall be granted 20% additional fiscal assistance and two year additional eligibility period shall be applicable

Mega and ultra mega project

Industrial units  satisfiying the minimum  threshold  limits of  fixed capital  investment  or direct employment prescribed shall be classifiled  as mega  units /ultra mega units

ParticularZone A & BZone CZone DZone D+Specified areasNo industries areaEntire state
ClassificationMega projectUltra mega
Minimum fixed  capital investment1500 Cr100Cr750Cr500Cr350Cr200Cr4000Cr
Minimum direct employment2000150010007505003504000

Incentives

  • All incentives  on ultra  mega  AAND MEGA unit shall  be offered gross  basis
  • Allocation of MIDC land to mega  project  on priority basis
  • Financial refund/incentive

PMFME-Scheme-1

Maharashtra Start-up Policy-2018

OBJECTIVES

Provide a platform and nurture the entrepreneurial aspirations amongst the citizens of Maharashtra  Empower start-ups to contribute Maharashtra State Innovative Start-up Policy-2018

significantly to Maharashtra’s economic growth and create employment opportunities for all sections of society  Develop robust infrastructure and ease the regulatory framework to spur the development of the start-up ecosystem

Over a period of five years i.e. 2018 to 2023, the Maharashtra State Innovative Start-Up Policy 2018 (the “Policy”) sets out to achieve the following:  Attract angel and seed stage investment of INR 5,000 Cr Develop at least 15 incubators in collaboration with industry and academia  Facilitate incorporation of at least 10,000 start-ups  Create 500,000 direct and indirect employment opportunities

Setting up Innovation Clusters

The GoM would leverage the strength bestowed upon various cities across the State and simultaneously build on it.

Each State of Maharashtra has its own forte like Mumbai is

the financial hub as well as a leader in AVGC segment.

Pune has its strength in Auto & Electronics industry as well as Hardware products, Aurangabad has attracted leading manufacturing industries.

Thus, based on existing and potential regional economic advantages,

urban local bodies and the local industries will work together to nurture sector-specific

start-ups and establish major urban/rural areas as innovation clusters.

Compensation for Stamp Duty & Registration Fees

For recognized incubators or start-ups that wish to rent space/property, 100% of stamp duty

and registration fee may compensated for first three years and 50% for the second tranche of three years

Funding Start-Ups

To ensure seamless and uninterrupted growth of start-ups, adequate funding support will be provided to the start-ups across stages

i.e. early/seed stage, growth stage and mature stage to ensure holistic growth of the entire ecosystem.

Start-ups that would qualify for the eligibility conditions in Maharashtra

and who are registered at the portal will entitled to receive grants and financial assistance.

The State envisages to develop a self-sustaining financial model for the start-ups in Maharashtra.

Fund-of-Funds

A fund-of-funds will established with an initial corpus of ₹100 Crore and a total corpus of ₹500 Crore over a period of four years.

Investments will made in SEBI-registered funds including early stage i.e. angel and seed funds. A professional investment management team will recruited for this purpose.

Certain risks of primary funds may hedged using this fund of funds to cover the cost of funds for concerned start-ups.

Infrastructure Fund

The State will institute an Infrastructure Fund to provide assistance to academic incubators,

CoEs, and tinkering labs to cover capital and operational expenditures in the establishment and/or expansion of facilities.

Special infrastructure like cloud, internet etc. may made available through various service providers.

Crowdfunding

Social entrepreneurs comes with a very different set of problems and hence,

the cost for bringing their product/service into market/doorstep is very high as compared with commercial enterprises.

The social enterprises in India require a huge amount of long-term capital and have long gestation period. The State will provide vital financial support to the Social sector start-ups4 . They may receive grants matching the contributions raised on verified online crowdfunding platforms, up to INR 5 lakhs. The number of individual donors must exceed 100.

Equity Grant Scheme For Farmer Producer Companies (Fpcs)

Equity Grant Scheme For Farmer Producer Companies (Fpcs)

The Scheme

shall address nascent and emerging FPCs, which have paid up capital not exceeding Rs. 30 lakh as on the date of application.

The Equity Grant Scheme enables eligible FPCs to receive a grant equivalent in amount to the equity contribution of their shareholder members in the FPC subject to a maximum of Rs. 10.00 lakh per FPC in two tranche.

Objectives of Equity Grant Fund Scheme

Equity Grant Scheme extends support to the equity base of Farmer Producer Companies (FPCs) by providing matching equity grants. The EGS shall operated by Small Farmers’ Agri Business Consortium (SFAC).

Enhancing viability and sustainability of FPCs Enhancing credit worthiness of FPCs Enhancing

the shareholding of members to increase their ownership and participation in their FPC.

Eligibility Criteria For FPCs

It is a duly registereFPC as define under Part IXA of the Indian Companies Act, 1956

It has raise equity from its Members as laid down in its Articles of Association/ Bye laws.

The number of its Individual Shareholders is not lower than 50 Its paid up equity does not exceed Rs.30 Lakh.

Minimum 33% of its shareholders are small, marginal and landless tenant farmers as defined by the Agriculture Census carried out periodically by the Ministry of Agriculture, GOI. Maximum shareholding by any one member other than an institutional member is not more than 5% of total equity of the FPC.

Maximum shareholding of an institutional member should not be more than 10% of total equity of the FPC.

It has a duly elected Board of Directors (BoD) with a minimum of five members, with adequate representation from member farmers and minimum one woman member.

PLI scheme for food processing

Production Linked Incentive Scheme for Food Processing Industry

Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)”

to support creation of global food manufacturing champions commensurate with India’s natural resource endowment and

support Indian brands of food products in the international markets with an outlay of Rs. 10900 crore

Objectives of the Scheme:

The objectives of the Scheme are

  • To support food manufacturing entities with stipulated minimum Sales and willing to make minimum
  • stipulated investment for expansion of processing capacity and Branding abroad to incentivise emergence of strong Indian brands.:
  •  Support creation of global food manufacturing champions; Strengthen select Indian brand of food products for global visibility and wider acceptance in the international markets;
  •  Increase employment opportunities of off-farm jobs,
  • Ensuring remunerative prices of farm produce and higher income to farmers.

Salient features:

The first component relates to incentivising manufacturing of four major food product segments viz. Ready to Cook/ Ready to Eat (RTC/ RTE) foods, Processed Fruits & Vegetables, Marine Products, Mozzarella Cheese.

 Innovative/ Organic products of SMEs including Free Range -Eggs, Poultry Meat, Egg Products in these segments are also covered under above component.

 ● The selected applicant will be required to undertake investment,

as quoted in their Application

(Subject to the prescribed minimum) in Plant & Machinery in the first two years i.e. in 2021-22 & 2022-23.

● Investment made in 2020-21 also to be counted for meeting the mandated investment.

The conditions of stipulated Minimum Sales and mandated investment will not be applicable for entities selected for making innovative/ organic products.

● The second component relates to support for branding and marketing foreign to incentivise emergence of strong Indian brand.

 ● For promotion of Indian trade name abroad the scheme envisages grant to the applicant entities

for – in store , shelf space renting and promote

● will be implemented over a six year period from 2021-22 to 2026-27

Major impact, including employment generation potential

  • The implementation of the scheme would facilitate expansion of processing capacity
  • to generate processed food output of Rs 33,494 crore and;
  • Create employment for nearly 2.5 lakh persons by the year 2026-27.
Key Outcomes: Estimated Outgo, Sales, Investment, Employment & Exports
Outgo on Incentive (₹ Crore)10,790
Increase in Sales- 6 Years (₹ Crore)1,20,267
Incremental Sales in 6th Year (₹ Crore)33,494
Cumulative additional Investment (₹ Crore)6,057
Increase in Export Sales- 6 Years (₹ Crore)27,816
Increase in Employment end of Year-5 (Nos)2,47,730

CGT SME scheme

Credit Guarantee Fund Scheme For Micro And Small Enterprises

Objective

The Scheme shall be known as the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS-I) [earlier known as Credit Guarantee Fund Scheme for Small Industries (CGFSI)].

Subsequent to the enactment of MSMED Act-2006,

the Trust was rename as Credit Guarantee Fund Trust for Micro and Small Enterprises

and scheme as Credit Guarantee Fund Scheme for Micro and Small Enterprises. CGTSME scheme

“Amount in Default” means the principal and interest amount outstanding in the account(s) of the borrower in respect of term loan

and amount of outstanding working capital facilities (including interest),

as on the date of the account becoming NPA, or the date of lodgement of claim application whichever is lower or such other date as may be specified by

CGTMSE for preferring any claim against the guarantee cover subject to a maximum of amount guaranteed.

(ii) “Collateral security” means the security provided in

addition to the primary security, in connection with the credit facility extended by a lending institution to a borrower.

 (iii) “Credit facility” means any financial assistance by way of term loan and / or fund based and non-fund based working capital

(e.g. Bank Guarantee, Letter of credit etc.) facilities extended by the lending institution to the eligible borrower.

For the purpose of calculation of guarantee fee,

the “credit facility extended” shall mean the amount of

financial assistance committed by the lending institution to the borrower, whether disbursed or not.

For the purpose of the calculation of Guarantee Fee,

the credit facility extend shall mean the credit facilities

(both fund and non-fund based) cover under CGS-I and for which guarantee fee has been paid, as at March 31, of the relevant year.

(iv) “Eligible borrower” means new or existing Micro and Small Enterprises to

which credit facility has been provided by the lending institution without any collateral security and/or third party guarantees.

2 However, a “Hybrid / Partial Collateral Security” product allowing guarantee cover on credit facilities having collateral security,

for the portion of credit facility not cover by collateral security (unsecured portion), has also introduced by CGTMSE. In the partial collateral security model, the MLIs will allowed to obtain collateral security for a part of the credit facility, whereas the remaining part of the credit facility, can cover under Credit Guarantee Scheme of CGTMSE.

(v) ‘Guarantee Cover’ means maximum cover available per eligible

borrower of the amount in default in respect of the credit facility extended by the lending institution

 (vi) “Lending institution(s)” means a commercial bank for the time being includ in

the second Schedule to the Reserve Bank of India Act, 1934, Regional Rural Banks,

NBFCs and Small Finance Banks as may be specified by the Trust from time to time, or any other institution(s) as may be direct by the Govt. of India from time to time. The Trust may, on review of performance, remove any of the lending institution from the list of eligible institution.

 (vii) “Material date” means the date on which the annual guarantee fee on

the amount covered in respect of eligible borrower becomes payable by the Member lending institution to the Trust

. (viii) “Non-Performing Assets” means an asset classified as a non-performing based on the instructions

and guidelines issued by the Reserve Bank of India from time to time.

 (ix) “Primary security” in respect of a credit facility shall mean the assets created out of the credit facility so extend and/or existing unencumbered assets which are directly associate with the projector business for which the credit facility has extend

. (x) “Scheme” means the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS-I)

(xi) “SIDBI” means the Small Industries Development Bank of India, established under Small Industries Development Bank of India Act, 1989 (39 of 1989).

 (xii) “Micro and Small Enterprises” As per the MSMED Act, 2006 an “enterprise”

means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in

the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation)

Act, 1951 or engaged in providing or rendering of any service or services; and “Micro and Small Enterprises” .

(xiii) “Tenure of guarantee cover” means the maximum period of guarantee cover from Guarantee sanction date which shall run through the agreed tenure of the term credit and for a period of 5 years or block of a 5 years (for a maximum period of 10 years) from Guarantee start date where working capital facilities alone are extendeor loan termination date, whichever is earlier or such period as may specified by the Trust

. (xiv) “Trust” means the Credit Guarantee Fund Trust for Micro and Small Enterprises set up by Government of India and

SIDBI with the purpose of guaranteeing credit facility(ies), extended by the lending institution(s) to the eligible borrowers.

(xv) “Third Party Guarantee” means any guarantee obtained by a Member Lending Institution in connection with

the credit facility extended by it to a borrower except from Sole-Proprietor in case of Sole Proprietary concern,

Partners in case of partnership / limited liability partnership,

Trustees in case of Trust, Karta & Coparceners in case of HUF and promoter directors in 3 case of private/ public limited companies and owner of the immovable property in case of guarantee under Hybrid / Partial collateral security model.

II . SCOPE AND EXTENT OF THE SCHEME

Guarantees by the Trust

(i) Subject to the other provisions of the Scheme, the Trust undertakes,

in relation to credit facilities extended to an eligible borrower from time to time

by an eligible institution which has entered into the necessary agreement for this purpose with the Trust, to provide a guarantee on account of the said credit facilities.

 (ii) The Trust reserves the discretion to accept or reject any proposal referred by

the lending institution which otherwise satisfies the norms of the Scheme.

Credit facilities eligible under the Scheme

The Trust shall cover credit facilities (Fund based and/or Non fund based) extended

by Member Lending Institution(s) to a single eligible borrower in the Micro and Small Enterprises sector for credit facility

(i) not exceeding ₹50 lakh (Regional Rural Banks/Financial Institutions)

;(ii) not exceeding RS 200 lakh (Scheduled Commercial Banks, select Financial Institutions and Non Banking Financial Companies (NBFCs);

 (iii)not exceeding RS 50 lakh for Small Finance Banks

(SFBs)byway of term loan and/or working capital facilities on or after entering into an agreement with

the Trust, without any collateral security and/or third party guarantees or such amount as may decide by the Trust from time to time.

CGTMSE had also introduce a new “Hybrid Security” product where the MLIs will allowed to obtain collateral security for a part of the credit facility, whereas the remaining unsecure part of the credit facility, upto a maximum of ₹200 lakh, can be cover under CGS-I.

CGTMSE will, however, have pari-passu charge on the primary security

as well as on the collateral security provided by the borrower for the credit facilities extended.

Under the hybrid security product, there is no requirement 4 for

MLIs to create security / charge in favor of CGTMSE by way of legal documentation