Central Interest Subsidy Scheme under NEIIPP 2007

What is the Central Interest Subsidy Scheme under NEIIPP 2007?

Central Interest Subsidy Scheme under NEIIPP 2007 is one of the fiscal incentives created by the North East Industrial and Investment Promotion Policy, 2007, notified by the Department of Industrial Policy and Promotion, Government of India. In Assam, the scheme is listed by the Industries and Commerce Department and processed through its State Level Committee.

The problem the scheme addresses is the cost of working capital. A manufacturer in Assam typically has to hold larger stocks of raw material because supply lines are longer, and waits longer for receivables because markets are further away. Both tie up cash, and cash borrowed from a bank carries interest. NEIIPP 2007 absorbed part of that interest so that the working capital cycle in the North East did not permanently penalise units located there.

According to the Department for Promotion of Industry and Internal Trade, the scheme provides an interest subsidy at 3 per cent on working capital loan taken by an eligible industrial unit, for a maximum period of 10 years from the date of commencement of commercial production.

Is NEIIPP 2007 still open?

NEIIPP 2007 is closed to new registration. The policy applied to new and substantially expanded industrial units in the North Eastern Region that commenced commercial production within the policy window, which ran from 1 April 2007 to 31 March 2017. Units that registered and commenced production inside that window continue to be eligible for their remaining subsidy period, because the 10-year clock runs from each unit's own date of commercial production. A unit that began production in, say, 2016 could in principle remain within its 10-year window well past the policy end date.

A new unit setting up in Assam today cannot register under NEIIPP 2007. It should look instead at the Industrial and Investment Policy of Assam, 2019 and its 2023 amendment, and at the Government of India's UNNATI scheme, 2024 for the North Eastern Region.

How much is the interest subsidy and how long does it last?

The subsidy is a reimbursement of interest already paid, not a cheaper loan sanctioned at the outset. The unit borrows at the bank's normal rate, services the interest, and then claims 3 percentage points back through the state process.

What counts as working capital?

NEIIPP 2007 defines working capital with some precision, and claims are often reduced because the definition is read loosely. Working capital is the sum total of:

• Physical working capital, stocks of raw material, work in progress, finished goods, stores and spares, plus
• Cash in hand and at bank, plus
• The net balance of amounts receivable over amounts payable at the end of the accounting year.

Working capital excludes:

• Unused overdraft facility
• Fixed deposits, irrespective of duration
• Advances for acquisition of fixed assets
• Loans and advances by proprietors and partners, irrespective of purpose or duration
• Long-term loans, including interest on them
• Investments

The practical effect is that a unit cannot inflate its claim by counting an unused credit limit or a promoter's loan as working capital.

Who is eligible under NEIIPP 2007, and who is not?

A unit can claim if:

• It is a new industrial unit or an existing unit that undertook substantial expansion, as defined in NEIIPP 2007.
• It is located in the North Eastern Region, which for this purpose includes all districts of Assam.
• It commenced commercial production within the policy window ending 31 March 2017 and holds a registration under the policy.
• It falls within an eligible sector — manufacturing, services, biotechnology, or power generation up to 10 MW.
• It has taken a genuine working capital loan from a bank or financial institution and is paying interest on it.

A unit or person is not eligible and cannot apply if:

• It seeks to register now. NEIIPP 2007 registration is closed.
• It is an individual seeking a personal benefit. This scheme reimburses a business cost to a registered industrial unit. Individuals, households and self-employed persons without a registered unit cannot apply.
• The loan claimed is a term loan for fixed assets rather than a working capital loan. Interest on term loans is not covered by this particular subsidy.
• The unit is beyond 10 years from its date of commencement of commercial production.
• The unit falls in a sector placed on the negative list of the policy.

How to apply for and claim the NEIIPP 2007 interest subsidy

This is an institutional route. There is no citizen application form.

1. Confirm the unit's registration and eligibility window. Retrieve the NEIIPP 2007 registration certificate and the certificate of commencement of commercial production, and check that the claim year falls within 10 years of that date.
2. Obtain a bank certificate for the claim period showing the sanctioned working capital limit, the rate of interest charged and the interest actually debited to the working capital account.
3. Prepare a chartered accountant certified claim statement computing 3 per cent of the eligible working capital loan for the period, reconciled with the bank certificate and the audited accounts.
4. Submit the claim to the Industries and Commerce Department, Government of Assam, through the District Industries and Commerce Centre, in the prescribed format, and take a dated acknowledgement.
5. Face the State Level Committee scrutiny. The State Level Committee examines the claim, may call for a site inspection, and then makes its recommendation.
6. Receive disbursement from NEDFi, Guwahati, which releases the subsidy into the unit's own bank account on the strength of the State Level Committee recommendation.

What documents does the claim need?

Why NEIIPP interest subsidy claims get reduced or rejected

• Claim period outside the 10-year window from commencement of commercial production.
• Term loan interest claimed instead of working capital interest.
• Working capital overstated by including unused overdraft limits, fixed deposits or promoters' loans, all of which the policy definition excludes.
• Bank certificate missing or inconsistent with the audited accounts.
• No substantial expansion established where the claim rests on expansion rather than a new unit.
• Unit not in production at the time of inspection.

The commonest reduction is not a rejection at all. It is a recomputation, where the State Level Committee accepts the claim but shrinks the eligible working capital base after applying the exclusions above.

What is NEIIPP 2007 in the wider picture?

NEIIPP 2007 broadened what the earlier North East industrial policy had done. It extended benefits beyond notified industrial estates to units across the North Eastern Region, and brought in services, biotechnology and small power generation alongside manufacturing. Alongside the 3 per cent working capital interest subsidy, the policy package carried central capital investment subsidy, comprehensive insurance and excise and income tax concessions administered by the respective central departments.

For Assam units today, the closest live equivalent is the interest subsidy on working capital loan offered under the Industrial and Investment Policy of Assam, 2019, and the capital interest subvention under UNNATI 2024.

Help and grievance redressal

• Industries and Commerce Department, Government of Assam, at industries.assam.gov.in, which hosts the NEIIPP 2007 page.
• Commissionerate of Industries and Commerce at industriescom.assam.gov.in for claim filing and status.
• NEDFi, Guwahati, as the designated disbursing agency for the interest subsidy.
• Assam Single Window / Ease of Doing Business helpline: 1800 345 3579, email eodb-assam@assam.gov.in.

Since NEIIPP 2007 registration is closed, any offer to secure a fresh registration under this policy should be treated with suspicion.