25% Capital Investment Subsidy Scheme

What is the 25% Capital Investment Subsidy Scheme?

25% Capital Investment Subsidy Scheme is an industrial promotion scheme of the Department of Industries, U.T. Administration of Lakshadweep, Kavaratti. Under the scheme the Administration reimburses 25% of the fixed capital investment made in setting up a new micro or small manufacturing or service unit in the islands, subject to a ceiling of Rs 6.25 lakh per unit.

The scheme exists because of a specific problem. According to the revised guidelines issued by the Department of Industries, the Union Territory of Lakshadweep has been declared a "No Industrial Area", so there is no scope for setting up major industries. With very limited government employment and no large private sector, the Government of India accepted an expert committee recommendation; arising from a study by the Planning Commission for the Standing Committee of the Island Development Authority: to fund a capital subsidy that would let local entrepreneurs and unemployed young islanders start small ventures of their own.

The three stated objectives are:

• To promote micro and small enterprises in the islands.
• To generate employment in the private sector, not just in government service.
• To support industrial promotion and the wider economic development of Lakshadweep.

The area of operation is all inhabited islands of Lakshadweep, which covers Kavaratti, Agatti, Amini, Andrott, Bitra, Chetlat, Kadmat, Kalpeni, Kiltan and Minicoy. Bitra, being the smallest inhabited island, has a differently constituted island level committee, described further down.

The revised guidelines carrying these terms were approved by the Hon'ble Administrator vide Diary No. 2548 dated 10 August 2019, and were published on lakshadweep.gov.in in August 2019. They replaced the earlier operating guidelines and remain the reference document that island committees use when scrutinising a claim.

Who is eligible for the 25% Capital Investment Subsidy?

You can claim the subsidy if:

• You are an individual above 18 years of age. The guidelines specifically include women, ex-servicemen and persons with disabilities.
• You have set up a new micro or small industrial unit engaged in manufacturing or servicing in an inhabited island of Lakshadweep.
• Your total investment in plant, machinery and building is below Rs 25 lakh.
• Your unit holds Entrepreneurs Memorandum Part II (permanent registration) filed before the Director of Industries, Lakshadweep, or an Udyog Aadhaar / Udyam registration.
• You are a society registered under the Societies Registration Act or a self-help group that has not availed financial benefits under any other scheme.

You cannot apply, or are not eligible, if:

• The unit is an industrial unit run by a department of the UTL Administration. The guidelines define an eligible industrial unit as any micro or small manufacturing or servicing unit other than those run by the Administration.
• The spending is on expansion, modernisation or diversification of an existing unit. Only investment in a new unit counts.
• You have already taken a subsidy for the same purpose from another body. The guidelines name Lakshadweep Development Corporation, LKVIB, the Coir Board, the Coconut Board and NABARD as examples.
• Your activity falls in the negative list: any industry or business connected with processing or preparing intoxicating items such as beedi, pan or cigarettes; and manufacture of polythene carry bags thinner than 20 microns or of carry bags and containers made from recycled plastic for storing, carrying, dispensing or packaging foodstuff, or anything else that causes an environmental problem.
• Your investment claim rests on second-hand machinery bought from another industrial unit, which the guidelines exclude outright.

How much money does the scheme pay?

The subsidy is 25% of the total cost of the enterprise inclusive of land, machinery and construction, limited to a maximum of Rs 6.25 lakh.

What counts as fixed capital investment is defined tightly:

A GST number is not required on purchase bills for plant and machinery bought before GST was introduced in July 2017; for anything bought after that date, the bill must carry the supplier's GST number.

The subsidy is a one-time reimbursement after the unit is functioning, not an upfront grant. You spend first, then claim, and the island committee inspects the working unit before recommending payment.

What documents are required?

The Annexure-I form also asks for the date of commencement of production or service, the plinth area and roofing type of the building; RCC, Mangalore tiles, AC sheet or aluminium sheet, and the number of male and female workers employed. Keep employment records ready, since employment generation is one of the scheme's stated objectives.

How to apply for the 25% Capital Investment Subsidy

1. Register the unit first. File Entrepreneurs Memorandum Part II with the Director of Industries, U.T. of Lakshadweep, or complete Udyam / Udyog Aadhaar registration on the MSME portal. Without permanent registration the claim cannot be entertained.
2. Wait for the annual notice. The Department of Industries advertises the scheme every year through Panchayati Raj institutions and on lakshadweep.gov.in. The 2023-24 notice, for example, was open from 25 January 2024 to 12 February 2024.
3. Get the building certified. Have an Assistant Engineer or Executive Engineer (Civil) of UTL or the Central Government inspect the unit and issue the Annexure-II certificate stating the plinth area and the actual cost of the building, with a separate sheet of civil works expenditure.
4. Assemble the bills and certificates. Collect original taxes-paid purchase bills for all machinery, equipment and tools, the freight voucher, the land and building ownership certificate, caste and age certificates and an Aadhaar photocopy.
5. Fill Annexure-I in capital letters, entering the unit name, ward number, EM Part II or Udyam number, bank account with IFSC, products, employment created, and a bill-wise table of machinery purchases with the total cost and the subsidy claimed.
6. Execute the Annexure-III bond on Rs 100 non-judicial stamp paper with the Director of Industries, undertaking to run the unit for more than five years, to allow inspection of the books of account, to submit annual accounts each financial year, and to display the prescribed signboard at the unit entrance.
7. Submit the complete file to the Deputy Collector or Sub-Divisional Officer of your island, along with all supporting documents.

What happens after you apply?

The claim moves through two committees.

Island Level Committee. On every island except Bitra, this committee is chaired by the Deputy Collector or SDO, with the Assistant Engineer (PWD), the Senior Auditor or JAO of the Financial Planning Unit, and the senior-most Supervisor of the Department of Industries as members. On Bitra the chair is the Assistant Engineer (PWD), with the Authorised Officer, Bitra and the Executive Officer of the Panchayat as members. The committee verifies the claim, physically inspects the unit, and forwards the case in the Annexure-IV format to the Director of Industries with the bills received from the entrepreneur.

District Level Scrutinising Committee. Chaired by the Secretary (Industries), with the Accounts Officer (I) of the Development Planning wing, the Superintending Engineer LPWD, the Director (Planning & Statistics) and the Director of Industries as members. This committee verifies the details received from the island committee and recommends the quantum of subsidy for each beneficiary as per the guidelines.

Because the file passes through a physical inspection and two committees, allow several months between submission and release. There is no online status tracker; follow up with the office of the Deputy Collector or SDO that received your application, quoting the date of submission and the name of the unit.

Why applications get rejected

• Bills without tax paid, or bills for machinery bought after July 2017 with no GST number.
• Second-hand machinery included in the investment figure.
• Missing Annexure-II certificate from an Assistant Engineer (Civil), so the building cost cannot be verified.
• No ownership certificate for the land and building where the unit runs.
• Double subsidy — the same machinery already subsidised by LDCL, LKVIB, the Coir Board, the Coconut Board or NABARD.
• Negative list activity, most commonly thin polythene carry bags.
• Expansion dressed up as a new unit, which the island committee usually catches at the physical inspection.
• Investment above Rs 25 lakh in plant, machinery and building, which takes the unit out of the eligible bracket entirely.

Recovery and post-sanction obligations

Taking the subsidy carries continuing obligations. The Annexure-III bond commits you to running the enterprise for more than five years after the subsidy is released, to submitting annual accounts in the prescribed receipts-and-payments format every financial year, to allowing the Director of Industries or an authorised representative to inspect the books of account, and to displaying a signboard at the main entrance naming the unit and stating that it was financed by the Industries Department, U.T. of Lakshadweep, with the year.

If a subsidised unit stops functioning, the district level committee examines the reason using the annual reports received from the DCs and SDOs and recommends revenue recovery from the defaulter to the concerned revenue authority.

Where to get help

• Directorate of Industries, U.T. of Lakshadweep, Kavaratti – 682 555. The sanctioning department and the office that issues the guidelines and forms.
• Office of the Deputy Collector or Sub-Divisional Officer of your island: where applications are received and where you follow up.
• lakshadweep.gov.in notices section: where the annual application window and the revised guidelines PDF are published.

The Department of Industries does not charge any fee for the subsidy, and no agent can get a claim sanctioned. The only cost you should incur is the Rs 100 non-judicial stamp paper for the bond.

How to check your application status

There is no online portal or reference number system for this scheme, so tracking a claim means following up in person or by phone with the office that is actually holding your file at that stage.

• Find out which stage your file is at first. A claim under this scheme sits with one of two bodies at any given time: the Island Level Committee (chaired by the Deputy Collector or SDO of your island, or by the Assistant Engineer PWD on Bitra) while it is being verified and inspected, or the District Level Scrutinising Committee (chaired by the Secretary, Industries) once the island committee has forwarded it in the Annexure-IV format. Knowing which of the two has the file tells you who to call.
• Contact the Deputy Collector or SDO office you originally submitted to. This is the first and usually the fastest checkpoint. Quote the date you submitted Annexure-I, the name of your unit, and your Entrepreneurs Memorandum Part II or Udyam registration number so the staff can locate the file without searching by your name alone.
• If the island committee has already forwarded your case, ask the Directorate of Industries, Kavaratti. Once Annexure-IV has gone to the Director of Industries, the file moves to the district-level committee, and the island office may no longer have current status. The Directorate can confirm whether your case is listed for the next scrutinising committee meeting.
• Watch for a physical inspection visit. Before either committee recommends payment, someone from the Assistant Engineer's office or the Department of Industries physically inspects the running unit. If you have not been contacted for an inspection some weeks after submission, that is a reasonable point to follow up, since the file cannot progress without it.
• Ask specifically what is pending, not just "is it approved". Because the process runs through two layers of committee scrutiny plus a site inspection, a file can be held up for a documentary reason (a missing Annexure-II certificate, an unclear bill) without being formally rejected. Asking which specific item is outstanding gets a more useful answer than asking for a yes-or-no status.
• Expect the process to take several months rather than weeks. The scheme has no published turnaround time, and both committees meet periodically rather than continuously, so a gap of a few months between submission and a decision is normal and not by itself a sign of a problem.
• Keep a copy of your submission and any acknowledgement. Since there is no digital tracking, your own copy of the filled Annexure-I, the date-stamped receipt (if the receiving office gave one), and the names of officials you have already spoken to are what let you pick up the follow-up conversation efficiently each time.