Package Scheme of Incentives 2019 - Industrial Promotion Subsidy (IPS)

What is the Package Scheme of Incentives 2019?

Package Scheme of Incentives 2019 (PSI-2019) is the industrial incentive policy of the Industries, Energy and Labour Department, Government of Maharashtra, notified by Government Resolution No. PSI-2019/CR46/IND-8 dated 16 September 2019. Maharashtra has run a Package Scheme of Incentives in some form since 1964, and PSI-2019 is the latest edition, framed to push manufacturing investment away from the already-saturated Mumbai-Pune belt and into the state's less developed talukas.

The Industrial Promotion Subsidy (IPS) is the single largest component of PSI-2019. IPS reimburses an eligible unit up to 100 per cent of the gross State Goods and Services Tax payable by it on the first sale of eligible products billed and delivered within Maharashtra. In effect, the state returns the SGST a new factory generates on its domestic sales, up to an overall ceiling fixed as a percentage of the unit's Fixed Capital Investment.

This is not a citizen benefit scheme. There is no application for an individual, no household eligibility and no DBT payment. The beneficiary is a registered manufacturing enterprise, and the money moves as a post-facto reimbursement against audited claims.

How the scheme is structured

• Maharashtra is divided into taluka groups A, B, C, D and D+, plus special categories, No Industry Districts, Naxalism Affected Areas, Aspirational Districts, and the Vidarbha, Marathwada, Ratnagiri, Sindhudurg and Dhule regions.
• The less developed the location, the larger the basket of incentives as a percentage of Fixed Capital Investment, and the longer the eligibility period.
• Units are graded as MSME, Large Scale Industry (LSI) or Mega and Ultra Mega Project, with different investment thresholds for each.
• The basket is drawn down year by year over the eligibility period until either the ceiling or the period is exhausted, whichever comes first.

Which units are eligible for the Industrial Promotion Subsidy?

A unit can qualify if:

• It is a manufacturing enterprise covered by the Industries (Development and Regulation) Act, 1951, or registered under the MSMED Act, 2006, or is an IT and biotechnology manufacturing unit, or a food and agro-processing unit.
• It is a new unit, or an expansion or diversification of an existing unit meeting the prescribed minimum additional investment.
• It is located in a B, C, D or D+ taluka, or in Vidarbha, Marathwada, Ratnagiri, Sindhudurg, Dhule, a No Industry District, a Naxalism Affected Area or an Aspirational District.
• It commences commercial production within the operative period notified for PSI-2019.
• It meets the local employment condition prescribed in the GR, which links the incentives to a minimum share of local persons in the workforce.
• For MSME status, Fixed Capital Investment is up to Rs 50 crore and the unit is classified under the MSMED Act, 2006.

Who cannot apply or is not eligible:

• Individual citizens cannot apply. PSI-2019 has no personal benefit component of any kind; no scholarship, pension, loan or grant to a person.
• MSME units in A talukas are outside the MSME incentive basket, since A talukas are the most industrially developed areas of the state.
• Trading, retail and pure service businesses that do not manufacture are not covered.
• Units that started commercial production outside the operative period of the scheme.
• Units in the ineligible industries list annexed to the GR.
• Units that have already availed the corresponding incentive under an earlier Package Scheme of Incentives for the same investment.

How much does the Industrial Promotion Subsidy give?

The reimbursement itself is up to 100 per cent of gross SGST on the first sale of eligible products inside Maharashtra. What varies by location is the overall ceiling on the whole basket of incentives, expressed as a percentage of Fixed Capital Investment, and the number of years over which it can be drawn.

New MSME units and small industries

Large Scale Industries

Expansion and diversification projects are entitled to 80 per cent of the incentives available to a comparable new unit, with a correspondingly reduced eligibility period.

What else does PSI-2019 offer besides IPS?

• Interest subsidy on the interest actually paid on term loans taken for fixed capital assets, subject to the ceilings in the GR.
• Exemption from electricity duty for the eligibility period.
• Waiver of stamp duty on land and loan documents in the eligible areas.
• Power tariff subsidy per unit of electricity consumed, for the prescribed number of years.
• Technology upgradation, quality certification and patent assistance.

These components together form the "basket", and the total drawn across all of them cannot exceed the ceiling percentage of Fixed Capital Investment applicable to the unit's location.

What documents does a unit need?

How to apply for the Industrial Promotion Subsidy

1. Register the unit; obtain Udyam Registration for an MSME, or file the Industrial Entrepreneur Memorandum for a Large Scale Industry, and complete GST registration.
2. Set up in an eligible taluka and record the location on the possession documents, since the taluka classification decides the ceiling and the period.
3. Create a user account on the MAITRI single-window portal of the Government of Maharashtra and open the PSI-2019 application module.
4. File the application for the Eligibility Certificate, uploading the detailed project report, possession proof, registration certificates and the Chartered Accountant certificate of Fixed Capital Investment.
5. Commence commercial production within the operative period and submit the commencement certificate, because the eligibility period begins from that date.
6. Obtain the Eligibility Certificate from the implementing agency — the District Industries Centre for smaller units, the Joint Director of Industries for mid-sized ones and the Directorate of Industries for the largest projects, as set out in the GR.
7. File the annual IPS claim after each financial year, supported by GST returns showing the gross SGST paid on first sales within Maharashtra, a Chartered Accountant certificate and the employment record.
8. Receive the reimbursement from the implementing agency after scrutiny, with the drawn amount set off against the unit's remaining basket ceiling.

There is no offline citizen counter for this scheme. The nearest thing to an offline route is the District Industries Centre (DIC) of the district where the unit is located, which guides promoters through the MAITRI filing and processes Eligibility Certificates for smaller units.

How to track a PSI-2019 claim

1. Log in to the MAITRI portal with the credentials used at registration.
2. Open the PSI-2019 application and read the current status, application filed, query raised, Eligibility Certificate issued, claim under scrutiny, or claim disbursed.
3. For a query raised by the implementing agency, upload the requested document inside the time given, since unanswered queries close the file.
4. For anything not visible on the portal, contact the District Industries Centre of the unit's district, quoting the MAITRI application reference and Eligibility Certificate number.

Why PSI-2019 claims get rejected or reduced

• Commercial production started outside the operative period, which makes the unit ineligible from the start.
• Wrong taluka classification claimed, giving a higher ceiling than the actual location supports.
• Fixed Capital Investment disallowed in part, working capital, pre-operative expenses and non-admissible assets are excluded from FCI.
• Local employment condition not met, which suspends or reduces the disbursement.
• SGST claimed on sales outside Maharashtra or on non-first sales, which do not qualify. Only the first sale billed and delivered within the state counts.
• Ceiling exhausted: once the basket percentage of FCI has been drawn, no further disbursement is made even if the eligibility period is still running.
• Product not on the eligible list, or the unit falling in the ineligible industries annexure.

Help and grievance redressal

• MAITRI single-window portal: the primary channel for application, queries and status
• District Industries Centre (DIC): the district-level implementing and facilitation office for MSME units
• Joint Director of Industries at the regional office, for mid-sized units
• Directorate of Industries, Mumbai: the apex authority for policy interpretation and the largest projects
• Maharashtra CM Helpline: 1800 120 8040

Because the operative period, taluka classification lists and ceiling tables are amended by subsequent Government Resolutions, a promoter should always read the current PSI-2019 GR and its amendments on the Directorate of Industries and MAITRI websites before committing investment on the strength of an expected incentive.