Promotion of MSMEs in North Eastern Region and Sikkim

What is the Promotion of MSMEs in North Eastern Region and Sikkim scheme?

Promotion of MSMEs in North Eastern Region and Sikkim is a central sector scheme of the Ministry of Micro, Small and Medium Enterprises, administered through the Office of the Development Commissioner (MSME). The scheme exists because the Ministry judged that MSME development in the North East and Sikkim needed a separate instrument rather than the general national schemes.

The scheme funds infrastructure and institutions, not enterprises. According to the guidelines issued by the Office of DC (MSME), assistance flows to State Governments and state agencies that build Mini Technology Centres and industrial estates. The current guidelines for the scheme were issued on 2 June 2022.

What does the scheme fund?

Mini Technology Centres. Financial assistance for setting up new and modernising existing Mini Technology Centres, at 90% of the cost of machinery, equipment and buildings, not exceeding Rs 10 crore. Government of India funding is not admissible towards the cost of land, and the scheme portal states that building cost is limited to 20% of the total.

Industrial estates. 80% of the cost of infrastructure facilities, not exceeding Rs 8 crore, for developing new and existing industrial estates. Eligible facilities include power distribution, water supply and harvesting, telecommunication, drainage and pollution control, roads, banks, storage and marketing outlets, and administrative services such as an office building, conference hall or exhibition centre, post office, first aid centre, creche and canteen.

Tourism sector projects. The scheme portal lists a tourism component with government funding limited to Rs 4.50 crore or 90% of project cost, whichever is less, with the State Government meeting the balance.

Capacity building of officers. Officers engaged in promoting MSMEs are deputed for techno-managerial training at institutions such as NI-MSME, Hyderabad and MSME Technology Centres. The Government of India pays the training fee and boarding and lodging directly to the training institution; TA and DA are borne by the deputing department or state.

Other activities. Research studies, strengthening of institutes, and specially designed state projects in areas such as honey, bamboo and organic products, or IT modules for ease of doing business. Each such intervention can be up to Rs 1 crore.

Who is eligible for the scheme?

Who can bring a proposal

• State Governments of the North Eastern Region and Sikkim, which formulate the proposal and identify an implementing agency, preferably the Department of Industries or another organisation engaged in industrial promotion.
• State agencies nominated by those governments to execute the project.
• NSIC may be engaged as Project Management Agency where the PAMC approves it and the State Government agrees.

Who cannot apply

• Individual entrepreneurs cannot apply. There is no citizen application form and no personal subsidy under this scheme, which is the single most common misunderstanding about it.
• A single micro or small enterprise is not eligible for a direct grant. An enterprise benefits indirectly, by using a Mini Technology Centre or operating in an upgraded industrial estate.
• Proposals seeking central funding for land purchase are not eligible: land must come from the state.
• A state that has not made a budget provision for its own share, or has not furnished the utilisation certificate for a previous grant, will not receive the next instalment.

What documents are required?

How to apply for the scheme

1. The State Government decides to seek assistance and identifies an implementing agency, preferably the Department of Industries. It may approach the Office of the Development Commissioner (MSME), New Delhi, for help at this stage.
2. The State Government gets a Detailed Project Report prepared covering the industrial scenario, proposed location, demand analysis, services to be offered, organisational structure, capital cost, operating expenses, funding pattern and cash flow. The MSME-Development Institute may assist.
3. The proposal is forwarded to the Government of India in the prescribed format — Annexure-IA for a Mini Technology Centre or Annexure-IB for an industrial estate, with confirmation that the state budget provides for its share, that the balance and recurring cost will be borne by the state, and, for an estate, that suitable land of the required size is available.
4. The Office of DC (MSME) examines the proposal and communicates any discrepancy to the State Government within 30 days of receipt.
5. The proposal goes to the Project Approval and Monitoring Committee (PAMC) chaired by the Secretary (MSME), which may co-opt experts, engage NSIC as project management agency, or recommend a higher amount in suitable cases with the approval of the Minister for MSME.
6. On approval, formal sanction is conveyed to the State Government and the first instalment of 25% of the central contribution is released after pre-project activities are complete.
7. The state furnishes utilisation certificates in the GFR format to draw the remaining instalments, and keeps a place on the governing body of the Mini Technology Centre for a Central Government nominee.

How this scheme relates to other MSME schemes

This scheme is one of several routes through which the North East gets preferential treatment. MSE-CDP raises its Common Facility Centre grant to 90% for North Eastern and hill states, and reduces the Special Purpose Vehicle's own contribution to 5% or 15%. SFURTI funds hard interventions at 95% instead of 90% in the North Eastern Region, Jammu and Kashmir and hilly states, and allows an artisan cluster of as few as 50 members there. The Procurement and Marketing Support Scheme gives NER units 100% space rent reimbursement at trade fairs instead of 80%.

An entrepreneur in the region looking for capital should therefore look at PMEGP, a CGTMSE-guaranteed bank loan or a state industrial policy incentive, not at this scheme.

Help and contact

• Scheme portal: ner-promotion.msme.gov.in
• Ministry of MSME: 011-23062354
• State route: the Department of Industries or Directorate of Industries and Commerce of your state, which owns the proposal
• Central route: the Office of the Development Commissioner (MSME), Nirman Bhawan, New Delhi

No individual application, agent or facilitator is involved in this scheme, so any offer to "get you a grant" under it is a misrepresentation.