Capital Investment Subsidy (for New and Existing Industries) under Motivation of Entrepreneurs to Start Industries and Fiscal Assistance to Capital Intensive Industries

What is the Capital Investment Subsidy for new and existing industries in Puducherry?

Capital Investment Subsidy (for New and Existing Industries) is the main industrial capital incentive of the Union Territory of Puducherry, notified under the umbrella scheme "Motivation of Entrepreneurs to Start Industries and Fiscal Assistance to Capital Intensive Industries". The Industries and Commerce Department, Puducherry, brought the component into force with effect from 1 April 2017, and it operates in the whole of the Union Territory, Puducherry, Karaikal, Mahe and Yanam.

Unlike the thrust area component, which subsidises machinery alone, this component subsidises the full fixed asset block: land, building, plant and machinery. The rates are graded by size of enterprise and by category of promoter:

The highest ceiling, Rs 75 lakh, is deliberately reserved for women, Scheduled Caste and Scheduled Tribe entrepreneurs, and comes with a stricter ownership test described below.

Who is eligible for the capital investment subsidy?

Enterprises that can claim:

• Micro, small, medium and large enterprises set up anywhere in the Union Territory of Puducherry.
• Women, SC and ST entrepreneurs, at the enhanced 45% rate and the Rs 75 lakh ceiling.
• New units, meaning those that commenced commercial production on or after 1 April 2017.
• Existing units, meaning those that commenced production before 1 April 2017, on the fresh investment they have made since.
• Units making additional investment after an earlier claim, up to the ceiling limit for their category.

Conditions every claimant must satisfy:

• The investment must have been made on or after 1 April 2017.
• The unit must provide at least 60% of its total employment strength to people of the Union Territory of Puducherry, and maintain that share for the period specified in the affidavit.
• The unit must not transfer or dispose of fixed assets, including plant and machinery, for five years from the date of submitting the application or the date of disbursement of subsidy, whichever is later.

Who is not eligible:

• Private individuals seeking a personal benefit. This is an enterprise incentive against documented capital expenditure; there is no household or welfare component and individuals cannot apply for one.
• Units claiming the 45% SC, ST or women rate where ownership is only partial. In the SC, ST and women category only investments in units fully owned by that category are considered. For a partnership or private limited company, all partners, shareholders and board members must belong to the claimed category.
• Units whose investment predates 1 April 2017 and who claim under this component for it.
• Units that fail the 60% local employment test.
• Units that file beyond one year of commencing regular commercial production, where the State Level Committee declines to condone the delay.

What documents are required?

The date of commencement admitted by the entrepreneur is reckoned only after due verification by officials of the Industries Department, so the date on the application must match what an inspection will show.

How to apply for the Puducherry capital investment subsidy

1. Download and print the prescribed form from the common application for subsidies page at industry.py.gov.in/common-application-subsidies. The same form set covers the several components of the Motivation of Entrepreneurs scheme, so tick the capital investment subsidy component clearly.
2. Complete every mandatory field — enterprise classification, date of commencement of regular commercial production, head-wise break-up of investment in land, building, plant and machinery, and the employment strength with the Puducherry share stated separately.
3. Attach self-attested copies of all mandatory documents, including the chartered accountant's investment certificate and the 60% local employment affidavit.
4. Submit the duly filled and signed application with enclosures to the Directorate of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605009.
5. Obtain a receipt or acknowledgement carrying the date and time of submission and a unique identification number, and keep it safe.

What happens after you apply?

1. The Directorate of Industries scrutinises the application on merit and works out the quantum of subsidy admissible.
2. The file is placed before the State Level Committee, which examines the merits of each case, decides whether the unit qualifies, and recommends the amount.
3. On sanction, the money is released either through the lender or directly, as set out below.

How is the subsidy disbursed?

The subsidy is released in single or multiple instalments, depending on the availability of funds in the year of sanction. A unit should therefore plan its cash flow on the assumption that the money may come in tranches.

• Financed units, the subsidy amount is disbursed only through the financial institution or bank, and is adjusted against the loan availed, or applied to the creation of additional fixed assets or working capital. For this purpose "financial institution" means PIPDIC or any other government corporation, and scheduled banks including co-operative banks.
• Self-financed units. The subsidy is disbursed directly to the entrepreneur or the unit.

How to check your application status

1. Keep the unique identification number from your acknowledgement to hand.
2. Contact the Directorate of Industries and Commerce, Thattanchavady, on +91-413-2248476, 2248168 or 2248320 and ask whether the file is under scrutiny, awaiting inspection, or listed before the State Level Committee.
3. Karaikal applicants can follow up with the Assistant Director at the Rural Industrial Estate, Kottucherry, on +91-4368-265438; Yanam on +91-884-2321257; Mahe on +91-490-233235.
4. If the unit is bank-financed, ask the branch separately when the sanctioned subsidy is credited against the loan account.

Why capital investment subsidy claims fail

• The 45% rate claimed on partial ownership. A firm with one SC partner and two general-category partners does not qualify for the enhanced rate.
• Investment dated before 1 April 2017 claimed under a scheme that starts from that date.
• The 60% local employment share not maintained through the period specified in the affidavit, a live condition, not a one-day test at the time of claim.
• Assets sold or transferred within five years, which breaches the lock-in and attracts recovery.
• Application filed more than one year after commercial production began, with no ground made out for condonation.
• Investment figures that do not reconcile between the invoices, the balance sheet and the chartered accountant's certificate.
• Land or building bought in a personal name rather than in the name of the enterprise claiming the subsidy.

Grievance redressal

Complaints and delays are taken up through the Industries and Commerce Department's grievance redressal mechanism at industry.py.gov.in/grievance-redressal-mechanism. Above that, the Director of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605009, and the Secretary to Government (Industries and Commerce) at the Chief Secretariat, Puducherry 605001, phone +91-413-2336115, are the escalation points.

The prescribed application form is free. No consultant or agent has any special standing before the State Level Committee, and no payment is required to have a claim listed.