Infrastructure Development Subsidy (For IT/ITES) under Motivation of Entrepreneurs to Start Industries and Fiscal Assistance to Capital Intensive Industries

What is the Infrastructure Development Subsidy for IT/ITES?

Infrastructure Development Subsidy is a component of "Motivation of Entrepreneurs to Start Industries and Fiscal Assistance to Capital Intensive Industries", run by the Industries and Commerce Department, Union Territory of Puducherry. The component came into force with effect from 1 April 2017 under the New Industrial Policy 2016 and operates across the whole Union Territory.

Under this component the department grants a 30 per cent subsidy, subject to a maximum of Rs 1,00,00,000, on the investment made on a building with a minimum extent of 50,000 sq ft of constructed area, put up by infrastructure developers or industries either for leasing out to IT industries or for their own industrial use; specifically for the manufacture of computer systems, software and Information Technology Enabled Services, Business Process Outsourcing and Knowledge Process Outsourcing.

This is the largest single incentive in the Puducherry package by ceiling. It exists because the Union Territory's constraint on attracting IT and back-office employers has been the supply of large, ready, quality office floorplates rather than the supply of graduates. Subsidising the shell rather than the tenant is a deliberate choice.

How much is paid and on what schedule?

The instalment rule matters for a developer's cash flow planning. Even where the full Rs 1 crore is sanctioned, the incentives order caps disbursement at Rs 25,00,000 per annum, so the subsidy is spread over at least four years. Valuation is not left to the applicant either: PIPDIC or the Public Works Department assesses the building value, and that assessment is the base on which 30 per cent is worked out.

Disbursement follows the standard rule for the package. Where the project is financed by a bank, PIPDIC or another government corporation, the subsidy is routed through that institution and adjusted against the loan, or applied to additional fixed assets or working capital. A self-financed project is paid directly.

Who is eligible for the subsidy?

You can claim if:

• The investment was made on a building with a minimum extent of 50,000 sq ft of constructed area.
• The investment was made by an infrastructure developer or an industry.
• The building is leased out to IT industries or used for the applicant's own industrial use in computer systems manufacture, software, ITES, BPO or KPO.
• The project gives at least 60 per cent of its employment to people of the Union Territory of Puducherry, maintained for the period specified in the affidavit.
• You undertake not to transfer or dispose of the fixed assets, including plant and machinery, until five years from the date of submitting the application or of disbursement, whichever is later.

Units that commenced commercial production on or after 1 April 2017 are treated as new industries; those that commenced before that date are treated as existing units. Additional investments made after the first claim are also eligible, up to the ceiling limit.

You are not eligible, and cannot apply, if:

• The building has a constructed area below 50,000 sq ft. There is no proportionate benefit for a smaller building under this component.
• You purchased a building that had already been occupied and used, and are now setting up an industry in it. Such buildings are expressly excluded.
• The building is intended for a non-IT use, a warehouse, a retail block or a general manufacturing shed does not qualify under this component, though other incentives in the package may apply.
• Your project's local employment is below 60 per cent of total strength.
• You are an individual seeking help to build a house or a small commercial property. This is a capital-intensive industrial incentive with a Rs 1 crore ceiling, not a housing or small-property benefit.

Where two or more industrial undertakings are set up by the same proprietor, common partners or a common board of directors or shareholders, they are treated as separate entities for subsidy, provided the locations differ and the licences, clearances and registrations are held separately.

What documents are required?

How to apply for the Infrastructure Development Subsidy

1. Confirm the built-up area and the end use before you build. The 50,000 sq ft threshold and the IT/ITES end use are eligibility conditions, not preferences, and they cannot be fixed after construction.
2. Download the common application form for subsidies from industry.py.gov.in/common-application-subsidies, or collect it from the Directorate of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605009.
3. Assemble the investment record; approved plan, completion certificate, contractor bills, payment proofs and audited accounts, and the lease deeds or evidence of your own IT operations in the building.
4. Fill in every mandatory field, attach self-attested copies of all documents including the local-employment affidavit, and sign the form.
5. Submit the application to the Directorate of Industries and Commerce, and obtain a receipt with the date, time and a reference number.
6. Facilitate the valuation. PIPDIC or the Public Works Department will assess the building value; give their officers access to the site and to your construction records, because their assessment fixes the subsidy base.

What happens after you apply?

The Directorate of Industries scrutinises the claim on merit to determine the amount admissible and places it before the State Level Committee, which decides whether the project qualifies and recommends the quantum. After sanction, the subsidy is disbursed in annual instalments of not more than Rs 25,00,000 until the total eligible amount is paid, in single or multiple releases depending on availability of funds.

By when must the claim be filed?

• New units: within one year of obtaining Entrepreneurs Memorandum Part-II, permanent registration, or the commencement of production certificate.
• Existing units — within one year of completing expansion, diversification or modernisation.

Common reasons claims are rejected

• Constructed area short of 50,000 sq ft on measurement.
• Previously occupied building bought and converted, which the order excludes.
• End use not IT or ITES; no lease to an IT tenant and no own IT operation.
• Investment not evidenced by contractor bills, payments and audited accounts, so the PWD or PIPDIC valuation cannot be reconciled.
• Local employment below 60 per cent.
• Claim filed after the one-year window.
• Asset disposed of within the five-year lock-in, which can trigger recovery.

Other incentives for a capital-intensive project

The same capital-intensive incentives order also carries Assistance for Technology Acquisition at 50 per cent up to Rs 10 lakh for acquiring appropriate technology for a specific product or process. Alongside, the general package offers capital investment subsidy on land, building, plant and machinery, SGST reimbursement for five to seven years, 100 per cent stamp duty exemption on purchase, lease, mortgage and hypothecation of land and buildings, a power subsidy of 50 paise per unit, and an employment subsidy of 20 per cent of wages up to Rs 5 lakh a year for units employing at least 10 persons directly with at least 60 per cent local employment. The department's fast track single window system undertakes to issue industrial permissions, licences, clearances and no objection certificates within 30 days.

Help and grievance redressal

• Directorate of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605009 to +91-413-2248476, 2248168, 2248320
• Secretary to Government (Industries and Commerce): +91-413-2336115
• Grievance redressal, industry.py.gov.in/grievance-redressal-mechanism

How to check your application status

This subsidy is claimed offline, and the Directorate of Industries and Commerce does not run a public online tracker for individual claims, so status has to be followed up directly.

• Keep the receipt from submission. When you filed the common subsidy application form, you should have received an acknowledgement with a date, time and reference number. Quote this reference in every follow-up, whether by phone, letter or in person.
• Call the Directorate of Industries and Commerce at the Industrial Estate, Thattanchavady, Puducherry 605009 on +91-413-2248476, 2248168 or 2248320, and ask for the section handling capital-intensive industry incentives. Your claim moves through two stages before disbursement: scrutiny by the Directorate to fix the amount admissible, and a recommendation from the State Level Committee, so ask specifically which of these two stages your file is at.
• Ask about the valuation stage separately. Because PIPDIC or the Public Works Department has to assess the building before the 30 per cent subsidy can be worked out, a claim can be held up at valuation even after the Directorate has scrutinised the paperwork. If you have not been contacted for a site visit or records inspection within a few weeks of filing, raise this with the Directorate rather than assuming the claim is progressing.
• Escalate in writing if there is no movement. A written follow-up addressed to the Directorate, citing your reference number and date of submission, creates a paper trail that a phone call does not, and is useful if the claim later needs to go to the Secretary to Government (Industries and Commerce) at +91-413-2336115.
• Use the grievance redressal mechanism at industry.py.gov.in/grievance-redressal-mechanism if the Directorate does not respond to direct follow-up, or if the claim has been pending well beyond a reasonable processing period.
• Check for instalment-wise status once sanctioned. Since disbursement is capped at Rs 25,00,000 per annum and can run over several years, a sanctioned claim is not a one-time payment; confirm with the Directorate, each year, when the next instalment is due and whether any fresh documentation (such as updated employment proof) is needed to release it.