Infrastructure Subsidy under Motivation of Entrepreneurs to Start Industries and Fiscal Assistance to Industries

What is the Infrastructure Subsidy in Puducherry?

Infrastructure Subsidy is a component of the umbrella scheme "Motivation of Entrepreneurs to Start Industries and Fiscal Assistance to Industries", run by the Industries and Commerce Department, Union Territory of Puducherry. The umbrella scheme is commonly abbreviated on departmental listings as MESIFAI.

Most of the incentives under that umbrella subsidise machinery. This one subsidises the building itself. The government's reasoning is practical: an IT or bio-technology company arriving in Puducherry usually wants finished floor space to move into, not a plot to develop, and the shortage of ready built-up space was holding back the sector. The component therefore pays a developer, or a company building for itself, to put up large-format premises.

According to the scheme details published on myScheme, the subsidy is 25% of the investment made on the building, subject to a maximum of Rs 1,00,00,000, and it applies to investment made on building on or after 31 July 2006.

What are the exact rates and ceilings?

The fourth line is the one worth noticing. A bio-technology company constructing its own premises faces a threshold ten times lower; 5,000 sq ft instead of 50,000; because laboratory and production space in that sector is typically small. The ceiling halves to Rs 50,00,000 in exchange.

Who is eligible for the Infrastructure Subsidy?

Applicants that can claim, on any one of these four grounds:

• An infrastructure developer who has invested in a building with a minimum extent of 50,000 sq ft constructed area, for leasing out to IT industries.
• An industrial unit investing in construction of a factory building of not less than 50,000 sq ft for setting up IT industries.
• An infrastructure developer who has invested in a building with a minimum extent of 50,000 sq ft constructed area, for leasing out to bio-technology industries.
• A bio-technology industry unit that has invested in a building with a minimum extent of 5,000 sq ft for self-occupation.

For this component the department defines "IT industries" to mean manufacturers of computer systems, software and Information Technology Enabled Services (ITES), Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO).

Who is not eligible:

• Buildings for general manufacturing industry. The component is confined to IT and bio-technology premises; an ordinary factory shed does not qualify under it, though the unit may still be able to claim under other MESIFAI components.
• Buildings below the size threshold, under 50,000 sq ft for the three main categories, or under 5,000 sq ft for a self-occupying bio-technology unit.
• Building investment made before 31 July 2006.
• Private individuals seeking a personal payment. This is a business incentive against documented construction expenditure by a developer or a registered industrial unit. An individual cannot apply for a household benefit under it.
• Residential or commercial real estate that is not built for, or leased to, an IT or bio-technology industry.
• Applicants filing beyond the one-year window described below.

What documents are required?

Two documents carry most of the weight here. The engineer's certificate for building valuation, assessed by the Public Works Department or PIPDIC, fixes the investment figure on which 25% is computed. The approved plan fixes the constructed area, which is what decides whether the 50,000 sq ft or 5,000 sq ft threshold has been crossed at all.

How to apply for the Puducherry Infrastructure Subsidy

1. Download the prescribed common application form for subsidies from industry.py.gov.in/common-application-subsidies. One form set covers the several components of the Motivation of Entrepreneurs scheme, so tick the Infrastructure Subsidy component clearly and state which of the four categories you fall in.
2. Fill in every mandatory field, in particular the constructed area in square feet, the date the building investment was made, and the capitalised value of the construction.
3. Attach self-attested copies of all mandatory documents, above all the engineer's certificate of building valuation from PWD or PIPDIC, the approved plan showing the constructed area, and, for a developer, the registered lease agreement with the IT or bio-technology occupier.
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 for every later enquiry.

What happens after you apply?

The Directorate of Industries scrutinises the application on merit and works out the quantum of subsidy admissible. The file is then placed before the State Level Committee, which goes into the merits of each case, decides whether the applicant qualifies, and recommends the amount. Sanction follows the committee's recommendation.

How is the Infrastructure Subsidy disbursed?

This component is not paid in one lump sum. The subsidy is released in annual instalments not exceeding Rs 25,00,000 per annum, until the total eligible subsidy is completed.

That schedule matters commercially. A developer who qualifies for the full Rs 1 crore will receive it over a minimum of four years, so the subsidy should be modelled as a multi-year receivable rather than as construction finance. A bio-technology unit at the Rs 50,00,000 ceiling receives it over at least two years.

Where the project is financed by a bank or financial institution, the subsidy is routed through that institution and adjusted against the loan or applied to additional fixed assets or working capital. Self-financed applicants are paid directly. "Financial institution" here includes PIPDIC or any other government corporation, and scheduled banks including co-operative banks.

How to check the status of your claim

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 PWD or PIPDIC valuation, 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. After the first sanction, follow up each year for the next annual instalment. Because the payout is staged, the file stays live for several years and needs to be tracked rather than filed away.

Why infrastructure subsidy claims fail

• The constructed area falls short of 50,000 sq ft, most often because common areas, stairwells or car parking were counted into the applicant's own measurement but not into the approved plan.
• The occupier is not an IT or bio-technology industry as the department defines those terms. A developer who leases the floor space to a call centre for a non-IT service, a retail tenant or an office of another kind will not clear this test.
• Building investment predating 31 July 2006.
• No registered lease agreement produced by a developer, leaving the end-use unproved.
• The building valuation not certified by PWD or PIPDIC, or a private valuation submitted in its place.
• Filing beyond one year of commencement of production or of completing expansion, diversification or modernisation.
• The same construction already subsidised under another government scheme.

Grievance redressal

Complaints about delay, under-assessment or rejection go first 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 to download, and no agent has any special standing before the State Level Committee.