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

What is this Interest Subsidy component?

Interest Subsidy is a component of the scheme "Motivation of Entrepreneurs to Start Industries and Fiscal Assistance to Industries", administered by the Industries and Commerce Department, Union Territory of Puducherry. Under this component an industrial unit that has taken a loan from a financial institution towards the creation of fixed assets and working capital receives an interest incentive equal to 25 per cent of the annual interest amount paid.

The component is category-based rather than open to every industry. It was designed to lower the cost of borrowing for entrepreneurs from groups that historically found it harder to raise industrial finance; Scheduled Caste, Scheduled Tribe, women, physically handicapped and ex-servicemen entrepreneurs, and, separately, for industries the Union Territory wants to attract, namely thrust area industries and IT sector industries.

Two government orders define the benefit, and which one applies depends on when the unit commenced production. That single fact decides whether the annual ceiling is Rs 75,000 or Rs 5,00,000, so it is worth checking carefully before filing.

How much is paid, and under which order?

For industry set up by SC, ST or women entrepreneurs that commenced production on or after 2 August 2004:

• Interest incentive of 25 per cent of the annual interest amount paid, for five years, admissible from the date of commencement of commercial production.
• The maximum incentive admissible to each industry shall not exceed Rs 75,000 in any financial year.

For industry set up by SC, ST, women, physically handicapped or ex-servicemen entrepreneurs that commenced production on or after 24 August 2011:

• 25 per cent interest subsidy subject to a maximum of Rs 5,00,000 per annum for a period of five years.

In both cases the incentive is paid through the financial institution that lent to the unit. The department does not hand the money to the entrepreneur in cash; it credits it against the borrowing.

Who is eligible for the Interest Subsidy?

Your unit can claim if:

• The industry is set up by an SC, ST or women entrepreneur, and, under the 2011 order, also by a physically handicapped or ex-servicemen entrepreneur, or the industry is a thrust area industry or an IT sector industry.
• The unit has availed a loan from a financial institution towards the creation of fixed assets and working capital. "Financial institution" here means and includes PIPDIC, any other government corporation, scheduled banks including co-operative banks, and government co-operative societies.
• The industry commenced production on or after 2 August 2004 for the Rs 75,000 ceiling, or availed the loan and commenced production on or after 24 August 2011 for the Rs 5,00,000 ceiling.

You are not eligible, and cannot apply, if:

• Your unit is outside both eligibility routes, that is, it is neither owned by an entrepreneur from the listed categories nor classified as a thrust area or IT sector industry. A general manufacturing unit owned by a promoter outside those categories should look instead at the separate interest subsidy for micro, small, medium and large new industries under the 2017 incentives order.
• The unit has no institutional borrowing. Interest subsidy is computed on interest actually paid, so a fully self-financed unit has nothing to claim.
• The loan came from a private lender or moneylender rather than a recognised financial institution.
• The unit commenced production before 2 August 2004, which places it outside both orders.
• You are an individual seeking help with a personal or housing loan. The component is an industrial incentive tied to a registered industrial unit.

What documents are required?

How to apply for the Interest Subsidy

1. Establish which order applies to you. Check the date on which your unit commenced commercial production, and whether you are claiming as an SC, ST, women, physically handicapped or ex-servicemen entrepreneur, or as a thrust area or IT sector industry. This decides the ceiling.
2. Download the common application form for subsidies from industry.py.gov.in/common-application-subsidies, or collect it at the Directorate of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605009.
3. Get an interest certificate from your lender covering the financial year claimed, and assemble the loan sanction letter, commencement of production certificate, unit registration and, where relevant, your community, disability or ex-servicemen certificate.
4. Fill in every mandatory field in the form, self-attest the copies of the documents, and sign the application.
5. Submit the application to the Directorate of Industries and Commerce for the Puducherry region, or the Assistant Director at Kottucherry, Karaikal, or the technical officers at the Civil Station in Yanam or Mahe.
6. Ask for a receipt or acknowledgement with the date, time and a reference number.

What happens after the claim is filed?

Unlike most incentives in the Puducherry package, applications under this component are processed by the Industries Department directly to obtain sanctions and are not placed before the State Level Committee. That shortens the route, but the department still verifies the loan, the interest actually paid, the eligibility category and the date of commencement before sanctioning. The subsidy is then released through the lending institution.

By when must you apply?

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

Because the incentive runs for five years, a unit files a claim each year against the interest actually paid in that year, within the department's process.

Why claims under this component are rejected

• Category not established: no community, disability or ex-servicemen certificate, and no thrust area or IT sector classification either.
• Wrong ceiling claimed — a unit that commenced production between 2004 and 2011 asking for the Rs 5,00,000 ceiling introduced by the 2011 order.
• Interest certificate missing or unclear, so the admissible amount cannot be worked out.
• Loan not for fixed assets or working capital.
• Claim filed outside the one-year window.
• Loan taken from a lender outside the recognised list of PIPDIC, government corporations, scheduled and co-operative banks and government co-operative societies.

Related incentives in the Puducherry package

An entrepreneur claiming this interest subsidy may also be eligible under the wider "Various Incentives" order of 1 April 2017 to capital investment subsidy, generator subsidy of 50 per cent up to Rs 5 lakh, quality certification subsidy of 50 per cent up to Rs 2 lakh for up to three certifications, technology acquisition assistance of 50 per cent up to Rs 10 lakh, market development support of 50 per cent up to Rs 5 lakh, and reimbursement of half the cost of an energy or water audit up to Rs 25,000. All are filed on the same common application form, but the same investment cannot be subsidised twice.

Help and grievance redressal

• Directorate of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605009 to +91-413-2248476, 2248168, 2248320
• Karaikal: Assistant Director, Rural Industrial Estate, Kottucherry; +91-4368-265438
• Yanam; +91-884-2321257; Mahe, +91-490-233235
• Grievance redressal; industry.py.gov.in/grievance-redressal-mechanism

How to check your application status

This Interest Subsidy component is processed offline by the Industries and Commerce Department, so there is no separate online tracking portal for the claim itself. Once you have filed the form, follow up this way.

1. Keep the acknowledgement number. When you submit the common subsidy application form, ask the receiving office for a dated acknowledgement or diary number. Quote this number in every follow-up, whether by phone, in writing, or in person.
2. Call the office where you filed. For units in the Puducherry region, contact the Directorate of Industries and Commerce at Thattanchavady on +91-413-2248476, 2248168 or 2248320. Karaikal applicants can call the Assistant Director's office at +91-4368-265438; Yanam applicants at +91-884-2321257; Mahe applicants at +91-490-233235.
3. Ask specifically where the file stands, for example whether the loan and interest certificate have been verified, whether the eligibility category (SC, ST, women, physically handicapped, ex-servicemen, thrust area or IT sector) has been confirmed, and whether the sanction has been passed on to the lending institution for credit.
4. Visit in person if a call does not resolve it. Because this component is sanctioned directly by the department rather than routed through the State Level Committee, a visit to the Directorate (or the regional office at Karaikal, Yanam or Mahe) with your acknowledgement copy usually gets a faster, file-specific answer than a phone call.
5. Check with your bank or PIPDIC in parallel. Since the subsidy is credited through the financial institution that gave the loan, the lender's loan account statement will show the interest credit once the department has released the sanctioned amount, even before any confirmation reaches you directly.
6. Use the grievance redressal mechanism if there is no response. If a reasonable period has passed with no update, raise it through industry.py.gov.in/grievance-redressal-mechanism, citing your acknowledgement number, the date of filing and the office where it was submitted.

Because the claim is filed year by year against interest actually paid, keep a separate acknowledgement and follow-up trail for each financial year's claim rather than assuming one year's sanction covers the next.