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ABSTRACT Small Industries Department Announcement made by Minister (Finance) in the Budget Speech (2003-2004) Payment of back ended interest subsidy for term loans obtained for technology upgradation, modernisation term loan obtained under NEF Scheme, NSIC-SIDCO consortium loan, composite term loan and loans obtained by Tiny Industries under Credit Guarantee Fund Trust Scheme from any bank or financial institution and term loan obtained for ISO certification, R&D resulting in Registration of Patent and intellectual property rights Expenditure sanctioned Guidelines approved. SMALL INDUSTRIES (DEV.1) DEPARTMENT G.O.Ms.No.131, Read: From the Industries Commissioner and Director of Industries and Commerce, Chennai letter No.34354/KC1/2003 dated 26.7.2003 and 13.8.2003 ORDER: During the discussion with the Lead Banks, Reserve Bank of India, SIDBI and Tamilnadu Industrial Investment Corporation, it was informed that earmarked funds for SS Sector could not be lent in full and that the Government of India schemes were also not availed by SSI units due to heavy interest burden. Therefore, a meeting was convened on 5.3.2003 with the Bankers. At this meeting, the Bankers suggested that a portion of interest may be paid as subsidy to the SSI unit to reduce the burden of interest, In view of this, in the Budget speech dated 21.3.2003 M(F) has announced new schemes for payment of back ended interest subsidy as detailed below: Small and Medium entrepreneurs in Tamil Nadu have to be encouraged. The lesson from China is that a vibrant small and medium enterprises sector is vital for the robust growth of the economy and for increasing employment opportunities. The Budget includes a provision of Rs.2 Crores for Technology Upgradation and Modernisation Scheme. Under this scheme, the Government will provide back ended interest subsidy in order to enable SSI units to upgrade their units and compete in the market. Likewise for SSIs started under the National Equity Fund Scheme, back ended interest subsidy will be extended. The Budget provides Rs.1 Crore for the purpose. For the tiny sector, a similar scheme will be launched. A provision of Rs.25 Lakhs is made in the Budget. The Budget also includes a provision of Rs.25 Lakhs to support SSI units to obtain ISO certification and engage in research and development initiatives. These measures will go a long way in giving a fillip to small scale and tiny industries in Tamil Nadu. 2. The Government have made suitable provision in the BE 2003-04 for the above schemes. In the letter read above, the Industries Commissioner and Director of Industries and Commerce after consulting Managing Director, Tamilnadu Industrial Investment Corporation / SIDCO sent guidelines for implementation of the scheme. 3. The Government after careful consideration approve the guidelines as in the Annexure to this order. 4. Sanction is accorded to the incurring of an expenditure of Rs.2.00 Crore (Rupees Two Crore only) towards payment of back ended interest subsidy to SSI units for the term loan obtained from Tamilnadu Industrial Investment Corporation / Banks for technology upgradation and modernisation. The expenditure should be debited to the head of account. 2851.00 Village and Small Industries II State Plan-102 Small Scale Industries LN Assistance to SSI for technology upgradation / modernisation of SSI unit 11 subsidies 01 Individual Based Subsidy (DP code 2851 00 102 LN 1110) Out of Rs.2.00 Crore (Rupees Two Crore only) sanctioned, Rs.1.00 Crore (Rupees One Crore only) is earmarked for technology upgradation and modernisation schemes funded by Tamil Nadu Industrial Investment Corporation Limited (TIIC) and the balance Rs.1.00 Crore (Rupees One Crore only) is earmarked for technology upgradation and modernisation funded by Banks. 5. Sanction is accorded to the incurring of an expenditure of Rs.1 Crore (Rupees One Crore only) towards payment of back ended interest subsidy to SSI units for term loans obtained from Tamilnadu Industrial Investment Corporation under National Equity Fund Scheme. The expenditure shall be debited to the Head of account. 2851.00 Village and Small Industries II State Plan-102 small Scale Industries LO Assistance to the Small Scale Industrial Units under National Equity Fund Scheme II Subsidies 01 Individual Based Subsidy (DP Code 2851 00 102 LO 1118) The amount of Rs.1.00 Crore (Rupees One Crore only) sanctioned herein is for the term loans under NEF schemes funded by TIIC only. 6. Sanction is accorded to the incurring of an expenditure of Rs.25 Lakhs (Rupees Twenty Five Lakhs only) towards payment of back ended interest subsidy to Tiny sector for composite term loans obtained under NSIC-SIDCO consortium loan, composite term loan and loan obtained by Tiny Industries under Credit Guarantee Fund Trust Scheme from any Bank or financial institutions. The expenditure shall be debited to the head of account 2851.00 Village and Small Industries II State Plan 102 Small Scale Industries LP Assistance to new Tiny Industries under NSIC-SIDCO consortium II Subsidies 01 Individual Based Subsidy (DP Code 2851 00 102 LP 1116) 7. Sanction is accorded to the incurring of an expenditure of Rs.25 Lakhs (Rupees Twenty Five Lakhs only) towards payment of back ended interest subsidy for term loan obtained from banks / financial institutions by SSI units for ISO certification. Research and Development resulting in Registration of Patent Right and Intellectual Property Rights. The expenditure shall be debited to the head of account. 2851.00 Village and Small Industries II State Plan 102 Small Scale Industries LR Assistance to SSI units for ISO certification and Research and Development II Subsidies 01 Individual Based Subsidy (DP Code 2851 00 102 LR 1112) 8. The SIDCO shall be the Nodal agency only for implementation of back ended interest subsidy scheme for loans obtained under NSIC-SIDCO consortium and loan obtained by Tiny Industries under CGFT scheme referred to in para 6 above. For other schemes, referred to in para 4,5, and 7 above. TIIC shall be the Nodal Agency. It is clarified that for the schemes implemented by TIIC as nodal agency back ended interest subsidy is 3% above PLR or actual interest rate minus PLR whichever is less. For NSIC-SIDCO consortium loan and loan obtained by Tiny Sector under CGFT Scheme implemented by SIDCO as nodal agency back ended interest subsidy is 3% above 10.5% or actual rate of interest minus 10.5% whichever is less, since NSIC does not maintain PLR. 9. The IC & DIC is permitted to draw and disburse the amount to the nodal agencies at appropriate stage. 10. The Industries Commissioner and Director of Industries and Commerce / Managing and Director, Tamil Nadu Industrial Investment Corporation Limited / Managing Director, Small Industries Development Corporation Limited/ National Small Industries Corporation/ State Level / District Level Lead Banks are requested to give wide publicity about this scheme so that large number of SSI units are benefited. 11. The order issues with the concurrence of Finance Department vide its U.O. No.258/SS(Dr.KSG)/03, dated:25.11.2003. (BY ORDER OF THE GOVERNOR) D.RAJENDRAN, To The Industries Commissioner and Director of Industries & Commerce, Chennai..5. The Managing Director, Tamil Nadu Industrial Investment Corporation Ltd., Chennai.35. The Managing Director, Tamil Nadu Small Industries Development Corporation Ltd., Chennai.16. The Regional Director, NSIC, Anna Salai, Chennai-2. The Accountant General, Chennai 18/35/6 (By Name) State Level District Lead Banks Copy to CMs Office, Chennai -9 Sr. P.A to M(RI), Chennai 9 The Finance Department, Chennai..9. The Industries Department, Chennai.9. All Sections in Small Industries Department. -/ Forwarded/By order/- SECTION OFFICER ANNEXURE TO G.O.Ms.No. 131 SID dated 9.12.2003 The following guidelines are issued for implementation of the scheme for payment of back ended interest subsidy not exceeding 3% above PLR for loans obtained for Technology Upgradation, Modernization, loans obtained under National Equity Fund, National Small Industries Corporation Small Industries Development Corporation consortium loan Composite Term Loan, loan obtained by Tiny Industries under Credit Guarantee Fund Trust Scheme from Banks or financial institutions, loan for ISO certification, Loan for Registration of Pattent right and Intellectual property rights. Nodal Agency: 1. Tamilnadu Industrial Investment Corporation is the nodal agency for the above schemes except National Small Industries Corporation- Small Industries Development Corporation Consortium Loan Schemes and composite term loan and loan obtained by Tiny Industries under Credit Guarantee Fund Trust Scheme. For National Small Industries Corporation- Small Industries Development Corporation consortium loan, Composite Term Loan and loan obtained by Tiny Industries under Credit Guarantee Fund Trust Scheme Small Industries Development Corporation will be the nodal agency. The Industries Commissioner and Director of Industries and Commerce shall release the fund sanctioned by the Government from funds provided in the Budget to these Nodal Agencies. Eligibility: For term loans sanctioned by Tamilnadu Industrial Investment Corporation/SIDBI/Nationalized Banks and Scheduled Banks/NSIC for technology upgradation modernisation for NSIC - Small Industries Development Corporation consortium, CTL loan obtained by Tiny Industries under Credit Guarantee Fund Trust Scheme are eligible for this subsidy. For loans sanctioned only by Tamilnadu Industrial Investment Corporation under National Equity Fund scheme interest subsidy is eligible. For loans sanctioned by Tamilnadu Industrial Investment Corporation/SIDBI/Nationalised Banks, Scheduled banks for ISO certification, for registration of patent rights and intellectual property rights are eligible for this subsidy. The SSI Units/Tiny Units for which loan has been sanctioned for the aforesaid schemes on and from 1.4.2003 are eligible for this subsidy. Based on the announcement made in the year 2001-02, three units which have obtained loan under TUF and referred to by Industries Commissioner and Director of Industries and Commerce in his letter No.RC56372/KC1/02 dated 23.10.02 are also eligible for back ended interest subsidy at the rate of 3%. Interest subsidy shall be reimbursed once in three months on a quarterly basis to the financial institutions. The Unit should have been prompt in payment of loan and interest. If there is any default in payment of loan and interest as per schedule of payment fixed by financial institution back ended interest subsidy will not be paid during the period of default. However, if the Tiny/SSI units subsequently pay the installment, interest subsidy alone shall be paid. Penal interest or charges for belated payment, if any shall not be paid by the Government. The Unit should be in operation during the period for which interest subsidy is claimed. The interest shall be for a maximum period of 5 years only irrespective of the period of repayment of loan. Further, the maximum amount of back ended interest subsidy payable per loan by the Government shall be Rs.15/- lakhs only. Mode of disbursement: For Modernisation, Technology upgradation, loan under National Equity Fund Scheme, ISO certification, Registration of Patent right, Intellectual property right the Tamilnadu Industrial Investment Corporation shall compute total requirement of back ended interest subsidy for the loan disbursed by Tamilnadu Industrial Investment Corporation and furnish to Industries Commissioner and Director of Industries and Commerce on quarterly basis. Similarly all Banks and financial institutions should furnish details regarding loan amount disbursed and the amount required as interest subsidy for the above schemes and loan obtained under Credit Guarantee Fund Trust scheme to Industries Commissioner and Director of Industries and Commerce on quarterly basis. For loans obtained for ISO certification and Patent Rights Registration, National Small Industries Corporation, Banks, financial institutions shall furnish these details regarding loan sanctioned and amount required as interest subsidy to Industries Commissioner and Director of Industries and Commerce on quarterly basis. The details should be furnished by Tamilnadu Industrial Investment Corporation, Banks and Financial Institutions to Industries Commissioner and Director of Industries and Commerce on or before the 20th of the succeeding month of each quarter. The Industries Commissioner and Director of Industries and Commerce shall release the interest subsidy to Tamilnadu Industrial Investment Corporation, Banks, Financial institutions as per their claim from the funds sanctioned by the Government within 10 days from the date of receipt of the claim. SSI units which have obtained loan after having paid the instalments of principal and interest relating to the claim period upto date to Tamilnadu Industrial Investment Corporation/Banks, Financial Institutions shall apply through the Branch Managers Tamilnadu Industrial Investment Corporation or through Banks or Financial Institutions which sanctioned loan for release of subsidy. The Branch Manager of Banks and concerned financial institutions shall forward the application together with recommendations regarding eligibility to Industries Commissioner and Director of Industries and Commerce. The Branch Manager, Industrial Investment Corporation shall forward the applications together with recommendations regarding eligibility to Managing Director, Tamilnadu Industrial Investment Corporation. The Managing Director, Tamilnadu Industrial Investment Corporation shall consolidate and forward these applications to Industries Commissioner and Director of Industries and Commerce. The subsidy shall be released to the Branch Manager, Tamilnadu Industrial Investment Corporation under intimation to Managing Director, Tamilnadu Industrial Investment Corporation, Banks, financial institutions under intimation to SSI units and this subsidy shall be adjusted to the subsequent dues on their account as per schedule of repayment and shall not be disbursed to the unit in cash. National Small Industries Corporation - Small Industries Development Corporation Consortium, Composite Term Loan and Loans obtained by Tiny Industries under Credit Guarantee Fund Scheme. The funds shall be released to Small Industries Development Corporation by Industries Commissioner and Director of Industries and Commerce from the funds sanctioned by the Government. Small Industries Development Corporation in consultation with NSIC shall compute loan sanctioned and arrive at the amount required for back ended interest subsidy. Tiny units after having paid loan and interest as per the repayment schedule shall apply to Small Industries Development Corporation for reimbursement of back ended interest subsidy on quarterly basis through National Small Industries Corporation. These details should be furnished on or before 20th of succeeding month of each quarter. The subsidy shall be released by Small Industries Development Corporation to the National Small Industries Corporation within 10 days from date of receipt of claim and this amount shall be adjusted to the subsequent dues on their account as per schedule of repayment and shall not be disbursed to the Unit in cash. Quantum of subsidy: The quantum of back ended interest subsidy for the schemes implement by Tamilnadu Industrial Investment Corporation Banks will be 3% over PLR or actual interest rate minus PLR whichever is less or in cases where PLR is not followed by any financial institution subsidy will be 3% over 10.5% or actual interest minus 10.5%, whichever is less. If the rate of interest charged for the schemes implemented by Tamilnadu Industrial Investment Corporation or Banks or financial institution is equal to or less than PLR or less than 10.5% no interest subsidy shall be sanctioned by the Government. Error & Omissions: If it is found that the subsidy was released inadvertently for ineligible cases or more than what is eligible it is the responsibility of the financial institutions to refund the amount to the Government immediately. Accounting by Nodal Agencies: The Nodal Agencies shall maintain a separate Bank account for the amount released by Government and disburse the subsidy to the lending institutions as per above guidelines. The interest earned in this account shall be utilized for payment of back-ended interest subsidy. At the end of every financial year the Nodal Agency shall render utilization certificates and accounts to Industries Commissioner and Director of Industries and Commerce in the month of May, in the following proforma: Utilisation Certificate & Accounts for the year Opening balance as on1.4. Add: Amount released by the Government during the current year Interest earned so far ---------------- Total --------------- Less: Subsidy disbursed Closing balance as on 31.3. --------------- The Nodal Agency shall disburse the subsidy within the amount released by Government and any excess amount released by the Nodal agency will not be reimbursed by Government. D. RAJENDRAN -/True Copy/Forwarded/- Section Officer
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