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Central Subsidies
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Working Capital Interest Subsidy Scheme
INTRODUCTION
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The scheme is for
Interest subsidy on the Working Capital Loans for industrial
units in the North Eastern Region.
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The scheme is
effective from 24.12.1997 and will remain in force upto
31.03.2007.
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It is applicable
to new industrial units and existing industrial units
undertaking substantial expansion in the Growth Centers or
Integrated Industrial Development Centers or industrial
estates/parks/export promotion zones set up by states in
the NE region.
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The scheme is
also applicable to new industrial units and existing industrial
units undertaking substantial expansion in specified
industries located outside the above specified locations.
DEFINITION
- Industrial unit: Industrial
undertaking, suitable servicing unit other than that run
departmentally by GOI/State Govt.
- New industrial unit: Industrial
unit for the setting up of which effective steps were not taken
prior to 24.12.1997.
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Existing
industrial unit: Industrial unit set up prior to the operative
date of the scheme i.e. 24.12.1997.
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Substantial
expansion: Increase in the value of fixed capital investment of
an industrial unit by not less than 10 % for the purpose of
expansion of capacity/modernisation and diversification.
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Effective steps:
It means one or more of the following steps:
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That 10% or
more of the capital issued for the industrial unit has been
paid up.
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That any part
of the factory building has been constructed.
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That a firm
order has been placed for any plant and machinery required
for the industrial unit.
- Fixed Capital Investment: It means
investment in land, building and plant and machinery.
NORMS FOR CALCULATING WORKING
CAPITAL
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The minimum
Working Capital: @ 25% of annual turnover.
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Inventory norms
may be applied, if necessary, after providing for aforesaid
minimum level.
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Working Capital
below the minimum level may be justified under special
circumstances as in case of ancillary units in small scale
sector.
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Working Capital
includes physical inventories such as materials, fuel, stores
etc., cash deposits in hand, bank, and net balances.
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Working Capital
excludes unused overdraft facility, fixed deposits, advances for
fixed assets, loans and advances by proprietor, long term loans
and investments.
AMOUNT OF ADMISSIBLE SUBSIDY
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An interest
subsidy to the extent of 3% of the Working Capital advanced by
the Scheduled Banks or Central/State Financial Institutions.
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It is for a
maximum period of 10 years from the date of commencement of
production.
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