Subsidies for manufacturing in India: Maharashtra – package scheme of incentives, 2019

​​​​​​​​​​​​​​​​published on 27 March ​2024 | reading time approx. 6 minutes

In our special series of articles on the subsidies provided by State Governments in India, we start with Maharashtra where the State Government has been issuing incentive schemes for manufacturing companies in the form of “Package Scheme of Incentives” since 1964. The last update in such schemes has been in 2019, when the Government unveiled the PACKAGE SCHEME OF INCENTIVES, 2019 (“PSI, 2019”). PSI, 2019 emphasizes on ensuring sustained industria​l growth, improving the conducive industrial climate and providing a global competitive edge to the industries in the State. An overview of PSI, 2019 in terms of applicability, benefits, timelines etc. have been provided below.

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​What are the benefits under PSI, 2019?

As the benefits under PSI, 2019 differ for one category to another, an applicant can evaluate the benefits that are available based on the category, the applicant would fall into. Some of the major benefits under PSI, 2019 are elaborated below:

• Industrial Promotion Subsidy (“IPS”) as a percentage of gross State Goods & Services Tax (“SGST”) payable by the unit on the first sale of eligible products billed and delivered within the state of Maharashtra. 
  

• Exemption from payment of Stamp Duty during the investment period for acquiring land (including assignment of lease rights and sale certificate) and for term loan purposes.
• Exemption from payment of Electricity Duty during the applicable eligibility period. In addition to electricity duty exemption, MSMEs would be entitled to receive power tariff subsidies as well.
• New MSMEs would be eligible for Interest Subsidy in respect of interest actually paid to the Banks and Public Financial Institutions (excluding unsecured loans, private loans/borrowings, loans from NBFCs etc.). The amount of interest subsidy would be calculated at an effective rate of interest, after deducting the interest subsidy receivable from any agency of the State Government or under any Government of India Schemes.
• Research and Development units including stand-alone facilities of eligible industrial units would be considered as part of Fixed Capital Investment (“FCI”) for the purpose of availing fiscal incentives up to 25 percent of FCI (max. INR 1 billion).
• Apart from the above, other benefits such as subsidy on additional capital equipment acquired for Technology Up-gradation, subsidy on the expenses incurred on quality certification, subsidy on additional capital equipment acquired for cleaner production measures, etc. are also offered in PSI, 2019.
• Separate policies have been notified for providing incentives for investments in specified Thrust sectors where location constraints have been eliminated and investment limits have been reduced.

​When should an entity apply for the benefits under PSI, 2019?

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