Schemes For MSMEs By The Government of Tamil Nadu

Tamil Nadu is the tenth largest state in the southernmost part of the Indian subcontinent. The economy of the state is Rs. 20.5 4 trillion which makes Tamil Nadu the second largest state in terms of economy. It is one of the most urbanized and industrialized states. one-third of the GDP of the state is derived from the manufacturing sector. Tamil Nadu is one of the leading states in the textile sector and the spinning sector of Tamil Nadu accounts for approximately 80% of the total installed capacity of India.

The state government does not want to stop just here it wants to advent great growth and development for the same many schemes have been introduced for micro small and medium enterprises they are as under:-

  • New Enterprise Cum Enterprise Development scheme (NEEDS):- This scheme is promoted by the Directorate of Industries and Commerce, Government of Tamil Nadu. The main objective of NEEDS is to provide educated youth with opportunities for entrepreneurship by providing capital and interest subsidy. If you have any Degree, Diploma, ITI or Vocational Training from recognized Institutions you can apply for this scheme.

The eligibility criteria of the New Enterprise Cum Enterprise Development Scheme are:-

  1. Age Criteria:- Entrepreneurs should be within the age bracket of 21 to 35 years and are under the general category. Whereas in the case of special category entrepreneurs should be within 21 to 45 years. The special category includes people who are Women, SC, ST, BC, MBC, minorities, ex-servicemen, transgenders and differently-abled persons.
  2. Academic Qualification:- An entrepreneur should hold a Degree, Diploma, ITI or Vocational Training from a recognized Institution.
  3. Place of Residence:- You need to be a resident of the state for not a minimum of three years.
  4. Business Entity:- You can set up both proprietorship or partnership business. But remember you need to start a new business. 
  5. Collateral:- Banks or Tamil Nadu Industrial Investment Corporation Limited (TlIC) would decide security. 
  6.  Any projects without capital expenditure or self-financed are not eligible for subsidy under this scheme. If you have already availed subsidy under any other State Government or Government of India schemes such as Prime Minister Rojgar Yojana, Rural Employment Generation Program, Prime Minister’s Employment Generation Program, Unemployed Youth Employment Generation Program, Tamil Nadu Adi Dravidar Housing and Development Corporation Limited and Self-help group then you cannot avail this scheme. 
  7. Do remember you should not be a defaulter to any Bank or Tamil Nadu Industrial Investment Corporation Limited.

The subsidy can be availed upto 25% of the cost of the project but not exceeding Rs 25 lakhs. If the cost of projects exceeds Rs 1 crore then you can avail subsidy of Rs 25 lakhs. Capital expenditure and margin money for working capital would be included in the cost of the project. Subsidy for rented or leased building, technical know-how, preliminary or preoperative expenses won’t be given. 

Along with a 25% subsidy of 3% on interest also provided under the NEEDS Scheme. If enterprises are financed by Tamil Nadu Industrial Investment Corporation, then the loan extends by a 3% rebate and even 3% of the interest is reimbursed. General category entrepreneurs need to contribute 10% of the project cost whereas Special category entrepreneurs need to contribute 5% of the cost of the project cost.

All manufacturing and service activities are covered under this scheme but need to follow the guidelines of TIIC or the bank. If you are dealing in projects like eco-friendly, accord importance to energy conservation or export-oriented then you would be given priority.

Following activities are not covered under this scheme are:-

    1. Activities that are directly connected with agriculture.
    2. Sericulture Animal Husbandry like Pisciculture, Piggery, Poultry etc.
    3. Manufacturing of Polythene carry bags which are of less than 40 microns thickness.
    4.  Manufacture of recycled plastic bags or containers storing, carrying, dispensing or packaging.
    5. Sugar.
    6. Distilleries, Brewery and extraction of malt.
    7. Enterprises utilizing Molasses as a raw material for the manufacture of potable alcohol.
    8. Manufacture and blending of fertilizers.
    9. Mining and Quarrying Ores, minerals etc.
    10. Manufacturing of intoxicated items like Beedi, Pan, Cigar or Cigarette etc.
    11. Saw Mills.
    12. Cement.
    13. Calcium Carbide.
    14. Slaughter House.
    15. Repacking of drugs, Medicine or Chemical, but without any processing or value addition.
    16. Azoic or Reactive Dyes.
    17. Firecrackers.
    18. Industries manufacturing or utilizing Ozone-depleting substances.
    19. Industries involving hazardous activities.
    20. Cyanide.
    21. Caustic Soda.
    22. Potassium Chloride.
    23. Manufacturing of fiber like Nylon, Rayon & Polyester.
    24. Real Estate.

The following documents are required to apply for this scheme:-

    1.   Copy of Birth Certificate or Transfer Certificate for age proof.
    2. Copy of Ration Card/Smart Card or Residence Certificate from Tahsildar for address proof.
    3. Copy of Degree or Diploma Certificate.
    4. Community Certificate.
    5. Certificate of proof for ex-servicemen, differently-abled or transgenders if applicable.
    6. Project Report along with projected sales and cash flow statements for the next three years.
    7. Copy of land document.
    8. Estimate of building obtained from the chartered civil engineer.
    9. Quotations for the machinery and equipment.
    10. Is the case of a partnership firm partnership deed is required
  • Unemployed Youth Employment Generation Program (UYEGP):- This scheme has been introduced by the micro small and medium enterprises department of the government of Tamil Nadu. The main perspective of this scheme is to remove the problem of unemployment for the socially and economically weaker section of the society and most importantly educated but unemployed people. Under this scheme, unemployed people are motivated to become self-employed by setting up their service or manufacturing business by availing financial assistance and by getting subsidies from the State Government. The eligibility criteria to avail the benefit under UYEGP scheme is as under:-
  1. The entrepreneur should have a minimum eight standard qualified
  2. Should be of a minimum of 18 years and a maximum of 45 years both for General and Special Category.
  3. The total family income of the applicant along with the spouse should not exceed Rs.1,50,000 per annum.
  4. The entrepreneur should be a resident of Tamil Nadu for at least three years.
  5. EDP training is compulsory for availing of the loan.
  6. The applicant should not have availed loan or subsidy under any other State or Central Government scheme.

This scheme covers all the cities and districts of Tamil Nadu. The activities covered under the UYEGP scheme are all economically viable service, manufacturing and business activities but excludes direct agricultural operations like raising of crops etc. The maximum cost of project should be:-

  1. Rs.  10 lakhs for the manufacturing sector.
  2. Rs  3 lakhs for the service sector.
  3. Rs. 1lakh for the business sector.

Promoters contribution to the project cost for the general category should be 10% whereas for the special category it should be 5%. The maximum quantum of subsidy under this scheme is 25% of project cost and a maximum of Rs.125000. The amount of loan from the bank would be 90-95% of the project cost including the government subsidy of 25%. The rate of interest is charged as per the guidance of the reserve bank of India and the tenure of repayment is five years. Following documents are required to apply for this loan:-

    1. Educational qualification certificate
    2. Quotation and Project Report
    3. Nativity certificate 
    4. Community Certificate
    5.  Certificate if an ex-serviceman, person with differently or a transgenders 
    6.  Quotations with GST number
    7. Affidavit
  • Capital Subsidy Scheme:- All MSMEs that are engaged in the manufacturing business or are set up in the state and investing in capital assets like plant and machinery are eligible to avail capital subsidy of 15%. But to a maximum limit of Rs 30 lakhs. Micromanufacturing enterprises are those units that invest less than Rs.25 lakhs on investment in plant and machinery. Additional subsidy of 5% and a maximum of Rs.2 lakhs is given to entrepreneurs that are women, SC or ST, physically disabled or transgender.

You can even avail of an additional capital subsidy of 25% if a plant or machinery is installed to promote cleaner and environment-friendly technologies, and the maximum limit is Rs 3 lakhs. A certificate from the Tamil Nadu Pollution Control Board is required for the same.

Educated unemployment is a serious stumbling block and if this figure increases it would be a hornet’s nest for any state as it will cause hindrance in the development of the state. To overcome this problem the Government of Tamil Nadu has developed these schemes for the residents of the state to set up the startup and become a job provider instead of a job seeker.

Read more about the Schemes levied by other states for MSMEs here.

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