Scheme for Plastic Industries

 

Plastic policy PPT_compressed

Scheme for assistance for Plastic industry – Gujarat Industrial Policy -2015

PREAMBLE- 

The Gujarat government has declared revised policy for plastic industry on 6th January, 2017 the Scheme for assistance for plastic industry under Gujarat Industrial Policy 2015 (Government resolution no. MIS-102014-924790-I) (hereinafter referred as Plastic Policy) aims to encourage the manufacturing sector to upgrade itself to suing cutting edge technology and innovative means to significantly add value, creating products that command a niche position in the global market.

 

  1.   Operative period of Plastic Policy

Plastic Policy shall remain in operation from the 1st January, 2015 to 31st December,   2019.

 

  1. Meaning of Plastic Industry Enterprise

Plastic Industry enterprise refers to that industrial unit, which engaged in manufacturing of plastic products/items/articles by using plastic as main raw materials. Plastic material means organic polymers of high molecular mass such as Polyolefin (LLDPE, LDPE, HDPE, PP), PVC, Nylon, Polyesters, Polystyrene, Polycarbonate, polyamide (nylon 6, nylon 66), etc.

 

  1. Meaning of New Industrial Undertaking, Existing Enterprise and Expansion
  2. New Enterprise

New enterprise means which has filed Industrial Entrepreneurs Memorandum/ Entrepreneurs Memorandum/ Udhyog Aadhar and commences commercial production during the operative period of Scheme.

 

  1. Existing Enterprise

Existing Enterprise means enterprise is in production before initiating expansion at the same location / premises

 

  1. Expansion

Expansion means where an existing enterprise increase its investment in gross fixed capital by at least 50% at the same location of its existing project, of which at least 60% of investment is made in plant and machinery, and also increases its installed capacity by at least 50% of existing products for which expansion is carried out. Such expansion will be eligible only if existing industrial unit has reached utilization of existing installed capacity of existing products at least to the extent of 75% during at least one out of the preceding three financial years and commencing production of said expansion during operative period scheme.

 

  1. Eligible Fixed Capital investment 

Eligible fixed capital investment means the investment made in new building, new plant and machinery, equipment and/or imported second hand plant and machinery/ equipment having residual life of minimum five years as certified by chartered Engineer, including cost of installation, erection, transportation, electrification and other related assets (except cost of land stamp duty and registration charges) required for manufacturing of the product.

 

  1. Time period for consideration of eligible fixed capital investment

The fixed assets acquired and paid after 1.1.2015 and during operative period of scheme or as defined hereunder will be considered as eligible fixed capital investment.

 

1 MSME Industrial Undertaking 6 months from the DOCP
2 Investment upto Rs. 100 crores 12 months from the DOCP
3 Investment more than Rs. 100 crore 18 months from the DOCP

DOCP: Date of Commencement of Production

 

  1. Quantum of Incentive
  2. Interest Subsidy

Interest subsidy @7% per annum out of interest payable on the term loan availed from bank or financial institution during the operative period of scheme for fixed capital investment with the maximum amount of Rs. 1 crore per annum for period of 5 years.

 

  1. SGST related incentive

 

  1. The eligible unit will be allowed reimbursement to the extent of 80% of the net SGST paid.
  2. Only 75% of eligible fixed capital investment of eligible enterprise will be considered for reimbursement.
  3. Reimbursement will be available for a period of 7 years from the date of production or completion of limit of 75% whichever is earlier. The eligible enterprise shall be entitled to avail the annual SGST incentive to the extent of 1/7th of monetary ceiling in particular year.

 

  1. Conditions for availing incentive 

 

  1. The incentive shall be available in the form of reimbursement only.
  2. The eligible industrial undertaking shall manufacture the goods on its own for which it is eligible for incentive.
  3. The eligible industrial undertaking shall remain in production during the incentive period.
  4. The eligible industrial undertaking shall have to make e-payment and submit e-returns.
  5. An industrial undertaking that has availed incentive under the scheme shall be required to employ persons domiciled in Gujarat to the extent of at least 85% of its total number of employees. The employment of persons domiciled in Gujarat in managerial and supervisory capacity shall not be less than 60% of the number of persons employed by the enterprise in managerial and supervisory capacity, subject to the requirement of employing at least 85% of the total number of employees from persons domiciled in Gujarat.

The industrial undertaking shall be required to submit a list of persons employed and such other information required for verification of having satisfied this condition, before the sanction of incentives under the scheme.

 

  1. An industrial undertaking that has availed similar incentive as provided under this scheme under any other scheme of the state government shall not be eligible for the incentive under this scheme.

However, the industrial undertaking may avail similar incentives under a scheme of the central government.

 

  1. Any investment made by an existing industrial undertaking for renovation, modernization, rehabilitation, or rationalization will not be eligible for incentive under this resolution.
  2. An industrial undertaking that has availed incentive under this scheme shall install and effectively operate and maintain pollution control measures as per the standards prescribed and approved by the competent authority in this regard.
  3. An industrial undertaking that has availed incentive under this scheme shall be required to remain in production continuously till the expiry of the eligible period of incentive. However, if production is discontinued due to reasons beyond the control of the management, the sanctioning authority may condone the period for which production is discontinued after due verification of details and reasons of discontinuation of production and after satisfying itself to the same.

 

  1. Expansion of existing unit

 

  • Conditions on quantum of Incentive: If the eligible enterprise availing incentive under this resolution is already manufacturing the same product in one or more existing industrial units in Gujarat owned by it or by its subsidiary, then the amount of net VAT paid by all such existing industrial units on the same product for five consecutive years commencing from the year in which enterprise avails incentive under this resolution shall not be lower than the average net VAT paid on the same product in the immediately preceding three financial years from the year in which the industrial undertaking avails incentive under this resolution.

If the amount of net VAT so paid by the existing industrial units in any of the five consecutive years is lower than the average net VAT paid in the immediately preceding three years from the year in which the industrial undertaking avails incentive under this resolution, then the amount of incentive availed under this resolution shall be reduced to that extent in the year in which the net VAT paid is lower.

 

  1. Illustration explaining Interest and SGST refund mechanism

Unit has investment of Rs. 30 crore and taken term loan of Rs. 20 crore @10% p.a., incentives available are as follow:

 

  • SGST incentive:

 

Capital investment  30 crore 
Eligible fixed capital investment 30 * 75% = 22.5 crore
eligible refund per year for 7 years 3.21 crore per year

      Hence, unit will be eligible to get refund of Rs. 3.21 crore in each year.

 

  • Interest Incentive:

Interest amount – 20 crore term loan * 7% interest rate = 1.4 crore – maximum eligible interest would be Rs. 1 crore

Now In above case, if unit has made purchases of 50 crore and sale of 95 crore. In such case, SGST paid on purchase @9% will be Rs. 4.5 crore and SGST payable @9% will be Rs. 8.55 crore on sale. In such case, refund calculation will be as follow:

 

SGST refund Amount (in crore) 
(A) SGST on sale Rs. 8.55
(B) SGST on purchase Rs. 4.50
(C) SGST Paid (A-B) Rs. 4.05
SGST eligibility 80% of (C) Rs. 3.24
Maximum refund eligible Rs. 3.21

Hence, total SGST eligible for refund will be Rs. 3.21 crore and Interest eiligible for refund will be Rs. 1 crore.

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