The incentives offered by the Government of Tamil Nadu's towards industrial development in the state are comparable to the best in the country. These incentives have been proposed to enhance the competitiveness of the state and also foster the pace of industrialisation. Several capital subsidies have been offered as a percentage of the fixed assets costs involved in the investment, subject to the maximum amount specified. SIPCOT is the authorised agency to receive applications, sanction and disburse for medium and large industries. Following table is a comprehensive list of concessions and incentives offered by the state to encourage investments and promote industrial activities.

A recent study by the National Council of Applied Economic Research (NCAER) made a comparison of the incentive packages of all Indian States which reveals that Tamil Nadu offers the most attractive package among industrialised States of India.

Tamil Nadu offers the best incentives package for industries, among industrialised states in India.

Tamil Nadu ranks II at the all India level in terms of attractiveness of incentives.

NCAER - Incentives Index

Capital Subsidies offered by Govt. of Tamil Nadu

General Terms & Conditions for Availing Subsidies

Second hand equipment is not eligible for any subsidy. However, secondhand imported machines are eligible for subsidy provided that they are imported for the first time and it has residual life of a minimum of 5 years based on the Chartered Engineer's Certification on the life and value of such machines.

In case of lands purchased on lease basis, the assets held by the entrepreneur as described here shall also be liable for eligibility for sanction of State Capital subsidy, subject to the condition that the period of lease of the land is for a minimum period of 20 years:

Where land and/or building is held on premium lease arrangements, premium paid by the lease holder on the date of application for grant of subsidies.

Where buildings or work sheds are constructed on lease land by the entrepreneur utilising his own funds the market value of the building/work sheds so constructed as assessed by the competent authority.

Locational policy restrictions will not be applicable for sanction of capital subsidy to specified category of thrust industries set up anywhere in the State; besides subsidies for effluent treatment plants, purchase of generators and mega projects are also exempted from locational policy restrictions:

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Capital Subsidies

Most Backward area capital subsidy

Investment subsidy will be given at the rate of 20% or fixed assets subject to a maximum of Rs.20.00 lakhs for all new industries set up in 71 most backward blocks and SIPCOT Industrial complexes at Pudukkotai, Manamadurai and Tuticorin including SIDO Industrial estate at Tuticorin.

Backward area capital subsidy

Investment subsidy will be given at the rate of 15% on fixed assets subject to a ceiling of Rs.15.00 lakhs for new industries set up in 216 backward blocks of the State and in all other industrial estates & complexes developed by SIPCOT, TACID, and SIDCO.

Special capital subsidy for thrust industries

A higher rate of investment subsidy will be extended to certain thrust industries located anywhere in State.

Electronics - 20% of fixed assets subject to a maximum of Rs.20.00 lakhs.

Leather - 20% on fixed assets subject to a maximum of Rs.20.00 lakhs.

A special capital subsidy of 10% of fixed assets subject to a ceiling of Rs. 15.00 lakhs will be extended to medium and large industries set up anywhere in the State in the following categories:

• Automobile spare parts
  
• Drugs & Pharmaceuticals 
  
• Solar energy and other non-conventional energy devices (except wind mills)* 
  
• Pollution control equipment 
  
• Export oriented gold jewellery making and diamond processing unit.
  
• Jute industries in specified areas 
  
• Jute industries in specified areas
  
• Sport goods and accessories 
  
• Cost effective building materials like Aluminium or PVC doors, window frames etc.

Small scale industrial units in the above thrust industry groups are eligible for the above special capital subsidy at a higher rate of 20% of fixed assets subject to a maximum of Rs.15.00 lakhs irrespective of their location.

Whereas "users" of solar energy equipment and renewable energy equipment are eligible for subsidy at the rate of 10% of cost of equipment up to a ceiling of Rs.10.00 lakhs irrespective of small/medium/large industries. The user must be an industrial user.

Wind mills are not eligible for special subsidy since 17.3.1997

Mega projects subsidy

To attract mega projects into the State, attractive capital subsidies have been introduced as hereunder to industries set up in the State (Subject to specified locational restrictions).

For project with an investment of Rs.50.00 crores Rs.25.00 lakhs crores and above but below Rs.100.00 crores

For projects with an investment of Rs.100.00 crores Rs.50.00 lakhs crores and above but below Rs.200.00 crores

For projects with an investment of Rs.200.00 Rs.100.00 lakhs crores and above

The above subsidies are extended to existing industries undertaking expansion/ diversification without any limit to the number of such expansions/diversification. The envisaged additional turnover of such expansion/diversification should be atleast 15% increase in existing turnover of the company undertaking expansion/diversification.

Subsidy for tourism projects

Following tourism projects are eligible for various concessions, incentives and subsidies as applicable to other industries:

One star, two star and three star hotels with investment less than Rs.100.00 lakhs to be set up in Tamilnadu excluding the Corporation limits of Madras, Coimbatore and Madurai. 

Amusement parks  Golf courses Restaurants approved by Government of India/Government of Tamilnadu 

New tourism projects in the above categories will be extended, a capital subsidy at the rate of 10% of total investment excluding cost of land subject to a maximum of Rs. 10.00 lakhs per project.

Capital subsidy @ 15% for purchase of generators to be installed in New tourism project with a separate ceiling of Rs.5.00 lakhs which is exclusive of ceiling of Rs.10.00 given as capital subsidy on the total investment in the project.

Additional subsidy for employment of women workers.

New industrial units which employ more than 30% women in their work force will be eligible for an additional subsidy of 5% upto a ceiling of Rs.5.00 lakhs.

Generator subsidy

In order to encourage units to have reliable power supply, subsidy for installation of new generators for captive use to the extent of 15% of cost upto a ceiling of Rs. 5.00 lakhs is also extended.

Special Effluent treatment plant subsidy

A special subsidy of 10% of the value of assets created towards setting up of effluent treatment plant with a ceiling of Rs.2.00 lakhs will be made available for installation of effluent treatment plant by the existing tanneries.

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Investment Subsidy

Investment Subsidy will be 20 % on  fixed assets subjects to a maximum of Rs. 20 lakhs for all new industries in 31 Most Backward Taluks.

Investment Subsidy will be at the rate of 15 %  on fixed assets subject to a ceiling of Rs. 15 lakhs in 76 backward taluks of the State and in all Industrial Estates and Complexes developed by the Government Agencies.

A higher rate of Investment Subsidy will be extended to certain thrust industries located anywhere in the State.

• Electronics 20 % of fixed assets subject to a maximum of  Rs. 35 lakhs.  
• Leather 20 % of fixed assets subject to a maximum of Rs. 20 lakhs.  

A special Investment Subsidy of 10 % on Fixed Assets subject to a maximum of Rs. 15 lakhs will be extended to industries in the following categories:

• Automobile ancillaries;  
• Drugs and Pharmaceutical;  
• Solar Energy and other non-conventional energy devices;  
• Export Oriented Gold Jewellery making and Diamond   processing;  
• Pollution Control Equipment;  
• Jute Industry in specified areas;  
• Sports goods and accessories;  
• Foods processing industry ;  
• Cost effective building materials.  

New Industrial Units which employ more than  30 % women in their workforce will be eligible for an additional subsidy of 5 % upto a ceiling of Rs. 5 lakhs.

In order to encourage units to have reliable power supply subsidy for installation of new generators for captive use to the extent of 15 % of cost upto a ceiling of Rs. 5 lakhs is also extended.

To enable large units to plan social infrastructure as part of their projects, a Special Subsidy of Rs. 25 lakhs for units with an investment of Rs. 50 crores and above and below Rs. 100 crores and a subsidy of Rs. 50 lakhs for units with an investment of Rs. 100 crores and above boost to mega investments, a subsidy of Rs. one crore will be given for investments of Rs. 200 crores and above.

A concerted effort to streamline the procedures for extension of incentives will be undertaken. The incentives will be released promptly with the minimum of procedural formality. Adequate Budgetary support to facilitate prompt disbursement of subsides will be provided.

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Sales Tax Concessions 

A granted scheme of Sales Tax deferral will be implemented.

The present scheme provides for 9 years deferral in Backward and Most Backward Taluks and 5 years deferral in other areas.

A special scheme of sales tax deferral/waiver will extended for large units established anywhere in the State. This will consist of :

Units with an investment of Rs. 50 crores and above  and below Rs. 100 crores	Waiver of Sales tax for 5 years or deferral of tax for 10 years upto full value of investment.
Units with an investment of  Rs. 100 crores and above and below Rs. 300 crores.	Waiver of Sales tax upto 6 years or deferral of tax or 12 years upto full  value of investment.
Units with an investment of Rs. 300 crores and above.	Waiver of Sales tax upto  7 years or deferral of tax upto 14 years upto full value of investment.

 
Full exemption of stamp duty will be given on land purchased for industrial units in all industrial estates developed by Government agencies.

Full exception from electricity consumption tax will be given for 3 years for all the new units.

Captive generating units will be fully excepted from electricity duty.

A Sales Tax Reforms Committee will be constituted to evolve a rational long term sales tax policy.

Continuous dialogue with industry will be held to enable a sound taxation policy. An index to gauge need for reliefs will be developed.

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Credit Linked Capital Subsidy Scheme

The Government of India is operating Credit Linked Capital Subsidy Scheme to facilitate the upgrading of technology in SSI units in respect of 21 specified products / sub-sectors. Under this scheme, 12% capital subsidy is granted for induction of of proven technologies approved under the Scheme.

Objective

Technology Upgradation.

2. Eligible units

All new / existing units in SSI sector.

• 21 specified products / sub sectors
  
• Leather, Food Processing, Information Technology (hardware), Pharmaceuticals, Auto
• Components, Electronics, Glass/Ceramic, Toys, Tyres, Hardtools, Foundry, Stone industry, Medicinal aromatic plants, Combustion devices / appliances, Gold plating and Jewellery, Common effluent treatment plants, Bio-tech industries, Plastic moulded / extruded products and parts / components and Corrugated boxes.
  

3.Definition of Technology Upgradation

• Induction of state-of-the-art technology
  
• Significant step-up from the present technology level to a substantially higher one involving improved productivity, quality and environmental conditions.
  
• Installation of improved packaging techniques, anti-pollution measures and energy conservation machinery.

4. Eligible Proposals

• Proposals sanctioned after October 1, 2000 to September 30, 2005 (or) Till Capital Subsidy of Rs.600 crores is disbursed by SIDBI, whichever is earlier.
  
• Cases covered under RTDM Scheme of SIDBI
  
• Installation of second hand machinery not eligible
  
• Replacement of existing machinery with the same machinery / technology not eligible

5. Subsidy

12% Capital Subsidy on actual loan amount or 12% on loan ceiling whichever is lower.

Tamilnadu Industrial Investment Corporation
Website: www.tiic.org/clcss.html

More info visit Website of Ministry of Food Processing : www.mofpi.nic.in

a. Cold Storage Activities :

Setting up of cold storages to reduce post harvest losses with investment not exceeding Rs.2 crores.

b. Production Related Activities :

• High quality commercial horticulture crops
  
• Indigenous crops / produce, herbs
  
• Aromatic & Medicinal Plants
  
• Seed & Nursery
  
• Biotechnology, Tissue Culture
  
• Bio-pesticides
  
• Organic Foods
  
• Estt. of Hort. Health Clinics / Laboratory (For Agri / Horti unemployed graduates)
  
• Consultancy Services
  
• Bee-keeping

c. Post Harvest Management / Processing Related Activities

• Grading / Washing / Sorting / Drying / Packing centers
  
• Pre-cooling Unit / Cool Stores
  
• Refer Van / Containers
  
• Sp. Transport Vehicle
  
• Retail Outlets
  
• Auction platform
  
• Ripening curing chamber
  
• Market yard / rope ways
  
• Radiation unit / VHT unit
  
• Primary processing of products
  
• Hort. Ancillary industry e.g. tools, equipment, plastics, packaging etc.
  
• Crates, Cartons, Aseptic Packaging & Nets

NHB grants back ended capital investment subsidy not exceeding 20% of the total project cost with a maximum limit of Rs.25 lakhs per project. For North-Eastern/Tribal/Hilly areas maximum limit of subsidy would be Rs.30 lakhs per project.

More info visit website of NHB : www.hortibizindia.nic.in

• Special capital subsidy at 15% on investment in plant and machinery subject to maximum of Rs.15 lakhs per block.
  
• Generator subsidy at 15% on the cost of the generator subject to Rs.5 lakhs.
  
• Women worker subsidy at 5%, subject to a maximum of Rs. 5 lakhs, if the unit is employing more than 50% of their work force as women.
  
• Entitled to low tension power subsidy (LTPT) of 30%, 20% and 10% of energy charges in the first, second and third year respectively from the date of commencement of production or date of power connection whichever is later

1. The Scheme

TIIC is the principal financial institution for the scheme announced by the Govt. of Tamilnadu 'New Anna Marumalarchi Thittam' [NAMT] to promote agro based SSI units not exceeding 4 numbers in each of the 385 blocks of the State with a minimum capital investment of Rs.1.00 crore per block. A special package of incentives and support / escort services are provided under the Scheme.

2. Salient Features of the Scheme:

All agro based industries including processing of horticulture / floriculture produce, flower based extract, coir and food processing, etc will be eligible under the scheme. An illustrative list of products / units / activity is given as under ;

• Fruit Processing , namely Mango pulp / Tomato pulp etc.
  
• Food Processing, namely Cashew Processing, vegetable processing etc.
  
• Aromatics
  
• Natural Dyes
  
• Bio-fertilizers
  
• Cattle Feeds
  
• Cold Storage and Refrigerated Transport
  
• Floriculture
  
• Bio-technology products
  
• Agro Energy
  
• All post-harvesting activities / processing with value addition
  
• Fish Processing
  
• Agri Clinics / Services

The list is only illustrative and not exhaustive. All activities using agriculture / horticulture produce as raw material involving manufacturing / service and machinery / equipments / value addition will be eligible for financial assistance under the scheme.

4. Size of the Project

The cost of each individual project should not be less than Rs.25.00 lakhs and should not exceed Rs.1.00 crore.

5. Promoters' Contribution

Minimum of 20% of the cost of the project.

6. Debt Equity Raio

The Debt Equity Ratio will be 2:1

7. Incentives

Special capital subsidy at 15% on investment in plant and machinery subject to maximum of Rs.15.00 lakh per block. Generator subsidy at 15% on the cost of the generator subject to Rs.5.00 lakhs.

Women worker subsidy at 5% subject to a maximum of Rs.5.00 lakhs, if the unit is employing more than 50% of their work force as women. Entitled to low tension power subsidy (LTPT) of 30%, 20% and 10% energy charges in the first, second and third year respectively from the date of commencement of production or date of power connection whichever is later.

8. Rate of Interest

The rate of interest will be the prevailing rates.

9. Security

50% of the loan amount shall be offered as collateral security

10. Others

NAMT proposals can also be considered under NEF Scheme.

11. Other Features

The applicant shall be submitted to respective DIC. The same will be placed before

• Steering Committee
  
• District Level Committee
  
• State Level Co-ordination Committee (SLCC)
  
• SLCC will give the final approval. Then the beneficiary may approach TIIC / Bank / other
• Financial Institution for financial assistance for the project.

Interest rebate of 2% will be allowed by the Corporation for prompt repayment of principal and interest. Of this rebate, 1% is allowed at the end of each year and another 1% on settlement of loan account.

Website: www.tiic.org