India has an informal business climate like many other developing nations. Entrepreneurs are reluctant to register their businesses amidst a conservative society. Jobs are considered the preferred medium of earning livelihood. By 2020, India is set to become the youngest country in the world with nearly 64 percent youth population under the age of 35. Young India needs jobs for this aspiring population to maintain a living and a healthy family life. In order to take advantage of this age benefit, India as a nation needs to promote a better climate for business.
To inculcate it as a part of the culture, Indian Government has introduced incentives and subsidies to stimulate business as a career option that is better and stable compared to traditional outlook on employment.
There are several government subsidy schemes for business being provided to entrepreneurs through different ministries. As an entrepreneur, it pays to understand the benefits of the various government subsidies for business in order to take full advantage of the changing times and grow your business.
Extensive lists and information are available on government subsidies for businesses. While the list of government subsidy schemes for business is a long one, few of these schemes are a must know for all entrepreneurs planning to startup or running an established business.
1. Credit Linked Capital Subsidy Scheme (CLCSS)
Globalization of the markets has necessitated modernization of equipment in small-scale industries to ensure survival and growth of business. To provide a level playing field for the SSI, the Ministry of Small Scale Industries introduced a scheme for technology modernization called the Credit Linked Capital Subsidy Scheme.
Under the CLCSS government subsidy scheme for business, a 15% capital subsidy is provided to SSI units on institutional finance availed by them for improving technology and manufacturing plants in many of the sub-sectors/products approved under the scheme for a loan of upto INR 1 crore.
2. Subsidy for Establishing Cold Chain
Government subsidy scheme for business under NABARD provides subsidies to food processing and farming sectors for establishing cold chain storages. Financial assistance of 50% of the total cost of plant and machinery and technical civil works in general areas and 75% for NE region including Sikkim and difficult regions (J&K, Himachal Pradesh and Uttarakhand), subject to a maximum of INR 10 crore is provided under this scheme. The NABARD subsidy scheme provides financial assistance for integrated cold chain and preservation infrastructure facilities for horticulture, organic produce, marine, dairy, meat and poultry etc.
3. Technology Upgradation Fund Scheme (TUFS) – Textile Sector
The Textiles sector contributes a significant amount to the economy in both earnings and employment generation, especially for women. The Technology Upgradation Fund Scheme(TUFS) of The Ministry of Textiles has helped industry scale new heights and improve technology to match global standards. Under TUFS government subsidy scheme for business, 5% interest reimbursement is provided on interest charged by financial institutions or banks for textile technology up gradation projects. The scheme also provides for margin money and/or capital subsidy for investment in many textiles manufacturing equipment like power looms, common effluent treatment plants, garment machinery, machinery for technical textiles, handlooms, etc.
4. Subsidy for Acquiring Quality Management System
Implementation of quality standard is becoming necessary for MSME units to compete successfully on a global scale. In order to increase adoption of quality standards by MSME units, the government shares cost of acquiring ISO Certifications like ISO 9000 and ISO 14001.
The government subsidy scheme for business reimburses up to 75% of the expenditure subject to a maximum of INR 75,000 for acquiring ISO-9000/ISO-14001 certifications to units with a valid SSI registration.
5. TREAD Subsidy Scheme for Women
The Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme for Women offers a subsidy of up to 30% of the total cost of the project as assessed by lending institutions. The rest of the loan assistance is to be provided by the lending institutions. The request for subsidy is considered only if forwarded through an NGO.
6. International Patent Protection in Electronics & IT
Department of Information Technology has introduced a scheme providing financial support to SMEs and Technology Start-Up units for filing international patents to encourage innovation and exploit the value and capabilities of global intellectual property in information technology and electronics.
The scheme reimburses upto 50% of the total patent cost that covers attorneys’ fees, patent office filing fees, examination fees, patent search cost, additional cost for entering national phase upto grant/issue. Support is limited to INR 15 lakhs or 50% (whichever is less) of the total expenses incurred in filing each invention.
7. Mahila Coir Yojana
The Mahila Coir Yojana Subsidy Scheme is a blessing for artisan women living in rural areas producing coir fiberand looking for funding options.As per this government subsidy scheme for business, the Coir Board provides 75% cost of the motorized ratt while financial institutions would raise the rest 25%. However, only one person from a family is eligible to avail this scheme.
8. Capital Subsidy for Solar Lighting and Small Capacity PV Systems
The Jawaharlal Nehru National Solar Mission (JNNSM) promotes sustainable energy generation to support the growing need for energy while addressing energy security challenges. A host of subsidies and soft loans are available under this scheme for promotion of solar energy generation.
A capital subsidy of upto 40% of the approved unit cost (benchmark cost) for solar lighting systems and small capacity photovoltaic systems is available under this scheme. Capital subsidy of 90% of the benchmark cost is available for special category states like Sikkim, J&K, Himachal Pradesh and Uttarakhand.
It is imperative for society and governments to see the entrepreneurial spirit as what it really is. It shapes and runs the economy of a region, ensuring inclusive growth for the population and nations.
As Winston Churchill once said, “Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon.”