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Archita Bhattacharjee
| Updated: 30 Nov, 2020 | Category: MSME

MSMEs under Gujarat Industrial Policy 2020 : Strengthening the Pillars for Atmanirbhar Gujarat

Gujarat Industrial Policy 2020

With a coastline of 1600 km Gujarat is known to be leading industrialized states in the country situated on the west coast of India, which is well connected to all the prominent port in all countries and continents. Observing the present scenario, the New Gujarat Industrial Policy 2020 has been propounded in order to promote the business consolidation and improve the current growth rate.

There are lots of focused efforts have been made for in consonance to assist jobs, adoption of state- of-the-art technology, value addition across sectors, increase productivity with Industry 4.0 manufacturing, innovation driven ecosystem with focus on R&D so as to enhance the state further heading towards the strengthening the vibrant pillars of “Atmanirbhar Gujarat”. We surely assist our clients enabling the shaping of a Modern Gujarat that lead the mission and vision of a Modern India.

Page Contents

Why Gujarat is known as a Growth Engine for New India in this Contemporary Period of Time?

Before reaching at the detailed description on the exerted changes occurred by virtue of the Gujarat Industrial Policy, 2020[1], it is important to know that Gujarat stands first in India in terms of Industrial Output at approximate 17% of India’s output. It has been broadly recognized by DPIIT, Govt of India as Best Performer State in State Startup Ranking in 2018.

This state has ranked No. 1 in the LEADS Index by Ministry of Commerce Government of India and Logistics Performance Index, in year of 2019 which is evidently seen highest national increment of 240% in FDI inflows from last year as against an increase of 14% in FDI in India. In the last 5 years, Gujarat has been continuously achieving double digit growth rate, having a registered an average growth rate of 10.14% at steady price.

In the year of 2019-20 over previous year, Gujarat has also been witnessing 13% growth in GDP at current prices. It has amplified almost 3 times in the last five years looking at subsidy amount, showing an exceptional growth. It is expected that the average annual outlay bearing in mind of similar growth patterns, for the New Gujarat Industrial Policy 2020 will be upto INR 8k crore. Moreover, Gujarat is also known to be home of over around 3.5 million MSME Registration which are of most important source of employment and also form a significant part in the larger industrial ecosystem in India.

Gujarat Industrial Policy 2020: A Transformed Focus on Exerting a pull on Investment

There are various important updates which benefits the newly manufacturing Set-ups in Gujarat under The Gujarat Industrial Policy 2020. Those segments are been elaborated below for Large Enterprises, which are as follows:-

Thrust Sectors

The thrust sectors have been classified in two major groups based with a view on global investment trends, the need for strengthening the integrated exports, value chains, policies by NITI Aayog, government of India, etc.

The Two major groups are Core sectors & Sunrise Sectors

Core Sectors

Sunrise Sectors

  • Industrial Machinery and equipment
  • Electrical machinery and equipment
  • Gems and Jewelry
  • Auto and Auto Components
  • Agro and Food Processing
  • Ceramics
  • Technical Textiles
  • Pharmaceuticals and Medical devices
  • Chemicals (in designated area)
  • Waste management projects
  • Eco-friendly compostable material(substitutes to   traditional plastics)
  • Electric Vehicle & its components
  • Green Energy (Solar & Wind Equipment)
  • Industry 4.0 manufacturing
  • 100% Export Oriented Units, irrespective of sector

In the present condition, companies were being compensated as per “Net SGST” since GST has been executed on goods sold within the state. Moreover, Gujarat is also known to be the first state to take on a bold decision to de-link incentives from State GST. Therefore, for setting up manufacturing establishment in the state in the form of capital subsidy Up to 12% of Fixed Capital investment will be given to industries which are based largely.

Core sectors & Sunrise Sectors

Durability of Benefits: – This benefit will be given subject to annual ceiling of INR 40 Crore over a period of 10 years.The eligible period of 10 years will be postponed upto more 10 years conditioning that annual ceiling will remain Rs. 40 crore per-annum if the eligible cash-subsidy could not be pay out within period of 10 years due to upper ceiling of the same amount.

Moreover, all new industries will continue to fetch exemption from Electricity Duty for the period of 5 years. Considering the above explanation, it can be said that Gujarat will be giving significantly high incentives to industries in comparision to other states in India.

What are the Incentives Provided for MSME’s by the Gujarat Industrial Policy 2020?

A large number of units will be able to take advantages of the provisions under MSME policies which are in alignment with the Government of India definition of MSME.

The Gujarat Industrial Policy 2020 focuses to promote MSMEs with an aim to make domestic MSMEs globally competitive in the global platform by upgradation of all sorts of technologies in marketing their products internationally by adopting globally accepted certifications.

Incentives Provided for MSME’s

Capital Investment Subsidy

  • Capital Investment Subsidy has been provided at the rate of 25% with the maximum amount of INR 35 Lakhs of eligible loan amount.
  • Furthermore, the unit will be eligible for an additional capital subsidy upto Rs. 10 lakhs if in case the eligible fixed capital investment is above Rs. 10 crores.

Interest Subsidy

  • The Gujarat Industrial Policy 2020 will provide Interest Subsidy of 7% for a period of 7 years with the maximum amount INR 35 Lakhs per annum
  • Moreover, 1% Additional Subsidy for have been proposed towards SC/ST, Women entrepreneurs and physically challenge.
  • Additional 1% Subsidy below the age of 35 years for Young Entrepreneur on the date of sanction of loan.

MSMEs Service Sector

Service sector under MSME is known to be a major contributor to the national Gross Domestic Products, where many services are key inputs to facilitate primary and secondary industries in India. Few examples occupies, Financial Services Healthcare Services, Audio Visual services, Construction related engineering services, Environmental services, etc.

Acquisition of foreign technologies by MSMEs

The state Government under The Gujarat Industrial Policy 2020 will provide support 65% which will imply Maximum support upto INR 50 lakh of the cost of acquiring patented foreign technologies. This also ensures to help in making them globally competitive by the raise of manufacturing powers of our MSMEs.

MSMEs to get Market Development Assistance

The Gujarat Industrial Policy 2020 will provide financial assistance to MSMEs in order to encourage MSMEs to market their products and services at a national & global level. The support will occupy the following attributes:- Rate of 75% of stall rent upto INR 2 lakh for demostration in India and, rate of 60% of stall rent upto INR 5 lakh for demonstration Outside India.

Use of Solar Power by MSMEs

The power cycle of consumption of units for calculation has been increased from 15 minutes to 7 AM – 6 PM to work towards the aim to further ease the process of make use of rooftop Solar Power in the premises of MSMEs.

In addition, the price has been made increase to INR 2.25/unit from INR 1.75/unit for purchase of surplus solar power from the MSMEs. Moreover, Interest Subsidy will be provided on term loan for the existing industries who switch to use Solar Power.

Concurrent Benefits

  • Implementation of ERP (Enterprise Resource Planning),
  • Implementation of ICT (Information & Communication Technology),
  • Obtaining ZED certification
  • Service line
  • Patent filing,
  • Power Connection charges Rent assistance,
  • Obtaining quality certifications, etc.

What are the Incentives Provided to Start Ups by the Gujarat Industrial Policy 2020?

There are various Incentives Supports that are provided to Start Ups under the Gujarat Industrial Policy 2020. Those are given below for your understanding.

  • Seed Support:- INR 30 lakh (Earlier INR 20 lakh)
  • Sustenance Allowance: INR 20,000 (Earlier INR 10,000)
  • With 1 Woman Co-founder: INR 25,000

Separate Start-up Fund

A separate fund shall be created for mid-level Pre-Series- A funding of start-ups under GVFL (Gujarat Venture Finance Limited). In above and beyond, these start-ups will get upto 9% on term loans at the rate of 1% Interest subsidy.

Societal Impact

For start-ups with significant impact on society, the Gujarat Industrial Policy 2020 will grant upto INR 10 lakh.

Acceleration programs 

The Gujarat Industrial Policy 2020 will provide the fiscal support upto INR 3 lakh per start-ups in accordance to provide enrollment for national/international standardized acceleration programs.

Soft Skill & Mentoring Support

The Gujarat Industrial Policy 2020 will provide funding of upto INR 1 lakh per start-ups for trainings specific to “Managerial Training, Fundraising, Soft Skills, Marketing skills, Finance” on reimbursement basis. Moreover, there is also a mentoring assistance of INR 1 lakh with maximum INR 15 lakh per annum- per institute- per start-ups will be given to recognized Nodal Institutes

Will there be any Relocation Incentives provided in the Light of Covid-19?

Yes, several industries are setting up to relocate their operations and/or diversify supply chains in light of CoVID-19. In that cause of action, Gujarat will offer Special Incentives to relocate from other countries to such companies who are planning for the said cause.

What are the Parameters brought in to the Context by the Gujarat Industrial Policy 2020 to Promote Balance Regional Development?

The Gujarat Industrial Policy 2020 has cautiously dealt with the significance of the context to promote adequate balance in the Regional development. Those measures are given below:

Government Land for Long Term Lease

The state government will facilitate industries to fetch “Government Land” on long term lease up to 50 years which is further extendible as per prevailing policy in order to further provide a thrust to a balanced regional development in the state, to industrial enterprises @6% of the market rate. Moreover, the industries will be able to mortgage the land also in consonance with adequate terms and conditions.

Benefits related to Increments

The incentives to all MSMEs and large industries have been categorized to promote a balanced regional development in the state based on industrial development in respective categorized talukas. Moreover, the incremental benefits will be given in industrially to the less developed talukas setting up operations.

Progress of Research and Development

  • The Gujarat Industrial Policy 2020 will provide assistance upto   INR 5 crore for setting up R&D and product development centres to  private companies/institutions.
  • The Gujarat Industrial Policy 2020 will provide assistance in consideration at the rate of 50% of project cost, withut counting cost of land and building, subject to maximum INR 50 Lakhs for Sponsored/Contract research work from any Industrial association/ industrial enterprise to recognized R&D institution / technical collages approved by “All India Council for Technical Education”.

What are the Promotional measures Connected to the Development of Industrial Infrastructure under the Policy?

There are visible measures those are connected to the Development of Industrial Infrastructure under the Policy, which are as follows:-

Setting up Private Industrial Parks

  • The Gujarat Industrial Policy 2020 will provide incentives to private developers for establishing the required set up “Private Industrial Parks” in the state @25% of Fixed Capital Investment upto INR 30 Cr.
  • The Gujarat Industrial policy will support setting up of industrial parks in case of Vanbandhu Talukas, at the rate of 50% of Fixed Capital Investment upto INR 30 crore. This assistance will support industrial developing last-mile connectivity as well as infrastructure creation in the state.

Reimbursements of Stamp Duties

The policy also speaks about the Stamp duty reimbursements which will be given to Developers with 100% of Stamp Duty, and Individual units at 50% of stamp duty.

Promote Clusters Development

Financial assistance of up to 80% of the Project Cost including INR 25 Crore has been set up by the Gujarat Industrial Policy 2020 in order to promote clusters for set up of “Industrial Infrastructure” such as construction and up development of roads, fire stations, underground utilities, warehousing facilities, etc. will be offered.

Dormitory Housing for Labourers in Industrial Clusters

The Gujarat Industrial Policy 2020 will provide 80% of financial assistance upto INR 25 crore for Dormitory Housing in manufacturing clusters for labourers in industrial clusters to provide better living conditions.

What are the Beneficial Steps taken by the Gujarat Industrial Policy 2020 in Order to connect the world of Sustainable Manufacturing and Environment Infras?

There are numerous Beneficial Steps taken by the Gujarat Industrial Policy 2020 in Order to connect the world of Sustainable Manufacturing and Environment Infras, which are as follows:-

Zero Liquid Discharge – Waste Recovery

50% of capital subsidy will be given to industries upto INR 75 lakhs, who is continuously practicing at least 50% waste recovery through “Zero Liquid Discharge” as authorised by Gujarat Pollution Control Board.

Incentives for Cleaner Production Measures

The Gujarat Industrial Policy 2020 will give Incentives to MSMEs for Exection of cleaner production technology in place of existing process such as “substitution & optimization” of raw material, reduction upto in energy consumption or water consumption or waste generation @35% of cost of Plant & machinery and to Bigger units @10% of cost of Plant & machinery with maximum of INR 35 lakh

Support for Environment Infrastructure

The Gujarat Industrial Policy 2020 will offer Support for Common environment infrastructure facilities increased to 40% from existing 25% of the project cost uptill INR 50 Cr.

Improvement of Green Estates

It is also to be noted that assistance of up to 25% of project cost upto INR 25 crore for set up/ retrofitting/ relocation of existing polluting industrial units into Green Industrial Estates.

Common Boiler Project

According to the Gujarat Industrial Policy 2020, incentives upto 50% of fixed installation cost upto INR 2 crore will be given to Common Boiler Project by SPV constituted by bare minimum 10 MSME’s.

What are the Concurrent Benefits or Support that has been given by Gujarat Industrial Policy 2020?

Gujarat Government will undertake a gap analysis of available workers across various sectors & Skill requirement of industries in the state. For that, there are some Concurrent Benefits that has been proposed by the Gujarat Industrial Policy 2020. Those are as follows:-

Training and Skilling Sorts of Support

According to the said policy, this will help create a mapping for training local population in consonance with the important skills which will eventually bridge the gap. There will be financial support in setting up Skill development Anchor institutes, Skill upgradation centres, specialized skill development centres, etc. and will give incentives per person per training for skill enhancement upto INR 15000.

Conducive Industrial Infrastructure: – “GARUD”

An organization “GARUD” has been formed under the Gujarat Industrial Policy 2020 by the state government to make sure increase exports & easy movements of goods inter & intra over the state. In order to incur less production costs, the infrastructure created this authority which will support industries. It will enhance therefore will have a ready for action edge adjacent to other developing economies. Those are to be articulated in the form of the following attributes:-

  • Industrial infrastructure
  • Institutionalization of Industrial Parks by Private Investors
  • Dormitory Housing

Escalation of the Investor Facilitation Agency (IFA)

District Industries Centre (DIC) is the nodal agency operates at the district level (regional offices) and Investor Facilitation Agency (IFA) which functions at the state level for supporting prospective investors in the state. The Investor Facilitation Agency scrutinizes applications and provides required information to all the related departments.

Nominated Relationship Managers: – Dedicated “Relationship Managers” will be nominated for all government related queries & approvals by Industrial Extension Bureau for investors as solo point of contacts.

Investor Facilitation Portal (IFP) for Ease of Doing Business – a framework for “Mega Permission” is being prepared To further strengthen the Ease of Doing Business Environment in the state, which requires investor to submit only one application form for 26 different state related compliances to be processed and approvals in an accelerated manner.

Streamlining Centralized Inspection System: – In order to further facilitate ease of doing business and bring transparency, the state government has also initiated the procedure for streamlining Central Inspection System.

Implementation of Pipeline enterprises: – The brand New projects will be qualified under the previous policies (Gujarat Industrial Policy 2015) which are already under various stages of its business implementation.

Conclusion

In connection with this great opportunity, it would be smart enough to unite this immense opportunity as the Gujarat Industrial Policy 2020 is also indeed a game changer for the MSMEs which attract many a soul to take the entrepreneurial path.

It never before stand out features like, de-linking of incentives from tax structure and substituting it with capital subsidy with no upper ceiling and offering land on lease. This particular Gujarat Industrial Policy 2020 is the torchbearer for inclusive growth which lead balanced regional development. At the end, the policy will ensure to establish Gujarat as the best business destination on the world map, making it as the Business Card of India.

Read our article: MSMEs to Incorporate New IT system that Support e-invoicing

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Archita Bhattacharjee

Archita Bhattacharjee is working as Legal Analyst (Team Lead, Research & Development) at Corpbiz and has proving experience about 2 years as Corporate Legal Researcher in law firms as well as Rajya Sabha and authors in diverse publications. She has refined her skills by representing India in Paris, France and the University of Leiden over implications of International Humanitarian and Criminal Law being certified member of many Legal Centers.

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