Uttar Poorva transformative industrialization scheme (Unnati), 2024

The Government of India has announced the Uttar Poorva Transformative Industrialization Scheme (UNNATI), 2024, for the North-Eastern Region.  This scheme will cover all 8 northeastern states: Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.

COMMENCEMENT AND DURATION OF THE SCHEME:

It will be effective on 09.03.2024 and will remain in force up to and inclusive of 08.03.2034 and 8 more years for meeting committed liabilities.

ABOUT THE SCHEME:

UNNATI, 2024 is designed to strengthen the Industrial Eco-System in the North East and attract New Investment. The Scheme is divided into two parts i.e. Part A and Part B.

Part A: Part A incentivizes eligible new industrial units and those undergoing substantial expansion. Part A will have three components namely Capital Investment Incentive (CII), Central Interest Subvention (CIS), and Manufacturing & Services Linked Incentive (MSLI).

Part B: Part B is for developing an industrial eco-system through activities such as (i) Project Monitoring Unit (PMU) and Project Implementation Unit (PIU); (ii) Third Party Evaluation and Impact Assessment; and (iii) Portal Development (aligned with National Single Window System, NSWS), Capacity Building workshops, IEC and others as decided by the Steering Committee.

APPLICATION PERIOD FOR REGISTRATION:

Registration shall commence from 09.03.2024 and will continue till 31.03.2026 subject to the guidelines issued in this regard. Notwithstanding the permissible period of registration till 31.03.2026, further grant of registration and receipt of application in the portal under the scheme will be stopped before this period if the projected financial liability of the units that are granted registration reaches 115% of the total financial outlay of the scheme. Further, details for registration will be issued separately in the registration guidelines of the scheme.

• Merely applying for registration will not entitle any applicant to claim incentives under this scheme. Further details for claiming incentives shall be provided in the claim guidelines of this scheme.
• No unit will have the right to register under this scheme or claim the benefits unless it is specifically approved by the competent authority as laid out in the guidelines.
• The registration will be granted by the competent authority as laid out in the guidelines, which will, among other things, consider the prima facie eligibility of the unit and the availability of approved funds.
• All units willing to avail of the incentive(s) under this scheme have to apply for registration through the online portal.

GRANT OF REGISTRATION:

All registration applications shall be disposed of by 30.09.2026 unless otherwise extended.

 ELIGIBILITY FOR AVAILING INCENTIVES:

• All units eligible under the Manufacturing and Service sector will be granted incentive(s) under this scheme as defined under respective incentives.
• Manufacturing sector units with a minimum investment of Rs. 1.0 crore in plant & machinery will be eligible for incentives under this scheme. For the calculation of any incentive under the scheme, the eligible value shall be determined based on the investment made in Plant & Machinery in the manufacturing sector. The scheme shall not apply to the units that manufacture the products listed in the Negative list in Annexure I.
• Service sector units with a minimum investment of Rs. 50 Lakh in building and other durable physical assets will be eligible for incentives under this scheme. For the calculation of any incentive under the scheme, the eligible value shall be determined based on the investment made in building and other durable physical assets. The scheme shall be applicable only for services listed in the Positive list in Annexure II.
• For Micro Industries the minimum investment limit shall be ₹50 lakhs for both the manufacturing and service sector.
• For Micro industries (defined as per MSME industry norms), the Plant & Machinery calculation will include the cost of building construction as well.
• All eligible units have to commence commercial production/operation within 4 years from the date of grant of registration. The unit shall be allowed to sell or supply* the finished goods produced/manufactured in the intermediate phases. It is envisaged that certain units may install plant & machinery in phases. Thus, there will be a provision for phased commencement of production (maximum 3 phases), but the incentives will only flow after the final commencement of production. The date of commencement of commercial production after the completion of all phases shall not be later than 4 years from the date of registration under the scheme.

(*Supply means supply of goods and services as defined under GST Act, 2017)

• The final invoice for procurement of Plant & Machinery or for construction of building and durable physical assets must be on or after 09.03.2024 to be considered eligible under the scheme.
• The maximum eligible benefit to one unit from all scheme components is Rs. 250 crores.
• (a) Cost of Plant and Machinery (in the manufacturing sector) that is essential for manufacturing of finished goods but excludes the cost of land, consumables, disposables, or any other item charged to revenue.
• (b) Cost of construction of Building and procurement of other durable physical assets for the service sector unit that are basic to running that particular unit in the service sector but excludes the cost of land, consumables, disposables, or any other item charged to revenue.
• Units availing benefits under other schemes of the Government of India will not be eligible for the same incentives under this Scheme. However, the eligible value of Plant & Machinery (Manufacturing Sector) or construction of building and durable physical assets (Service sector) for claiming other eligible incentives under UNNATI will be calculated by the Department of Industries of the concerned State government.
• The beneficiary of this scheme has to furnish an undertaking to abide by the terms and conditions of the scheme. The format of the undertaking shall be provided in the registration guideline.
• Eligibility under this scheme will be subject to verification of investment (core and non-core) in plant and machinery (in the manufacturing sector) and cost of construction of the building and other durable physical assets (in the service sector). However, the incentive will be eligible only for the core segment in both the manufacturing and service sectors. Details will be laid down in the guidelines.

 Nodal Agency:

The North-Eastern Development Financial Corporation Ltd. (NEDFi) will be the nodal agency for the disbursal of incentives under various components of the scheme. The nodal agency will release incentives only through e-transfer to the designated bank accounts of eligible units.

 GOVERNANCE AND IMPLEMENTATION MECHANISM:

The scheme will be implemented under the supervision of the Government of India, i.e. the Department for Promotion of Industry & Internal Trade (DPIIT) and implemented through State machinery with the support of the Project Monitoring Unit (PMU) and Project Implementation Unit (PIU).

committees constituted for the governance and implementation of this scheme are

• The Steering Committee
• The State Level Committee
• Project Management Unit (PMU) and Project Implementation Unit (PIU): The major roles and responsibilities of PMU & PIU are in Annexure- III.

INCENTIVES UNDER THE SCHEME:

Subject to eligibility, the following incentives are provided under this scheme:

1. CAPITAL INVESTMENT INCENTIVE (CII) 

• Eligibility:
• New units, as well as Expanding units will be eligible to avail of this incentive in both Zone A and Zone B.
• An applicant (with the same name and GST number) can get incentives on a maximum of one unit or application under this scheme in each state
• All eligible units located in Zone A District in the States of North-Eastern Region will be provided Capital Investment Incentive @30% of the eligible investment made in plant and machinery (for the manufacturing sector) or for construction of building and installation of other durable physical assets (for services sector) with a maximum limit of Rs. 5.00 crore. For those sectors where GST is not applicable, the maximum limit of this incentive will be Rs. 10.00 crore.
• All eligible units located in Zone B category blocks in the States of the North-Eastern Region will be provided Capital Investment Incentive @50% of the eligible investment made in plant and machinery (for manufacturing), or for construction of building and installation of other durable physical assets (for services sector) with a maximum limit of Rs. 7.50 crore. For those sectors where GST is not applicable, the maximum limit of this incentive will be Rs. 10.00 crore.
• A new unit registered under the scheme will not be eligible to avail of the benefit under substantial expansion. A unit can avail of this incentive only once under the scheme.
• Physical verification of the units is mandatory before availing of this incentive.

1. CAPITAL INTEREST SUBVENTION (CIS)

• Eligibility:
• New units, as well as Expanding units of both the manufacturing and service sectors, will be eligible to avail of this incentive.
• Interest on loan up to the principal amount of Rs. 250 crore for investment in eligible plant and machinery (manufacturing sector) or building and all other durable physical assets (for service sector) shall be eligible for capital Interest subvention. If the total principal amount of the loan (loan being defined as a whole and not as per draw-down amount in each tranche) is more than Rs.250 crore, then interest on the loan amount exceeding Rs. 250 crore would not be eligible for Capital Interest subvention.
• The capital Interest Subvention would be eligible on the amount disbursed and not on the principal amount sanctioned for the term loan.
• All eligible units located in Zone A category blocks in the States of the North-Eastern Region can avail of the Capital Interest Subvention at the annual rate of interest of 3% for a maximum of 7 consecutive years from any date after the date of application for registration under this scheme. However, disbursement of the eligible amount under this incentive shall begin only after the commencement of commercial production.
• All eligible units located in Zone B category blocks in the States of the North-Eastern Region can avail of Capital Interest Subvention at the annual rate of interest of 5% for a maximum of 7 consecutive years from any date after the date of application for registration under this scheme. However, disbursement of the eligible amount under this incentive shall begin only after the commencement of commercial production.
• This incentive is applicable on the loans availed from Scheduled Commercial Banks or financial Institutions registered by the Reserve Bank of India.

• MANUFACTURING & SERVICES LINKED INCENTIVE (MSLI)

 Eligibility: Only New units with a valid GST Identification Number (GSTIN) will be eligible for benefit under this incentive.

• The upper limit of incentive under this component shall be 75% (for Zone A) and 100% (for Zone B) of the eligible value of investment made in plant and machinery (for manufacturing sector) or construction of building and other durable physical assets (for services sector).
• All eligible units of Zone A & Zone B will be granted a Manufacturing & Services linked incentive (MSLI) equal to 100% of the Net payment of GST, i.e. GST Paid less Input Tax Credit, for a maximum period of 10 years from the date of commencement of commercial production/operation or till the validity of the scheme, whichever is earlier. However, GST paid on exported goods or services will not be counted towards eligible incentive amounts under this component.
• The amount of incentive paid in a financial year will be one-tenth of the total amount of eligible incentive under this component subject to full payment of GST as per GST return filed for the claim period.
• In case the Net GST paid by any unit in a financial year is more than one-tenth of the total amount of eligible incentive, the balance can be carried forward to the subsequent financial year(s). Further, if the unit cannot claim the full eligible amount of incentives in the first 3 years, the same can be carried forward to subsequent years. However, this will not be carried forward beyond the eligible period of 10 years or beyond the scheme’s validity, whichever is earlier.

 PROCESS OF APPLICATION FOR REGISTRATION, CLAIMING INCENTIVES, APPROVAL, AND DISBURSAL OF CLAIMS:

These shall be prescribed in the detailed guidelines to be issued separately.

PROCESSING/ SCRUTINY OF CLAIMS:

• Claims filed under the scheme will be pre-scrutinized by a recognized independent audit agency to be appointed by DPIIT.
• NEDFi will undertake pre-scrutiny of 10% of claims before disbursement of incentives.
• All concerned Ministries/Departments of Government of India must amend their respective Acts/Rules/Notification etc. and issue the necessary instructions for effecting these decisions.

RIGHTS OF THE GOVERNMENTS:

• In case any unit availing incentives under this scheme goes out of production/ operation permanently or changes the location of the whole or any part of a unit or disposes of a substantial part of its total fixed capital investment within 10 years after the date of commencement of production/ operation, then the unit will not be eligible to claim any incentive with effect from the date it goes out of production or operation or changes its location.

Further, all such units will be liable to refund the entire grant or incentive availed if it goes out of production/ operation permanently changes the location of the whole or any part of a unit, or disposes of a substantial part of its total fixed capital investment within 5 years after the date of commencement of production or operation.

• If it is established that a unit has obtained incentive(s) by misrepresenting/suppressing an essential fact, or furnishing false information, the unit has to refund the entire grant or incentive availed with an interest of 15% per annum. It will also be liable for criminal proceedings.
• Concealment of input supplies or routing of third party or malpractices of similar kinds will render the unit liable for forfeiture of further claims and recovery of all previous incentive(s) paid with interest at 15% per annum.
• The incentive(s) will be released through digital payment and the Nodal Agency will collect all information required by the DBT Mission in respect of beneficiary units. The nodal agency shall take an affidavit of indemnity bond in this regard from the authorized signatory of the beneficiary unit.
• The Nodal agency shall furnish a Certificate of Utilization of the incentive(s) in Form 12 (C) of the General Financial Rules, 2017 in respect of disbursements to the DPIIT within 3 months from the date of receipt of the last installment/full amount.
• No interest on account of delay in incentive payment can be claimed by the unit. 16.
• The Minister in Charge is authorized to modify the scheme as deemed necessary for the implementation of the scheme within its broad contours.                                                                                                                                                                           ANNEXURE-I

NEGATIVE LIST: FOR THE MANUFACTURING SECTOR

The following manufacturing industries will not be eligible for benefits under the Uttar Poorva Transformative Industrialization Scheme (UNNATI), 2024 for the North-Eastern Region:

• All goods falling under Chapter 24 of the Central GST Tariff Act, 2017 which pertains to tobacco and manufactured tobacco substitutes,
• Pan Masala as covered under Chapter 24 of the Central GST Tariff Act, 2017.
• Plastic carry bags of less than 20 microns as specified by Ministry of Environment and Forests Notification No. S.O. 705(E) dated 02.09.1999 and S.O. 698(E) dated 17.6.2003 and any subsequent amendments.
• Goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) produced by Petroleum or Gas refineries.
• Plantations, Refineries, and Power Generating Units (that are fossil-fuel based).
• Units not complying with environmental standards or not having applicable Environmental Clearance from M/o Environment & Forests and Climate Change or State Environmental Impact Assessment Authority (SEIAA) or not having requisite consent to establish and operate from the concerned Central Pollution Control Board/State Pollution Control Board.
• Low-value addition activities in goods include preservation during storage, cleaning, operations, packing, repacking or re-labeling, sorting, alteration of retail sale price, etc. excluding high-value packaging and processing.
• Cement Industry
• Arms & Ammunition
• Any other industry or activity placed in the negative list through a separate notification as and when considered necessary by the Steering Committee. 

Annexure-II

POSITIVE LIST: FOR SERVICE SECTOR

The following service sector industries, details of which will be given in the guidelines, will be eligible for benefits under the Uttar Poorva Transformative Industrialization Scheme (UNNATI), 2024 for the North-Eastern Region:

                                                                                                                                                                    Annexure-III

Roles and Responsibilities of PMU and PIU

• Deploy resources at DPIIT, New Delhi for effective implementation of the scheme.
• Capturing, analysis of data, and preparation of reports for tracking the status of the scheme.
• Financial review to track the progress of the scheme on behalf of DPIIT.
• Coordinate with technical design & development agency and provide inputs for maintenance of the online platform and creation/maintenance of the dashboard for the scheme.
• Evaluation of the implementation of various components of the scheme at regular intervals.
• Monitoring of physical and financial progress for each approved component and monitoring the same on a periodical basis.
• Coordinate with the State government, NEDFi (the disbursing agency), and PIU for effective implementation of the scheme at ground level.
• Screening of documents & claims and physical inspection on behalf of DPIIT for randomly picked-up cases, as and when required based on the direction of DPIIT.
• Capacity building activities at the central and state level.
• Any other function specially assigned by DPIIT.

The Roles & Responsibility of PIU Will Primarily Include:

• Deploy resources at the state level for effective implementation of the scheme
• Assist the concerned state government departments in the assessment & appraisal of applications based on various parameters as per the requirements of the scheme, which may include:
• Project report.
• Land papers (Revenue papers regarding ownership/rent deed duly registered by the registering authority/lease deed in case of government land).
• Bank loan sanction letter or Appraisal report of the bank/financial institution.
• Certificate of mandatory/obligatory.
• Assist the concerned state department and other stakeholders in undertaking steps necessary for the evaluation of specific applications and obtaining the final decision of the Competent Authority for forwarding the cases/applications to DPIIT for grant of registration and disbursement of incentives

• Assist the concerned state government departments in verifying the information filed in the registration and claim applications.
• Undertake the development of an implementation plan in coordination with the state government departments to collate and disseminate information regarding the scheme, related guidelines, registration, and claim process.
• Coordinate with Nodal officers of concerned departments at the state level for sector-specific projects.
• Understanding the training requirements of various stakeholders at the state level, including government officials, agencies, and investors.
• End-to-end organizing & management of knowledge-sharing workshops with state government officials at the district level, potential investors, and applicants.
• Assisting the PMU team at the central level in the creation of knowledge and training collaterals.
• Hold awareness workshops for investors at the district level.
• Identify key bottlenecks in the application and claim process at the state and district level. Assist officials at the district/DIC level in the resolution of challenges and bottlenecks encountered during the appraisal of applications.
• Periodically organize camps at the district or DIC level to fast-track application and claim processes.
• Carrying out the necessary activities for Investment Promotion.
• Any other function specially assigned by DPIIT.

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