Gujarat Industrial Policy 2020 – Scheme for Capital Subsidy to Large Industries and Thrust Sectors
Goverment of Gujarat has issued Gujarat Industrial Policy 2020 for industrial development in the state. In this article we will discuss about the Scheme for Capital Subsidy to Large Industries and Thrust Sector
Operative Period of the Scheme
This scheme will remain in force from 07-08-2020 to 06-08-2025 (for 5 years)
Quantum of Capital Subsidy or Incentive
The industrial undertaking is eligible for Capital Subsidy according to classification of Talukas in the Gujarat State. To see the classification of Talukas you can follow this link. (Click Here)
The rate of capital subsidy shall be as below.
|Taluka Category||General Sectors||Thrust Sectors|
|Category I||10% of eligible fixed capital investment (excluding land)||12% of eligible fixed capital investment (excluding land)|
|Category II||8% of eligible fixed capital investment (excluding land)||10% of eligible fixed capital investment (excluding land)|
|Category III||4% of eligible fixed capital investment (excluding land)||6% of eligible fixed capital investment (excluding land)|
A new industrial unit or an existing industrial unit doing expansion or diversification and who commences the commercial production during the operative period of 5 years of the scheme.
Any industrial undertaking that has availed any incentive for the same assets under any other scheme of state government will not be eligible.
Meaning of Expansion
Expansion means where any existing industrial unit increases its investment in gross fixed capital by at least 50% of its existing project in the same premises, 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 the existing industrial unit has reached the utilisation of existing installed capacity at least to the extent of 75% in any one of the preceding 3 financial years. Capacity utilisation of year 2020-21 (COVID -19) will not be considered at the option of the unit.
Following manufacturing sectors have been identified as thrust sector
Electrical machinery and equipment
Industrial machinery and equipment
Auto and auto components
Agro and Food processing
Pharmaceuticals and medical devices
Gems and jewellery
Chemicals (in designated area)
Industry 4.0 manufacturing
Electric Vehicle and its components
Waste management projects
Green energy (solar & wind equipment)
Eco friendly compostable material
100% export oriented units irrespective of sector
Eligible Fixed Capital Investment
Eligible fixed capital investment means investment made on or after 07-08-2020 upto the date of completion of the investment period and includes following items (subject to certain terms and conditions)
Plant and Machinery
Technology, designs, drawings and patents
Project related infrastructure
Ineligible Fixed Capital Investment
Following expenditures will not form part of eligible fixed capital investment.
Land and land development
Preliminary and pre operative expenses
Indigenious second hand plant and machinery
Power generation except for captive use
Rented or leased property
Can MSMEs apply under this scheme
The MSME enterprises are entitled to opt for this scheme subject to condition that it will not be eligible for capital subsidy and interest subsidy under the incentive scheme of MSME under Gujarat Industrial Policy 2020.
Investment period for calculation of eligible fixed capital investment
In order to be eligible for the incentive under this scheme, the industrial unit must have commenced production during the operative period of the scheme.
The investment made in assets upto the following extended period of time will also be included in the eligible fixed capital investment.
|1||MSME Project||12 months from DOCP|
|2||Gross capital investment upto 1000 crores||18 months from DOCP|
|3||Gross capital investment upto 5000 crores||24 months from DOCP|
|4||Gross capital investment upto 10000 crores||30 months from DOCP|
|5||Gross capital investment above 10000 crores||36 months from DOCP|
DOCP = Date of commercial production
Disbursement of Incentive
The eligible capital subsidy will be given over a period of 10 years from the date of commercial production (DOCP) in equal annual instalments subject to annual ceiling of INR 40 crores.
Time limit for application under the scheme
The industrial unit shall apply for registration under the scheme within a period of one year from the date of commercial production.
The unit shall ensure employment of Gujarat domiciled persons to the extent of at least 85% of its total employees in all categories.
The Gujarat domiciled persons employed in managerial and supervisory roles shall not be less than 60% of the total persons employed in this category.
Download Government Notification
To download the government notification of Scheme of Capital Subsidy to Large Industries and Thrust Sectors, you can (Click Here)
Compilation by : Amit Mundhra FCA
The author is a member of ICAI. He can be reached at firstname.lastname@example.org