In the light of the Industrial Policy 1998 and Information policy 1998 Government of Kerala have issued necessary orders streamlining the State Investment Subsidy Manual. The full text of the revised Manual as per G.O. (MS) No. 92/2000/ID, dated 11/7/2000 is as follows.

1. An investment subsidy of 10% limited to Rs. 5.00 lakhs will be payable on the fixed capital investment; of all industrial units set up in the State except those mentioned in para 6. For the purpose of this scheme an industrial unit eligible for State Investment Subsidy shall be an independent legal entity.

2. The following have been declared as thrust Industries and all new units, tiny, small, medium or large included under thrust sector shall be eligible for investment subsidy at the rate of 15% of fixed capital investment subject to a ceiling of Rs. 15.00 lakhs or as notified in the specific incentives announced for the sector from time to time.
a) Rubber based Industries

b) Information Technology

c) Agro based business including food processing.

d) Readymade Garments

e) Ayurvedic medicines

f) Mining

g) Marine products

h) Light Engineering

i) Bio Technology

j) 100% Export Oriented Units.
The investment subsidy for Information Technology industries will be 20% of fixed capital investment subject to a maximum of Rs. 25.00 lakhs

3. In the case of Industrial Units set up in Idukki, Wayanad and notified industrial areas like industrial growth centres and Industrial Parks
the eligible subsidy shall be 10% of fixed capital investment subject to a ceiling of Rs. 10.00 lakhs and all thrust sector units mentioned above set up in Idukki and Wayanad districts shall be paid investment subsidy of 25% of fixed capital investment subject to a maximum of Rs. 25.00 lakhs.

4. An additional investment subsidy of 5% of the value of fixed capital investment subject to a ceiling of Rs. 1.00 lakh will be payable for tiny and SSI units established by entrepreneurs belonging to any one of the following categories provided the proprietor/ proprietrix, all the partners or Directors must belong the respective category.
a) Scheduled Castes and Scheduled Tribes

b) Women

c) Physically handicapped persons

d) Ex-servicemen

5. Industrial Units both new and existing in the tiny and SSI sectors which install equipment for renewable source of energy shall be eligible for an additional investment subsidy at 15% on such investment subject to a maximum of Rs. 5.00 lakhs per unit over and above the normal subsidies. Additional subsidy of 10% subject to maximum of Rs. 25,000/- will be provided for installation of pollution control devices in diesel generators.

6. The industries included in the Negative List and notified from time to time Government controlled industries, public sector undertakings, units started by Government controlled agencies, units financed by KVIC/KVIB etc. shall not be eligible for investment subsidy under these rules.

7. The subsidy received from other Government Agencies shall be deducted from eligible subsidy payable under the scheme. While computing the ceiling amount for payment of investment subsidy, assets for which subsidy available from such agencies or statutory Boards like MPEDA, Spices Board, rubber Board, local bodies etc. will be excluded.

8. Units undertaking expansion, diversification and modernisation shall also be eligible for investment subsidy at the revised rates applicable to each sector. In the case of modernisation, the eligible fixed capital investment for subsidy shall be fixed after deducting the higher of written down value or sale value of the scrapped items. In computing the ceiling, the investment subsidy given to the unit, the time it commenced production as a new unit and the course of its expansion etc. Including under Central Investment Subsidy Scheme shall be considered.

9. Expansion, diversification to be eligible for investment subsidy should be different from routine replacement. ‘Modernisation’ refers to replacement of existing machinery with new machinery partially or fully with the same make or with different make. The expansion, diversification and modernisation should have been carried out as per a definite project report, over a predefined period of time. While expansion, diversification and modernisation must result in at least 25% increase in plant and machinery in Gross Block terms, expansion must also result in at least 25% increase in capacity.

10. The principal elements of Fixed Capital investment such as land, building, plant and machinery, electrification costs, testing equipment, generator and pollution control equipments shall be admitted to investment subsidy on the following basis.

11. Land: - Land in the name of the unit, evidenced to by title deeds and possession certificate from the Village Officer of the village where the land is situated and considered essential to the running of the unit by the General Manager, District Industries Centres, Director of Industries and Commerce Kerala Financial Corporation, Kerala State Industrial Development Corporation shall be admitted to investment subsidy. Land in the name of the proprietor/proprietrix/ partner or partners/Director or Directors of the units will also be considered for subsidy as that of land in the name of units, provided if it is capitalised in the books and accounts of the unit. The stipulation of capitalisation in the books and accounts can be relaxed in the case of proprietorship units. A valuation certificate from the Tahasildar of the taluk where the land is situated for the purposes of financing the unit shall be produced in all cases in addition to the copy of the purchase deed. The lowest of purchase costs (including stamp duty and registration charges) as per the deed and cost as per Tahsildar’s certificate or cost admitted by the financial institution shall be taken as the value of land. From this amount the corresponding amount for the land required for the unit as assessed by the inspecting authority shall be considered as the investment in land for the purpose. In case of land as a gift or bequest also only the actual cash out go from the unit will be considered for investment subsidy. In the case of land/ land and building allotted on hire purchase in Government / Small Industries Development Corporation / Kerala Industrial Infrastructure Development Corporation / District Mini Industrial Estate Co-operative Societies owned industrial estates/ Development Area / Development Plot / Mini Industrial Estate, the hire purchase value shall be taken as value of the land / land and building for the purpose of investment subsidy. [ SIS on land in the name of the unit clarifications issued ]

12. Land development costs such as filling charges and leveling charges shall also be eligible for investment subsidy if certified to by a Chartered Engineer or an Engineer not below the rank of an Assistant Executive Engineer of the Government Department having jurisdiction over the areas where the unit is situated / Kerala Financial Corporation, Kerala State Industrial Development Corporation Small Industries Development Corporation / Kerala Industrial Infrastructure Development Corporation.

13. Building actually required by the unit and situated in free hold land in the name of the unit or in the name of the proprietor/proprietrix, Partner/Partners, Director/Directors of the unit, if it is capitalised in the Books and Accounts of the unit or land on registered hire purchase or on lease to the unit for at least ten years shall be eligible for investment subsidy subject to a cost ceiling of Rs. 2000/- per square metre of plinth area. The cost ceiling on building in the case of Information Technology units will be Rs. 5000/- per square metre plinth area. If the building is purchased or received as lease for 10 years or more from state owned undertakings, Technopark etc. the actual amount paid by the unit for the building to such undertakings towards the cost of building shall be taken after deducting the proportionate amount for the area which are not essentially relates to production. The plan, estimate and certificate shall be certified by a Chartered Engineer or an Engineer not below the rank of Assistant Executive Engineer of the Government Department having jurisdiction over the area where the unit is situated KFC/KSIDC/SIDCO/KINFRA. Compound walls, offices, showrooms, canteens, quarters, watch house, guest houses or any other civil structure not essentially related to production process shall not be eligible for investment subsidy. However, civil construction for pump house, D.G. set room, toilets, drying yard etc. can be considered.

14. All brand new identifiable items of plant and machinery including tools, jigs and moulds shall be eligible for investment subsidy. All claims in this regard shall be supported by a certificate by the Chartered Accountant with regard to cost of materials and fabrication charges. Plant and machinery on hire purchase from National Small Industries Corporation shall be eligible for investment subsidy on the basis of original value. Second hand imported machinery shall be eligible for investment subsidy provided the claim is supported with clear import documents and an affidavit that subsidy has not been availed of from Central Government or any State or Union Territories of union of India for these items of machinery. D.G. set shall also to be considered as part of machinery for the purpose of computing the investment for subsidy. No vehicles, items of office equipment, furniture, crates, pallets and consumable stores will be eligible for subsidy.

15. All testing equipment will be eligible for investment subsidy. Claim on this account can be considered independently without having to be a part of expansion, diversification and modernisation subject however to the per unit investment subsidy ceiling of 5/10/15/25 lakhs as the case may be.

16. All the pollution control equipment installed on or after 23.9.1991 and certified to by the Chartered Accountant with regard to the costs and by the Assistant Executive Engineer / Kerala State Pollution Control Board /KFC / KSIDC with regard to necessity shall be eligible for 15% subsidy subject to a separate ceiling of Rs. 5.00 lakhs.

17. Apart from land, land development costs, building, plant and machinery and other related investments only electrification costs will be eligible for subsidy. Own your electric connection (OYEC) costs to KSEB, transformer costs and costs of Industrial wiring including that for D.G. Set will be eligible for investment subsidy. These costs should be evidenced by invoices, cash receipts, and where industrial wiring costs and electrification exceeds Rs 50,000/- by a certificate of valuation from a Chartered Engineer or an officer not below the rank of an Assistant Executive Engineer, Electrical Inspectorate / Kerala State Electricity Board / Kerala State Industrial Development Corporation / Kerala Financial Corporation

18. Industrial units shall apply for investment subsidy within one year of commencement of commercial production or completion of diversification / expansion / modernisation. The District Level committee and State Level Committee shall however be competent to condone delays in individual cases on merits.

19. Units financed by Kerala Financial Corporation and Kerala State Industrial Development Corporation will get their application for investment subsidy processed and put up for sanction to the appropriate committee by the Kerala Financial Corporation and Kerala State Industrial Development Corporation respectively. Further, the subsidy applications of units in Technopark other than those financed by KFC shall be processed and presented by KSIDC. All other cases shall be put up to the appropriate committee only through the Industries Department. The agency responsible for processing investment subsidy application shall also be answerable to Audit.

20. Transportation and erection charges shall not be taken for the purpose of computing investment subsidy. So also certificate from Chartered Accountant need be insisted only for subsidy claims exceeds Rs. 25,000/-

21. All applications shall be made to the Kerala State Industrial Development Corporation/ Taluk Industries Office / District Office of Kerala Financial Corporation as the case may be only after starting commercial production.

22. The Officer while accepting the application form should examine whether all necessary details have been given. If any information is missing, the same should be intimated to the applicant across the counter or by return.

23. As far as possible all claims shall be disposed of within 3 months from the date of receipt of completed applications.

24. Cases involving subsidy up to Rs. 10.00 lakhs will be considered and sanctioned by District Level Committee with District collector (Chairman) Lead District Manager, representative of Finance Department in Government, District Manager, Kerala Financial Corporation and General Manager, District Industries Centre (Member Secretary).

25. Cases involving subsidy of more than Rs. 10.00 lakhs and applications of medium and large category shall be considered and sanctioned by State Level Committee consisting of Principal Secretary / Secretary (Industries) (Chairman), Secretary (Finance), Managing Director, Kerala State Industrial Development Corporation, Managing Director of Kerala Financial Corporation, Convenor, State Level Bankers committee or their representatives and Director of Industries and Commerce (Member Secretary). In the case of State Level and District Level Committee the quorum of the Committee shall be four.

26. Investment subsidy shall be disbursed by Kerala Financial Corporation/Kerala State Industrial Development Corporation / General Manager, District Industries Centre to Industrial Units through the Commercial bank/financing institution which has financed the unit on their executing an agreement with the General Manager, District Industries Centre / Kerala State Industrial Development Corporation/ Kerala Financial Corporation in the prescribed form. If there are more than one such financing institution the amount shall be credited to the term loan lending institution.

27. Industrial units which receive investment subsidy will be under obligation to remain working for 5 years from the date of receipt of the subsidy.

28. Investment subsidy to an industrial unit is liable to be refunded by the units with interest @ 14% per annum on issue of registered demand notice to the unit by the General Manager, District Industries Centre / Kerala Financial Corporation / Kerala State Industrial Development Corporation on grounds of obtaining subsidy by mis-representation, forgery or deception or if the unit is not found working for 5 years after receipt of subsidy. All amounts due to Government under this provision shall, in case of default, be recoverable as if they are arrears of land revenue under the provisions of the Revenue Recovery Act. Sufficient opportunity to show cause shall however be granted to the units before a demand is raised against it.

29. The State Level Committee for State Investment Subsidy is competent to dispose the appeals, if any, received in the prescribed form against the orders of District Level Committee and even competent to reconsider the decision of the State Level Committee if any appeals received. The State Level Committee is also competent to issue clarifications wherever necessary in respect of State Investment Subsidy Scheme.

30. The Appeals referred in para above shall be sent to the Member Secretary of the State Level Committee (Director of Industries and Commerce). The Member Secretary shall place the case before the Committee after getting the views of General Manager, District Industries Centre / Kerala Financial Corporation / Kerala State Industrial Development Corporation as the case may be, if necessary. The appeal shall be disposed of, as far as possible, within three months from the date of receipt of appeal.

31. The subsidy under these rules shall be given to all eligible industrial units from the date of this order. The date of provisional registration issued by Industries Department, date of IEM/SIA, date of sanction of loan by the financial institution whichever is earlier shall be the cut off date for eligibility of subsidy under these rules. If the date of provisional registration, IEM/SIA, sanction of loan by financial institution for the project for which the subsidy was claimed whichever is earlier happens to be a date prior to the date of this order, such units can; opt for the benefits under the scheme contemplated in G.O. (MS) No. 4/94/ID dated 4.10.1994 for a period of 2 years from the date of this order. However, the application of units filed as on the date of this order shall be processed as per the existing rules.