10 Important point on need scheme for new and young businessmen

need scheme

MSME – Micro small medium enterprises are backbone of Indian commerce contributes large share to GDP of counrty. To take care of welfare measures, guide, educate Ministry of Micro, Small & Medium Enterprises is established government of India along with government of Tamilnadu provides credit facilities and subsidies to eligible msme.

What is need scheme ?

The New Entrepreneur cum Enterprise Development Scheme  (NEEDS) is subsidy scheme provided by Directorate of Industries and Commerce, Government of Tamil Nadu to encourage and support new and young entrepreneur , Scheme aims at providing interest subsidy and capital subsidy to educated youth to start new business Under this scheme around 1000 entrepreneurs will be trained each year and 50 % of them would be women.

Top 10 Point to take care while applying in Tamilnadu government need scheme

  1. Manufacturing activity will be given priority
  2. Female candidates will be given high ranking
  3. Private limited company, LLP, OPC, limited company not eligible under the scheme.
  4. Prefer TIIC for loan application as they are well suited for MSME loans. TIIC provides additional subsidy on interest and minimum collateral security norms. Enhanced assistance compared to banks.
  5. Only new machinery or second hand machinery directly imported by applicant will be considered for project cost.
  6. Loan amount will be calculated as per BANK or TIIC norms.
  7. Collateral security is must as per bank guidelines. Colletral security relaxation may also be considered under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for eligible business
  8. After approval of subsidy, business should not be converted to private limited, llp,opc, limited company to be covered under the scheme.
  9. Business will be physically verified anytime to make sure conditions are met.
  10. For service sector capital intensive industries will only be considered.

What is the process of needs scheme ?

under needs scheme around 1000 members are selected for entrepreneur development program and after successfully completing training program, assistance will be provide by way of subsidy for investment and subsidy for interest. Every eligible members should invest in capital of the industry as per the the scheme, assistance in form of term loan will be provide by Tamilnadu industrial investment corporation (TIIC).

What are the eligibility for need scheme ?

Age Limit

Minimum – 21 years
Maximum – 35 years for General Category Entrepreneurs
Maximum – 45 years for Special Category Entrepreneurs    (Women / SC / ST / BC / MBC / Minorities /
Ex-Servicemen / Transgenders / Differently abled

Educational Qualification

Degree, Diploma, ITI / Vocational Training from
recognized Institutions.

Place of residence

The applicant should be a resident of Tamil Nadu State
for not less than 3 years.

Distribution of benefits on basis of Reservation

Scheduled Caste (SC) 18%
Scheduled Tribe (ST) 1%
Differently abled 3%

Priority will be given to destitute women

Income ceiling

Benefit is provided irrespective of existing annual income

Persons eligible under need scheme

Only individual are eligible under this scheme, and partnership can apply only if all partners in the firm are eligible under the scheme, training under the scheme will be provide only to authorized partners. Margin norms for partnership firm to be satisfied by partners also.

How much subsidy under need scheme

Subsidy is limited to 25 % of project cost subject to maximum amount of 25 lakhs,

Minimum investment 10 lakhs, and total project value  below 5 crores will be given priority.

3 % interest subsidy will be provided by state government directly to bank.

for project cost up to 50 lakhs subsidy will be provided in in 2 installments and for above 50 lakhs

How to calculate project cost ?

Investment amount should be for capital expenditure , which means it is for setup of machinery and other infrastructure

Total project costs                                                    Rs.XXXXExample
Rs. 1,50,00,000
Less :
a.Cost of rented/leased building (advance paid, rent, b.purchase cost )Rs.XXXX12,00,000
c.Technical know-howRs.XXXX0
d.Company registration expenses and other admin expenses.Rs.XXXX75000
e.Working capitalRs.XXXX20,00,000
f.Total project cost for calculation subsidyRs.XXXX11,72,5000
g. Subsidy @ 25  % of (f)Rs.XXXX29,31,250

(Restricted to maximum amount for Rs.25,00,000)

How much is promoter contribution ?

Promoter contribution should be minimum 10% for general category and 5 % for special category of persons.

Eligibility of business nature for need scheme?

All viable manufacturing and service activities except the following.

Ineligible business

1. Any activity directly connected with agriculture.
2. Sericulture (Cocoon rearing), Animal Husbandry like Pisciculture, Piggery,
Poultry etc.,
3. Manufacturing of Polythene carry bags of less than 40 microns thickness and
manufacture of carry bags or containers made of recycled plastic for storing,
carrying, dispensing or packaging of food stuff
4. Sugar
5. Distilleries, Brewery and Malt Extraction
6. Units utilizing Molasses/rectified spirit/de-natured spirit as raw material for
manufacture of potable alcohol.
7. Fertilizer manufacture and blending (Except bio-fertilizers)
8. Mining and Quarrying Ores, minerals etc. [Excluding polishing, cutting, crushing,
etc. of mined ores / minerals]
9. Aluminium, Iron and Steel Smelting [Excluding foundries]
10. Manufacturing of intoxicant items like Beedi / Pan / Cigar / Cigarette etc.,
11. Saw Mills
12. Cement
13. Calcium Carbide
14. Slaughter House
15. Re-packing of Drugs / Medicine / Chemical, without any processing or value
16. Azoic / Reactive Dyes
17. Fire Crackers
18. Industries manufacturing and or utilizing Ozone depleting substances
19. Industries involving hazardous activities / classified as “Red category” by Tamil
Nadu Pollution Control Board / Central Pollution Control Board
20. Cyanide
21. Caustic Soda
22. Potassium Chloride
23. Nylon, Rayon & Polyester Fibre manufacturing. [Excluding manufacture of
downstream products from Nylon, Rayon & Polyester Fibre]
24. Real Estate
25. All types of Business activities.

How to apply  ?

It is recommended to consult with district Commissionerate of Industries and Commerce before proceeding to apply to comply with rules and regulations, director will give advise on the scheme and eligibility. Once pre consultation is over you can apply subsidy in need scheme . Once application is submitted it will be verified and approved only after all the conditions are satisfied.

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