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This scheme by NSIC helps Micro, Small, and Medium Enterprises (MSMEs) by providing financial support for buying Read More... raw materials, so they can focus on making quality products. Read less

Details

Running a business, especially a small or medium-sized one, often means managing cash flow carefully. One of the biggest hurdles for MSMEs in India is getting the raw materials they need without draining their working capital. That's where the Raw Material Assistance Scheme comes in. It’s designed by the National Small Industries Corporation (NSIC), a government enterprise, to ease this burden.

What Is This Scheme?

The Raw Material Assistance Scheme is a financial support program by NSIC. Its main goal is to help Micro, Small, and Medium Enterprises (MSMEs) buy the raw materials they need, whether they are sourced locally in India or imported from abroad. This financial backing allows businesses to secure their supplies on time and on favourable terms, so they can concentrate on producing high-quality goods.

Who Can Benefit From This Scheme?

This scheme is specifically for manufacturing and service-oriented MSMEs that have a valid Udyam Registration Certificate. It's a crucial support system for these businesses to ensure they have a steady supply of necessary materials without the immediate pressure of upfront payment.

Why This Scheme Is Important

In today's competitive market, timely access to raw materials at the best possible prices is key to success. This scheme addresses that by offering credit support, helping MSMEs avoid delays, take advantage of bulk purchase discounts, and ultimately improve their production efficiency and product quality. It's a practical step to strengthen the backbone of India's manufacturing and service sector.

Objective

This scheme by NSIC helps Micro, Small, and Medium Enterprises (MSMEs) by providing financial support for buying raw materials, so they can focus on making quality products.

Benefits

Veterinary Sciences:₹ 12,000/- per month With a contingency grant of ₹ 6,000/- per annum.All disciplines other than Veterinary Sciences:₹ 8,640/- per month With a contingency grant of ₹ 6,000/- per annum.The rates of fellowship and contingency grants for higher studies will be as prescribed by the Council from time to time.

Sources and references

Guidelines

Eligibility Criteria

You must be a manufacturing or service MSME.
You need to have a valid Udyam Registration Certificate.
Important Note: This scheme is strictly for manufacturing and service activities. Trading is not permitted.

How To Apply

Download the application form from the official NSIC website (www.nsic.co.in) or get a copy from any NSIC field office.
Fill out the form completely and gather all the required documents.
Submit the completed application form along with the necessary documents to your nearest NSIC branch office.

You can find the addresses of NSIC offices on their official website: www.nsic.co.in.

Documents Required

Passport-size photographs of proprietors, directors, partners, or society office bearers.
Identity proof like PAN Card, Aadhaar Card.
Proof of residence (latest utility bill, passport, driving license, Voter ID, etc.).
Self-attested copy of Udyam Registration Certificate/UAM and GST Registration Certificate.
Self-attested statement of personal assets and liabilities for proprietors/directors/partners/society office bearers, along with their residential address.
A copy of the Board Resolution (for Pvt./Public Ltd. Co.), Power of Attorney (for partnership firms), or Governing Body Resolution (for Societies) authorizing the signatory.
Specimen signatures of the authorized signatory, attested by your bank.
Copy of the credit limit sanction letter from your Financial Institution/bank.
Financial statements: Last year's audited statements, current year's provisional statements, and for startups, current year's estimated financial statements certified by an auditor or Chartered Accountant.
Your unit's bank statement for the last six months.
Copy of the latest Electricity Bill.
Conduct Report of Accounts with your banks (excluding the bank providing the Bank Guarantee) and Financial Institutions, if credit status isn't available in the credit report.
An undertaking confirming that your name, company names, owners, associates, sister concerns, members, or directors are not on any defaulters list (CIBIL/RBI) and have no ongoing cases against them.
Copy of orders in hand, if seeking limit enhancement beyond ₹5 crores.

Documents for Renewal:

A written request for renewal, declaring no change in constitution, promoters, or address.
If there are changes in constitution, promoters, or addresses, relevant supporting documents must be submitted.
Copy of the latest and valid Bank Sanction letter.
For renewals due after the income tax return filing date, a copy of the last financial year's audited annual accounts. If not finalized, a self-attested declaration of financial parameters from the last financial year's appraisal form along with the latest available audited accounts.
Projected/estimated annual accounts for the current financial year or self-attested financial parameters as per the appraisal note.

FAQ’s

What exactly is the Raw Material Assistance Scheme?

It's a program by NSIC designed to help MSMEs get the raw materials they need. NSIC helps arrange for these materials based on what each business requires.

Can I apply for this scheme if I'm in a service business?

Yes, absolutely. Any manufacturing or service MSME with a Udyam Registration Certificate is eligible to apply for help under this scheme.

Does this scheme support businesses involved in trading?

No, the Raw Material Assistance Scheme is strictly for manufacturing and service activities. Trading is not allowed under this program.

How does NSIC provide credit for raw material purchases?

NSIC helps MSMEs by providing up to 95% of the Bank Guarantee value. You just need to submit your proforma invoice or original invoice with a request for payment release.

Is the payment sent directly to the MSME?

No, NSIC does not send the payment to the MSME. Instead, the payment is released directly to the supplier as per the MSME's request.

What is the duration of credit offered under this scheme?

The standard credit period is 180 days. However, it can be extended if the MSME requests it, the respective Zonal Head agrees, interest is paid, the total outstanding stays within the Bank Guarantee limit, and the Bank Guarantee remains valid for the extended period.

What are the main advantages for MSMEs under this scheme?

You get materials through bulk supply arrangements at discounted rates, cutting out middlemen. NSIC shares these bulk discounts with you, lowering your purchase costs. Plus, you get raw materials on credit, enabling you to fulfill your orders promptly.

What happens if I can't repay within 180 days?

If repayment is delayed beyond 180 days, an additional interest of 1.25% per quarter will be charged on the outstanding amount.

How do I apply for credit-based raw material assistance?

Any MSME needing raw materials through NSIC should apply to any NSIC field office using the prescribed application forms. These can be downloaded from www.nsic.co.in or obtained from NSIC offices.

Where should I submit my application?

You should submit the completed application form and all necessary documents to the nearest branch office of NSIC. You can find a list of their offices on www.nsic.co.in.

How is the credit limit decided?

The credit limit is determined based on your unit's raw material needs, its financial health, and the availability of equivalent security in the form of a bank guarantee.

Is there a maximum limit for the sanctioned credit?

Yes, the maximum exposure for a single manufacturing unit is ₹1000 Lakhs, and for a service unit, it's ₹600 Lakhs. For infrastructure units, it's ₹500 Lakhs. For all associated/sister concerns belonging to a 'GROUP', the maximum exposure is ₹2000 Lakhs for manufacturing, ₹1500 Lakhs for service, and ₹500 Lakhs for infrastructure units.

How long is the sanctioned limit valid?

The sanctioned limit is valid for one year. It can be renewed for another year if the account has been managed satisfactorily during the previous year.