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The Raw Material Assistance Scheme helps Micro, Small, and Medium Enterprises (MSMEs) finance the purchase of raw Read More... materials, both from within India and abroad, allowing them to focus on producing high-quality goods. Read less
Details
Are you an MSME looking to streamline your raw material procurement? The Raw Material Assistance Scheme, managed by the National Small Industries Corporation (NSIC) under the Ministry of Micro, Small and Medium Enterprises (MSME), is designed to support you.
What Is This Scheme?
This scheme basically helps MSMEs by providing financial assistance to purchase their required raw materials. Whether the material is sourced locally or imported, NSIC steps in to make the process smoother. This way, businesses can dedicate more energy to manufacturing excellent products.
Who Can Benefit From This Scheme?
Any MSME involved in manufacturing or providing services can apply, as long as they have a valid Udyam Registration Certificate. However, it's important to note that this scheme is strictly for manufacturing and service activities, not for trading businesses.
Why This Scheme Is Important
By financing raw material purchases, the scheme ensures that MSMEs don't face cash flow issues when buying essential supplies. This allows them to take advantage of bulk purchase discounts and maintain consistent production, ultimately boosting their competitiveness and product quality.
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Benefits
Sources and references
Eligibility Criteria
- Any manufacturing or service MSME holding a valid Udyam Registration Certificate is eligible to apply.
- Important Note: The scheme is exclusively for manufacturing and service activities; trading is not permitted.
How To Apply
- Download the prescribed application form from the NSIC website, www.nsic.co.in, or collect it from any NSIC field office.
- Fill out the application form completely and attach all the required documents.
- Submit the filled application form along with all necessary documents to the nearest NSIC branch office. You can find the list of offices on the NSIC website.
Documents Required
- Passport-sized photograph of Proprietor/Directors/Partners/Society office bearers.
- Identity proof like PAN Card, Aadhaar Card.
- Residence proof (e.g., latest Utility Bill, Passport, Driving Licence, Voter ID).
- Self-attested photocopy of Udyam Registration Certificate/UAM and GST Registration Certificate.
- Self-attested statement of personal assets and liabilities of Proprietor/Directors/Partners/ Society office bearers, along with their residential address.
- For Pvt./Public Ltd. Co.: Copy of Board Resolution. For Partnership Firm: Power of Attorney. For Society: Governing Body Resolution, authorizing the signatory for financial assistance dealings with NSIC.
- Specimen signatures of the authorized signatory, attested by the bank.
- Copy of the sanction letter for credit limit from your existing Financial Institutions/banks.
- Financial statements of the unit:
- Last year's Audited financial statements.
- Provisional current-year financial statements.
- For startup MSMEs: Current year estimated financial statements, certified by an Auditor or Chartered Accountant.
- Bank statement of the unit for the last six months.
- Copy of the latest Electricity Bill.
- Conduct Report of Accounts from your banks (other than the Bank Guarantee issuing bank) and Financial Institutions, if the status isn't available in the credit report.
- Certificate/undertaking from the unit confirming they are not on any CIBIL/RBI defaulters list and have no pending cases against them, their company, owners, associates, or sister concerns.
- Copy of orders in hand, if seeking a limit enhancement above ₹5 crores.
Documents Required for Renewal of Cases:
- Unit's written request for renewal, with a declaration of no change in constitution, promoters, or address.
- If there are any changes in constitution, promoters, or addresses, relevant supporting documents must be provided.
- Copy of the latest and valid Bank Sanction letter.
- If renewal is due after the income tax filing deadline, a copy of the last financial year's Audited Annual Accounts. If audited accounts are not finalized, provide a self-attested declaration of financial parameters for the last financial year from the Appraisal form, along with the latest available Audited Annual 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?
This scheme, run by NSIC, helps Micro, Small, and Medium Enterprises (MSMEs) by arranging for the procurement of their needed raw materials. It simplifies how you get your supplies.
Can I use this scheme for buying and selling goods (trading)?
No, the Raw Material Assistance Scheme is strictly for manufacturing and service businesses. Trading activities are not covered under this program.
How does NSIC help MSMEs get raw materials on credit?
NSIC helps by facilitating payments for your raw materials. You can get assistance for up to 95% of the Bank Guarantee value, essentially getting credit to purchase your materials.
What is the maximum amount I can get under this scheme?
For manufacturing units, the maximum exposure is ₹1000 Lakhs. For service units, it's ₹600 Lakhs. For infrastructure units, it's ₹500 Lakhs. If you have associate/sister concerns, the combined exposure limit for a 'GROUP' is ₹2000 Lakhs for manufacturing, ₹1500 Lakhs for service units, and ₹500 Lakhs for infrastructure units.
How long is the credit period for this assistance?
The credit is typically allowed for 180 days. However, if requested by the MSME and approved by the Zonal Head, it can be extended further, provided interest is paid and the Bank Guarantee remains valid.
What happens if I don't repay within the 180-day period?
If repayment is delayed beyond 180 days, an additional interest of 1.25% per quarter will be charged on the outstanding amount.
Where should I submit my application for raw material assistance?
You should submit your completely filled application form and all required documents to the nearest NSIC branch office. Details of these offices are available on the NSIC website.
Who is eligible to apply for this scheme?
Any MSME involved in manufacturing or services, provided they possess a valid Udyam Registration Certificate, is eligible to apply for assistance under this scheme.
Will NSIC pay the suppliers directly, or will the payment be released to the MSME?
NSIC will release the payment directly to the supplier based on the MSME's request. The payment is not released to the MSME directly.
How is the credit limit determined for purchasing materials on credit?
The credit limit is decided based on your unit's raw material needs, its financial standing, and the availability of a bank guarantee of equivalent value.
What are the main advantages for MSMEs under this scheme?
You get to source materials at bulk supplier rates, benefit from shared discounts, and can procure raw materials on credit, helping you fulfill orders efficiently.
How do I apply for credit assistance to buy raw materials?
Any MSME needing raw materials can apply by submitting the prescribed application forms to any NSIC field office. These forms can be downloaded from the NSIC website or obtained from the offices.
What is the validity period of the limits approved under this scheme?
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.
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