IPMC

Investment Promotion Management Cell

Investment Promotion Management Cell (IPMC)

Investment Promotion Management Cell (IPMC) in the Kerala State IT Mission, headed by the Director of KSITM, administers incentive schemes of the Government of Kerala for IT sector. The Fiscal incentives announced in the IT Policy 2017 are operative from 01.12.2016 and shall remain in force for a period of 6 years. The following Fiscal incentive schemes are available for IT/ ITES units:

Standard Investment Subsidy (SIS):-

SIS is a scheme of the Government of Kerala to promote productivity, job opportunities and entrepreneurship in ICT/ ITES sector in Kerala. The Government provides subsidy based on Fixed Capital Investment (FCI) of the IT Unit.

  • The following criteria determine eligibility of a Unit to apply for SIS:

    1. IT Units located in Kerala outside Special Economic Zone (SEZ)
    2. IT Units engaged in:
      • IT Software development
      • IT Services
      • IT enabled services (excluding IT training institutes that provide training to the public at large)
      • Hardware manufacture
      Please refer to SIS Subsidy Manual 2017 Sections 7 and 8 for details of eligible businesses.
    3. Units that have not availed SIS earlier and have started operations within the last six years from the date of application.
    4. Units that have availed SIS earlier and have invested over 25% above original investment (considered for prior SIS) for further business expansion/ modernization/ diversification and such business expansion/ modernization/ diversification has been completed after 01-12-2016.
    5. Units that have availed SIS earlier and NOT reached the maximum cap for providing subsidy under SIS scheme.
    6. Unit is not financed by Khadi & Village Industries Commission (KVIC) or Khadi & Village Industry Board (KVIB).
    7. In case of Partnership/ Proprietorship, none of the partners in the firm or the proprietor has 60% or more share in any other Unit that has already claimed or applied for SIS under a separate application.
    8. In case of a Company, it does not have more than 50% share in any other company or controlling interest in a proprietorship/ partnership firm that has already claimed or applied for SIS under a separate application.

  • Subsidy under SIS is provided based on the Fixed Capital Investment made by the unit to procure assets relevant to IT business of the Unit. The following criteria determine eligibility of investments:

    1. Furnishing, Fittings and Interiors
    2. Electrification including erection, installation, wiring, OYEC costs to KSEB, transformer costs, industrial wiring including that for DG set
    3. Software/ Hardware, Plant and Machinery including Generator sets, testing equipments, air conditioning equipments, UPS, photocopiers, bandwidth tapping equipments, office equipments like EPABX, OHP, digital projector and other specialized equipments related to operation of IT Unit.
    4. All assets above should be purchased brand new.
    5. Lease hold assets/ second hand assets are NOT eligible.
    6. Assets provided by Government agencies at concessional terms are not eligible.

    1. Subsidy under SIS is provided based on eligible Fixed Capital Investment made by the unit as above and also based on location of the Unit.
      Location of Unit Subsidy amount Maximum subsidy (CAP) amount
      Trivandrum
      Ernakulam      		 30% of Fixed Capital Investment Rs.15 lakhs
      Wayanad
      Idukki      		 50% of Fixed Capital Investment Rs.25 lakhs
      Other Districts 40% of Fixed Capital Investment Rs.25 lakhs

      2. Note: The CAP above is the maximum subsidy that can be provided to a Unit under SIS scheme. If a Unit has already availed SIS and has now applied for SIS again for business expansion/ modernization/ diversification, previous SIS availed and eligible subsidy for expansion together will be considered to determine if CAP is reached. For example, suppose a unit located in Trivandrum has already availed Rs.10 lakhs earlier and has now applied for SIS for business expansion for which eligible subsidy based on additional investment is Rs.15 lakh. Prior SIS availed + eligible subsidy for expansion = 10 lakhs + 15 lakhs = Rs.25 lakhs. However, as CAP applicable for Trivandrum district is Rs.15 lakhs, only Rs.5 lakhs can be provided as subsidy for expansion.

    2. Kerala State IT Mission may adjust the subsidy sanctioned against any dues of the Unit to Government agencies.
Terms and Conditions to be agreed by Unit for availing subsidy under SIS
1

The Unit shall not indulge in forgery, misrepresentation or deception in applying for the subsidy.

2

Units availing SIS shall successfully carry out commercial operation at least for a period of 5 years from granting the subsidy. The units will be audited for operations of the unit in line with the objectives of the business (as set forth while applying for SIS) for the 5 years immediately succeeding the release of SIS.

3

Assets on which investment is considered for SIS shall not be sold/ transferred for a period of 5 years from the date of purchase.

Bank Guarantee and Payout of Subsidy

The Unit availing SIS may have to produce a Bank Guarantee to Kerala State IT Mission, valid for a period of 5 years, as a security for its agreement to the Terms and Conditions above. Bank Guarantee amount is determined based on eligible subsidy amount against the application for SIS and Date of Commencement of operations of the Unit:

Unit that has been in operations for less than 3 years

The Unit, in this case, can choose between two options for submitting Bank Guarantee:

  • Bank Guarantee Amount = 100% of Subsidy sanctioned. If this option is chosen, 100% of subsidy will be released on receiving the Bank Guarantee.
  • Bank Guarantee Amount = 10% of Subsidy sanctioned. If this option is chosen, the subsidy will be released in 5 annual installments (over a period of 4 years), each amounting to 20% of subsidy sanctioned.

Unit that has been operation for more than 3 years but less than 5 years
  • Bank Guarantee need not be submitted.
  • Sanctioned subsidy will be released in 3 installments:
  • 1st payout = 60% of sanctioned subsidy upfront.
  • 2nd payout = 20% of sanctioned subsidy on the Unit completing 4 years of successful commercial operations
  • 3rd payout = 20% of sanctioned subsidy on the Unit completing 5 years of successful commercial operations

Unit that has been operation for more than 5 years but less than 6 years
  • Bank Guarantee need not be submitted.
  • 100% of subsidy will be released upfront.
Recovery of SIS on violation of Terms and Conditions.

Kerala State IT Mission will initiate recovery procedures of SIS released if the Unit violates the Terms and Conditions above. On demand by Kerala State IT Mission, the Unit shall refund 100% of SIS paid + Interest @ 14% computed from the date of disbursement of the SIS instalments. Kerala State IT Mission may recover the money from the Bank Guarantee if the Unit fails to refund within a period of 1 month from the date of demand.

Dues will be recovered as if they are arrears of land revenue under the provisions of the Revenue Recovery Act.