The Cabinet has approved modifications in the Central Capital Investment Subsidy Schemes under the industrial packages available to J&K and the North Eastern Region (NER) in so far as they apply to MSME sector. Under the modified scheme, the Capital Investment subsidy for the MSME units in J&K will be enhanced to 30% of the investment on Plant & Machinery against 15% available at present, at par with the units in the NER. 

In addition, the MSME units in both J&K and NER will now be eligible to claim subsidy each time they undertake expansion so long as the total investment on Plant & Machinery does not exceed the ceilings prescribed for MSME units i.e. Rs.10 crore in case of the units in the manufacturing sector and Rs. 5 crore for the units in the Services sector. 

These modifications have been made as per the recommendations of a Task Force, set up under the chairmanship of the Principal Secretary to PM, to consider various issues raised by the associations representing the Micro, Small and Medium Enterprises (MSMEs). 

The Central Capital Investment Subsidy Scheme is one of the components of the Industrial Packages announced for J&K in June 2002 and for NER in April 2007 for boosting industrialisation in these States. The other components of the industrial incentives are 100% excise duty exemption, income tax exemption, interest subsidy of 3% on working capital loan and reimbursement of comprehensive insurance premium on capital. These incentives are available to all new units for ten years from the date of commencement of commercial production and also to the existing units on undertaking substantial expansion as defined. The measures have yielded appreciable results and there has been consistent progress in investment in these areas. Capital investment subsidy parity extended to regional MSMEs, enabling repeated subsidy claims for eligible expansions. Increase of the Capital Investment subsidy for MSME units in Jammu & Kashmir to the same rate as the North Eastern Region, and allowance for MSME units in both regions to claim the subsidy on each expansion provided total plant and machinery investment remains within the prescribed MSME investment ceilings for manufacturing and services sectors.