Introduction to PSI 2019
The Package Scheme of Incentives (PSI) 2019 is a fiscal incentive package introduced by the Government of Maharashtra to encourage investment, employment, and balanced industrial development across the state, particularly in less-developed regions.
With a history dating back to 1964, PSI-2019 replaced the previous PSI-2013 and came into effect on 1 April 2019. It offers a comprehensive "basket of incentives" including Industrial Promotion Subsidy (IPS), interest subsidy, electricity duty exemption, stamp duty exemption, and power tariff subsidies.
PSI 2019 Scheme Snapshot
| Full Name | Package Scheme of Incentives – 2019 (PSI-2019) |
|---|---|
| Government | Government of Maharashtra |
| Administrative Department | Industries, Energy & Labour Department, Maharashtra |
| Original GR Date | 16 September 2019 |
| Effective Date | 1 April 2019 |
| Original Scheme Period | 1 April 2019 to 31 March 2024 or until new PSI comes into force |
| Nature | Fiscal incentive package for eligible industrial units |
| Geographic Basis | Taluka/location classification |
Disbursement Data (Government-Supported)
PSI has been a massive driver of industrial growth, with thousands of crores disbursed annually.
₹6,000 Cr
FY 2022-23 Total PSI Disbursement
₹5,700 Cr
FY 2023-24 Total PSI Disbursement
₹5,600 Cr
FY 2024-25 Total PSI Disbursement
₹3,840 Cr
FY 2025-26 Disbursement (Up to Oct)
₹29,866 Cr
Cumulative Disbursement (2019-20 to Oct-2025)
Objectives of PSI 2019
- Promote industrial investment in Maharashtra.
- Encourage industries to locate in less-developed regions.
- Create employment, particularly local employment.
- Promote MSME development.
- Encourage thrust-sector investment.
- Promote food/agro processing.
- Promote technology-intensive industries.
- Encourage green energy and biofuel manufacturing.
- Promote Industry 4.0 technologies.
- Encourage balanced regional industrial development.
- Improve Maharashtra's industrial competitiveness.
- Encourage private, cooperative and public-sector investment.
Eligible Beneficiaries
- Constitutional: Proprietary, Partnership, LLP, Private/Public Limited.
- Sectors: Private Sector, Cooperative Sector, State Public Sector, Joint Sector.
- New MSME Unit, and existing units undertaking expansion or diversification.
- LSI / Special LSI Unit.
- Mega / Ultra Mega Unit (subject to High Power Committee approval).
Eligible Activities & Investments
Eligible Activities
- All Manufacturing
- IT Manufacturing
- Biotechnology Manufacturing
- Dairy Processing
- Fruit & Vegetable Processing
- Grain Processing
- Fish / Meat / Poultry Processing
- Consumer / Packed Food
- Non-Alcoholic Fruit & Vegetable Beverages
- Secondary/Tertiary Food Processing
- Electric Vehicles
- Aerospace & Defence Manufacturing
- Industry 4.0: AI, 3D Printing, IoT, Robotics, Nanotechnology, etc.
- Integrated Data Centre Parks
- Textile Machinery Manufacturing
- Medical & Diagnostic Devices
- ESDM / Semiconductor / FAB
- Logistics & Warehousing
- Green Energy / Biofuel Manufacturing
- Sports & Gym Equipment Manufacturing
- Nuclear Power Plant Equipment Manufacturing
- Mineral / Forest-Based Industries
Eligible Investment Components
- Land
- Building
- Plant & Machinery
- Tools & equipment
- Electrical Installation
- Capitalized pre-operative expenses
- Technical know-how
- Other Fixed Assets
- R&D facilities
Zonal Classifications & Incentive Baskets
Incentives are strictly tied to the location of the unit.
| Area / Group | Maximum Incentive Basket | Eligibility Period |
|---|---|---|
| Group A | Nil under general MSME basket | — |
| Group B | 30% of FCI | 7 years |
| Group C | 40% | 7 years |
| Group D | 50% | 10 years |
| Group D+ | 60% | 10 years |
| Vidarbha / Marathwada / Ratnagiri / Sindhudurg / Dhule | 80% | 10 years |
| NID / Naxalism-Affected / Aspirational District | 100% | 10 years |
Special Enhancements
Special Enhancement (Thrust Sectors): Food/agro-processing, green energy/biofuel, and Industry 4.0 sectors can receive 20% over the normal basket, plus two additional years of eligibility, up to a 100% ceiling.
Special Category (Women/SC/ST)
- Incentives of C zone apply to units in A & B zones.
- Incentives of D+ zone apply to units in C & D zones.
- Incentives of Naxal Affected Areas apply to units in D+ and No Industry District zones.
Subsidies & Benefits
1. Industrial Promotion Subsidy (IPS)
- MSME: On 100% Gross SGST payable (Up to 10 years).
- LSI: On 50% of Gross SGST payable.
- Special LSI: 40% of Net SGST payable.
2. Interest Subsidy
- MSMEs: 5% Interest Subsidy up to 10 years.
- Applicable on interest actually paid, on eligible term loans, from Banks/Public Financial Institutions, for acquisition of new fixed assets.
3. Electricity Duty Exemption
- For MSME/LSI/Special LSI: 100% Exemption on eligible locations (Group C, D, D+, No-Industry, Aspirational, Naxalism-Affected) up to 10 years.
- Group A/B Exception: 100% EOUs, IT Manufacturing, Biotech Manufacturing can receive exemption for 7 years.
4. Stamp Duty Exemption
- Group C/D/D+ (MSME): New and expansion units get 100% exemption during the investment period for land acquisition, lease assignment, sale certificate, and term-loan purposes.
- Group A/B: IT/BT manufacturing units in Public Parks get 100%, Private Parks get 75%.
- LSI/Mega: 50% exemption for the first lease/conveyance deed.
5. Power Tariff Subsidy
- For MSMEs: ₹1/unit for eligible locations (Vidarbha, Marathwada, North Maharashtra, Raigad, Ratnagiri, Sindhudurg, No-Industry, Naxalism-Affected, Aspirational Districts).
- For MSMEs in other areas: ₹0.50/unit.
- Period: 3 years from commencement of commercial production (for energy consumed and paid).
- Group A: Not eligible.
6. Additional MSME Incentives (New/Expansion Projects)
| Benefit | Rate | Maximum Limit |
|---|---|---|
| Technology upgradation | 5% of additional capital equipment | ₹25 lakh |
| Quality certification | 75% | ₹1 lakh |
| Cleaner production | 25% of additional equipment | ₹5 lakh |
| National patent | 75% | ₹10 lakh |
| International patent | 75% | ₹20 lakh |
| Water audit | 75% | ₹1 lakh |
| Energy audit | 75% | ₹2 lakh |
| Water conservation/recycling equipment | 50% | ₹5 lakh |
| Energy-efficiency equipment | 50% | ₹5 lakh |
| Credit rating | 75% | ₹40,000 |
| SME exchange listing | Actual/₹6 lakh, whichever lower | ₹6 lakh |
7. Mega & Ultra-Mega Projects
Mega and Ultra-Mega projects do not follow the ordinary MSME subsidy table. The High Power Committee recommends the package, and the Cabinet Sub-Committee can approve customized incentives/special packages for strategically important projects.
8. Capital Subsidy (Women/SC/ST)
Between 15% to 35% of Fixed Capital Investment with a limit from ₹20 Lakh to ₹1 Cr. depending on the Location of the Unit.
Documentation Required
- Project Related Documents
- Auditor-Certified Baseline
- Licenses & Registrations
- Land and Building Documents
- Loan Documents
- Financial Documents
Process Flow
- Pre-Feasibility Check
- Apply for Eligibility Certificate
- Investment & Commencement
- Claim Submission
- Verification & Disbursement
Why This Policy Matters
- Location-based subsidy strategy
- Strong support for MSMEs
- Large backward-area advantage
- Food-processing advantage
- Technology focus
- Operating-cost reduction
- Financing support
- Employment-linked development
- Investment planning advantage
- Strong compliance framework
Conclusion – 7 Key Points
- Location-Linked Benefits: Higher incentives (up to 100% of FCI) in less developed districts.
- "Basket of Incentives": SGST refund, interest subsidy, and electricity duty exemption reduce operational costs.
- Investment-Linked Support: Tied strictly to new Fixed Capital Investment, not working capital.
- Priority Sectors: 20% bonus for food/agro-processing, green energy, and Industry 4.0.
- First-Come, First-Serve: Incentives are capped and allocated on a first-come basis.
- Complexity & Compliance: Requires meticulous documentation and strict adherence to procedures.
- Significant Financial Impact: Approvals worth hundreds of crores make this a critical tool for investors.
PSI 2019 Scheme Explained
Watch this detailed video to understand the scheme's eligibility, subsidy structure, and application process.
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