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Large scale damage is caused to the industrial units along with other private properties due to the earthquake on 26th January 2001 in certain districts of Gujarat including Kutch. In this context, the State Government received requests from different associations and industrial units to offer interest subsidy on the loan sanctioned for working capital as well as for the investment made for rehabilitation of the affected units, by the nationalized banks, co-operative banks etc. This matter was under consideration of the Government.

Now the State Government has announced relief in respect of the following :

  1. Cash subsidy on the investment made by small, medium and large industrial units and interest subsidy on the working capital.
  2. To operationalize the reliefs granted, total exemption from the prescribed stamp duty payable on the legal documents.
  3. Recovery of the electricity bill on the actual consumption of electricity instead of the minimum electricity bill, for a period of one year from the affected units (this will be implemented after receiving necessary permission from Gujarat Electricity Regulatory Commission).
1.0       Resolution

It has been resolved to sanction the relief at Sr. No.1 above for the rehabilitation of affected tiny units, SSI units/medium and large scale units  covered in the seismic zone IV and V (Annexure-1),  as declared by Revenue Department.

The definition of small industry would be in accordance with the provision made in the resolution No.INC/102000/17(1)-I dated 14/11/2000 of Industries and Mines Department.

1.1 A cash subsidy @ 60% of the new eligible investment made either for repairing or replacement of building and plant and machinery of the damaged industrial units, upto a maximum of Rs.60 lakhs.

1.2 Government will pay full interest  per annum upto a maximum limit of  Rs.10 lakhs within an overall limit of Rs.20 lakhs over a period of first two years to the financial institutions for the loans sanctioned as per the requirements of the above units by nationalized banks/scheduled banks/ cooperative banks/urban cooperative banks and state or national level designated financial institutions.

2.0       Conditions for the assistance of State Cash Subsidy

(A) Conditions

The investments made in the  damaged industrial units for the following purposes will only be considered as eligible investment.

(a) Investment made for necessary repairing of the existing building so damaged or for construction of new building.

(b) Investment made for repairing of the damaged plant and machinery as per the requirements. In case of replacement of the machinery if required, total expenditure which would include electrification, foundation, transport etc. will be considered.

(c) In case of the replacement of machinery as indicated at (b) above, the expenditure of any auxiliary machinery required to be installed with the original machinery if any, which would include electrification, foundation, transport etc. for the purpose would be considered.

(d) In case of repairing of the building, a certificate from a Chartered Civil Engineer giving estimate  of the expenditure will have to be obtained.

(e) Estimates of the expenditure for repairing or replacement of the machinery will have to be obtained from a Chartered Engineer (Mechanical).

(f) Any amount if received as a compensation from the insurance company to the affected units will have to be deducted from the eligible investment.

(B) Procedure

The eligible units desiring to avail the relief shall have to submit an application to the District Industries Centre along with the estimates of the damage by 31st March, 2001. District Industries Centre  will carry out a preliminary survey of the damages and will issue a certificate of the damages. For the purpose of the claim of the relief, District Industries Centre shall obtain application in the prescribed format from the concerned industrial unit and following procedure will be followed.

(C) Others

In the cases of rehabilitation through loans, the project cost in the context of eligible investment  will have to be considered as per the appraisal of bank/ financial institutions. In case of self-financed cases, following procedure will be followed.

(a) The officer of District Industries Centre  will carry out technical appraisal for the project cost  upto Rs.2 lakhs.

(b) Appraisal covering technical scrutiny and the cost estimates will be got done through SISI for the project cost above Rs.2 lakhs  and upto Rs.10 lakhs.

(c) Appraisal covering technical scrutiny and the cost estimates will be got done through GITCO for the project cost above Rs.10 lakhs.

(d) For the purpose of repairing, replacement  etc. the certificate of Chartered Engineer will be considered authentic.

3.0       Authority for sanction of assistance

In the case of SSI units, the powers to sanction reliefs will be vested to  the following District Level Committee.

1. Collector or Addl. Collector appointed for the concerned taluka Chairman

2. District Development Officer or Addl. District Development Officer appointed for the concerned taluka Member

3. Representative of taluka/district level industries associations/chamber Member

Regional Manager, Gujarat State Financial Corporation Member

5. Manager of the Lead bank or his representative Member

6. General Manager, District Industries Centre  - Member Secretary

In case of the small scale units where the amount of assistance is upto Rs. 10 lakhs, such applications shall be submitted to the committee under the chairmanship of Addl. Collector. In case when the amount of assistance exceeds Rs.10 lakhs, such applications shall be submitted to the committee under the chairmanship of Collector. Meetings of both these committees shall be held every week to sanction the assistance.

In the case of medium and large units, the constitution of the State Level Committee will be as prescribed  vide GR No.9APN-1095-2000(1)I dated 11/9/1995.

4.0       Mode of Payment

1. In the case where the loan will have to be availed from the financial institutions, the eligible amount of subsidy if not exceeding Rs.10 lakhs, will be deposited  in the bank account and arrangement will be made for disbursement of the amount of assistance in proportion to the disbursement of bank loan. In the case when the amount of assistance sanctioned exceeded Rs.10 lakhs, an advance  @ 75% towards the first instalment will be deposited in the bank account. Withdrawal of this amount will be made in proportion to the disbursement of the loan. Thereafter, on receipt of a CA certificate indicating the total expenditure in excess of 75%, the second instalment  of 25%  of the amount will be deposited in the bank account.

2. In the case of self financed investment, the unit after incurring total expenditure will have to approach District Industries Centre along with CA certificate giving details of the expenditure,  for the disbursement of the subsidy. The amount of subsidy will be disbursed after scrutiny of the application.

5.0       Interest Subsidy

(A)       Conditions

1. Interest subsidy will be available for the working capital sanctioned by banks/ financial institutions as mentioned under para 1.2. Bank/financial institutions shall sanction the working capital in accordance with their prevailing/general norms.

2. Bank/ financial institutions shall make the assessment of interest as per the circular of Reserve Bank of India dated 12/2/2001 and interest so calculated only will be eligible for assistance.

3. Interest subsidy will be directly disbursed to the bank/ financial institutions. Financial institution will not be required to recover the amount of interest subsidy under this resolution from the industrial units.

Interest subsidy will be made available to the quake-affected industrial units having obtained finance by way of cash credit/overdraft facility  from the bank// financial institutions and also on the additional/fresh finance obtained thereafter.

5. Interest subsidy will be available only on the original interest. Penal interest or interest on interest will not be considered. Similarly, no subsidy will be offered for the amount of interest on the overdues if any, prior to the earthquake.

(B)       Procedure

In the context of the damage, the unit shall have to submit an application in the prescribed proforma along with a copy of the sanction letter for working capital, in duplicate to District Industries Centre. On the basis of the said sanction letter, District Industries Centre  will sanction the eligible amount of interest subsidy and issue a sanction letter, a copy of which will also be sent to the institution sanctioning such finances.  On the basis of this sanction letter, sanctioning institute will calculate the interest on the finance and forward the claim for interest subsidy to  District Industries Centre  in the form of half-yearly  instalments and the District Industries Centre  will make direct disbursement to the sanctioning institution after due verification of the claim. The sanctioning institute shall have to submit a statement certifying the expenditure made by the unit along with the first claim of interest subsidy to District Industries Centre.

6.0       General Conditions

1. This scheme will be applicable to the damaged units, going for rehabilitation at the same location in the affected areas declared under seismic zone IV and V  by the Revenue Department (Annexure-1).

2. The industrial units availing assistance under the scheme may have to install and operate effectively the pollution control equipments as prescribed by the concerned competent authority.

3. The industrial units availing of assistance under the scheme shall have to recruit local persons for a minimum of 85% of the total posts and on a minimum of 60% of the managerial and supervisory posts. This  will be scrutinized by a joint team of  the General Manager, District Industries Centre and Employment Officer. The percentage of local employment shall be maintained permanently. 

The industrial unit availing such assistance may have to continue its operation at least for a period of 5 years.

5. The industrial units may have to furnish the information pertaining to production, employment or any other as required by the State Government from time to time.

6. The industrial unit may have to undertake new construction  in accordance with the norms and standards as laid down by the Government/local authority/ local self government for seismic zones IV and V.

7. The concerned industrial unit will have to insure against the earthquake for the purpose of protection on the properties developed through fixed investment and to be renewed from time to time.

8. If the unit is eligible to receive interest subsidy or cash subsidy from State Government, central Government or any other institution(s) under any other scheme and if the unit has accepted that option, it will not be eligible to receive the benefit under this scheme.

9. Under the scheme, the state level committee will be empowered to take all decisions pertaining to the interpretation, dispute or controversy  and the decision of the committee shall be final and binding to the applicant unit under the scheme.

10. If the unit breaches any of the conditions of this resolution, the amount of assistance will be recovered from it as arrears of land revenue.


Details of locations declared under seismic  zone IV and V vide GR No.CLS-162001-1403(5)-S.3 dated 14/3/2001 by Revenue Dept., Government of Gujarat

Seismic Zone-V (Very high vulnerability zone)

All the talukas of the district of Kutch

Seismic Zone-IV (High vulnerability zone)

Sr. District Taluka
1. Jamnagar Jodiya
Jamnagar (City)
Jamnagar (Rural)
2. Rajkot Maliya Miyana
3. Surendranagar Halvad
4. Patan Santalpur
5. Banaskantha Vav

Content source : Gujarat Government.


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