The Package Scheme of Incentives (PSI) is Maharashtra’s flagship industrial policy tool, designed to attract investments, promote balanced regional development, and generate employment by offering fiscal and non-fiscal benefits to eligible enterprises.

It has evolved through multiple iterations since its inception in 1964, with the latest versions—PSI 2013 and PSI 2019—continuing to shape the state’s industrial landscape.

Historical Context

  • Introduced in 1964, the Package Scheme of Incentives (PSI) was conceived to encourage dispersal of industries away from developed urban centers like Mumbai and Pune into underdeveloped and backward regions of Maharashtra.
  • Over the decades, the scheme has been revised periodically (PSI 1979, 1983, 1993, 2001, 2007, 2013, and 2019) to align with changing industrial priorities and economic conditions.

Objectives of PSI

  • Balanced regional development by incentivizing industries to set up in less-developed districts.
  • Employment generation through MSMEs, large-scale industries, and mega projects.
  • Promotion of thrust sectors such as IT, biotechnology, renewable energy, and high-tech manufacturing.
  • Support for MSMEs by offering capital subsidies, interest subsidies, and tax benefits.

Key Features of PSI

Sr. No.

Feature

Description

1

Objective

To promote balanced industrial growth across Maharashtra and generate employment opportunities by offering fiscal and non-fiscal incentives.

2

Administered By

Directorate of Industries, Government of Maharashtra.

3

Eligible Units

New, expansion, diversification, and modernization units in manufacturing and certain service sectors.

4

Classification of Areas

Areas divided into categories (A, B, C, D, D+, and No-Industry Districts) based on industrial development level. Incentives increase as the region becomes less industrialized.

5

Types of Incentives

Refunds and exemptions on taxes, electricity duty exemption, interest subsidy, and employment generation incentives.

6

Eligibility Period

Incentives available for a defined period (commonly 5 to 10 years) from the date of commencement of production.

7

Investment Thresholds

Minimum fixed capital investment required, varying by industry type and area classification.

8

Incentive Ceiling

Maximum admissible incentives usually linked to percentage of fixed capital investment (e.g., 30% to 100% depending on zone).

9

Electricity Duty Exemption

Exemption for a specified number of years depending on category area and project type.

10

Stamp Duty Exemption

On purchase or lease of land, conveyance deeds, or financial agreements related to the eligible project.

11

Interest Subsidy

For small and medium enterprises (SMEs/MSMEs) — a percentage of interest on term loans reimbursed.

12

Power Tariff Subsidy

Subsidized electricity tariff per unit for eligible industrial units for a fixed period.

13

SGST Refund

Refund of State GST paid on sales within Maharashtra, limited by eligible incentive amount.

14

Employment Generation Subsidy

Incentives based on number of local persons employed, especially for women and youth.

15

Mega & Ultra-Mega Projects

Customized incentives negotiated directly with the Government of Maharashtra based on investment and employment commitments.

16

Environment-friendly Projects

Special provisions or additional incentives for green, sustainable, or pollution-control investments.

17

Anchor Units

Large projects that promote vendor development may get additional incentives.

18

Implementation Authority

District Industries Centre (DIC) for small and medium units; Industries Department for large projects.

19

Monitoring

Periodic review of compliance and performance to ensure continued eligibility.

20

Policy Duration

Each PSI operates for a defined period (e.g., PSI–2019 effective up to 2024, to be succeeded by PSI–2025).

PSI 2013 and PSI 2019 Highlights

  • PSI 2013: Operative from 2013–2018, it emphasized mega projects and employment-linked incentives.
  • PSI 2019: Extended benefits till 2024, with sharper focus on sunrise sectors (AI, EVs, defense manufacturing, data centers). It also introduced flexibility in SGST refunds and special incentives for women entrepreneurs.

Impact on Maharashtra’s Industrial Ecosystem

  • Maharashtra has consistently ranked as India’s top investment destination, with PSI being a major driver.
  • In recent years, the state has approved investment proposals worth over ₹1.35 lakh crore, expected to generate 1 lakh+ jobs across thrust sectors.
  • Backward regions like Vidarbha, Marathwada, and Khandesh have witnessed increased industrial activity, reducing regional disparities.

Challenges and Criticisms

  • Implementation delays in disbursing subsidies.
  • Complex compliance requirements for smaller enterprises.
  • Over-concentration of mega projects in relatively developed belts despite incentives for backward areas.

 

The Road Ahead

The upcoming PSI 2025 framework is expected to:

  • Strengthen green and sustainable manufacturing incentives.
  • Deepen support for MSMEs and startups.
  • Integrate digital compliance systems for faster subsidy disbursal.
  • Align with India’s net-zero commitments by incentivizing renewable energy adoption.

The Package Scheme of Incentives (PSI) remains the backbone of Maharashtra’s industrial policy, balancing growth with equity. For investors, consultants, and policymakers, PSI is not just a subsidy framework—it is a strategic roadmap for inclusive industrialization.

MIDC Services

Our Services