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NEEDS Scheme Tamil Nadu


NEEDS Subsidy in Tamil Nadu

The New Entrepreneur cum Enterprise Development Scheme (NEEDS) is a scheme promoted by the Directorate of Industries and Commerce, Government of Tamil Nadu. The objective of the scheme is to provide educated youth with opportunities for entrepreneurship by providing capital and interest subsidy. In this article, we take a brief look at the features of the NEEDS Scheme in Tamil Nadu:

NEEDS scheme overview

The NEEDS Scheme is promoted by the Directorate of Industries and Commerce, Government of Tamil Nadu for providing opportunities for a young or new educated entrepreneur with subsidy and support for starting a new venture. The scheme mainly targets educated youth with any Degree, Diploma, ITI or Vocational Training from recognized Institutions.

NEEDS scheme eligibility criteria

Age Criteria: All entrepreneurs within the age of 21 to 35 are eligible under the General Category. The Special Category has an eligible category like entrepreneurs within the age of 21 to 45 who are also Women, SC, ST, BC, MBC, Minorities, Ex-Servicemen, Transgenders or Differently abled persons.

Academic Qualification: The entrepreneur must hold a Degree, Diploma, ITI or Vocational Training from a recognized Institution.

Place of Residence: The entrepreneur should be a resident of Tamil Nadu for not less than 3 years.

Business Entity: Entrepreneurs starting their business as a proprietorship or partnership are eligible for the subsidy under the NEEDS Scheme. Also, the business should be a new business.

Collateral Security: Collateral security will be decided as per Bank or Tamil Nadu Industrial Investment Corporation Limited (TlIC) guidelines. Loans may also be covered under Credit Guarantee Fund Trust Scheme for Micro and Small Enterprises (CGTMSE) Scheme.

Other Conditions:   Projects without capital expenditure or self-financed projects are not eligible for the subsidy. Entrepreneurs who have already availed subsidy linked loans under other State Government or Government of India schemes such as Prime Minister Rojgar Yojana (PMRY), Rural Employment Generation Programme (REGP), Prime Minister’s Employment Generation Programme (PMEGP), Unemployed Youth Employment Generation Programme (UYEGP), TamilNadu Adi Dravidar Housing and Development Corporation Limited (TAHDCO) and Self-help group will not be eligible for assistance under NEEDS. Also, the entrepreneur should not be a defaulter to any Commercial Bank or Tamil Nadu Industrial Investment Corporation Limited.

Activities eligible for assistance under NEEDS scheme

All manufacturing and service activities are eligible under this scheme subject to appraisal for its viability as per the guidelines of TIIC or Bank. The scheme gives priority to projects like eco-friendly, accord importance to energy conservation and export-oriented.

The following are  activities which are ineligible for assistance under NEEDS Scheme:

  • Any activity directly connected with agriculture.
  • Sericulture (Cocoon rearing), Animal Husbandry like Pisciculture, Piggery, Poultry etc.,
  • Manufacturing of Polythene carry bags of less than 40 microns thickness and manufacture of carry bags or containers made of recycled plastic for storing, carrying, dispensing or packaging of foodstuff.
  • Sugar.
  • Distilleries, Brewery and Malt Extraction.
  • Units utilizing Molasses or rectified spirit orde-natured spirit as raw material for the manufacture of potable alcohol.
  • Fertilizer manufacture and blending (Except bio-fertilizers).
  • Mining and Quarrying Ores, minerals etc. [Excluding polishing, cutting, crushing, etc. of mined ores or minerals].
  • Aluminium, Iron and Steel Smelting [Excluding foundries].
  • Manufacturing of intoxicant items like Beedi, Pan, Cigar or Cigarette etc.,
  • Saw Mills.
  • Cement.
  • Calcium Carbide.
  • Slaughter House.
  • Re-packing of drugs, Medicine or Chemical, without any processing or value addition.
  • Azoic or Reactive Dyes.
  • Firecrackers.
  • Industries manufacturing and or utilizing Ozone-depleting substances.
  • Industries involving hazardous activities or classified as “Red category” by Tamil Nadu Pollution Control Board or Central Pollution Control Board.
  • Cyanide.
  • Caustic Soda.
  • Potassium Chloride.
  • Nylon, Rayon & Polyester Fibre manufacturing. [Excluding manufacturer of downstream products from Nylon, Rayon and Polyester Fibre].
  • Real Estate.

Subsidy provided under the NEEDS Scheme

A subsidy to the tune of 25% of the project cost not exceeding Rs.25.00 lakhs is provided under the NEEDS Scheme. For projects costing more than Rs. 1.00 Crore, the subsidy component restricts to Rs. 25.00 lakhs. The project cost includes capital expenditure and margin money for working capital. Cost of rented or leased building, technical know-how, preliminary or pre-operative expenses and working capital margin will not be subsidized. Of the total project cost, promoter contribution must be more than 10% of the Project Cost for general category entrepreneurs and 5% of the project cost in case of special category entrepreneurs (BC, MBC, DNC, SC, ST, Women, Minorities, Ex-Servicemen, Transgenders or Differently abled Entrepreneurs).

In addition to the above 25% subsidy, an interest subsidy to the tune of 3% is also provided under the NEEDS Scheme. For enterprises financed by Tamil Nadu Industrial Investment Corporation (TIIC), the loan extends with a 3% rebate and the interest rebate of 3% reimburses to TIIC on a quarterly basis. For loans extended by commercial banks, the 3% interest subsidy provides a back-ended interest subsidy on a quarterly basis during the entire repayment period.

Procedure  for obtaining NEEDS scheme subsidy

The District Industries Centre receives the application for the NEEDS scheme, it will scrutinize and place the application before the Task Force Committee. The Task Force Committee selects the application and sends it to the banks or TIIC branches for assessment and provisional sanction. The Entrepreneurship Development Institute conducts a one-month compulsory Entrepreneurship Development Programme (EDP), where the eligible entrepreneurs availing the bank loans must attend. On completion of the EDP, the entrepreneur will deposit the promoter’s contribution with the bank or TIIC that has accorded sanction and start availing the loan. On disbursement of the loan and intimation of the same to General Manager, Directorate of Industries and Commerce, the subsidy will be released to the bank or TIIC in stages as per the project size.

Relevant Documents

The Guidelines for NEEDS Scheme

NEEDS Scheme Overview – English

NEEDS Scheme Overview – Tamil

Application for the NEEDS Scheme 

To avail subsidy under the NEEDS Scheme or obtain a bank loan, visit