Raw Material Assistance Scheme
180-day raw material credit support · MSMEs India
The Raw Material Assistance Scheme by NSIC (under the Ministry of MSME) helps manufacturing and service MSMEs finance the purchase of raw materials — both domestic and imported — with credit support for up to 180 days. It allows small businesses to buy in bulk and take advantage of cash discounts without straining working capital. Apply offline at the nearest NSIC branch office using the prescribed application form.
About This Scheme
The Raw Material Assistance Scheme by NSIC (under the Ministry of MSME) helps manufacturing and service MSMEs finance the purchase of raw materials — both domestic and imported — with credit support for up to 180 days. It allows small businesses to buy in bulk and take advantage of cash discounts without straining working capital. Apply offline at the nearest NSIC branch office using the prescribed application form.
Full official description
The scheme “Raw Material Assistance Scheme” was started by the National Small Industries Corporation (NSIC), Government of India Enterprise under the Ministry of Micro, Small and Medium Enterprises (MSME) to assist the Micro, Small and Medium Enterprises (MSMEs) in procuring the raw material(s). The Scheme aims to help MSMEs by way of financing the purchase of Raw Materials (Both indigenous & imported). This allows MSMEs to focus better on manufacturing quality products.
Benefits
- Credit support for raw material procurement for up to 180 days
- Enables bulk purchasing and cash discount benefits
- Interest rates (on Bank Guarantee basis): 9.00–10.00% p.a. for Micro units; 9.50–10.50% p.a. for Small & Medium units (lower rates for good-rated MSMEs)
- Processing fee: 1.0% p.a. on new sanctions; 0.5–1.0% p.a. on renewals
- Additional 1.25% per quarter charged only on outstanding dues beyond 180 days
💡 Why Startups Should Care
Bulk raw material purchases unlock cash discounts and better unit economics, but tie up working capital — this 180-day credit facility lets MSME manufacturers buy smart without straining cash flow.
Who Can Apply (Eligibility)
- Any manufacturing or service MSME with a valid Udyam Registration Certificate is eligible
- Trading activities are not covered under this scheme
- Security in the form of a Bank Guarantee from an approved bank is required
How to Apply
- Apply for Raw Material Assistance through NSIC's designated application process.
- Submit passport photos of proprietors/directors/partners.
- Provide identity proof and residence documents.
- NSIC facilitates the raw material procurement with credit support against bank guarantee.
- Repay within the 180-day credit period.
Frequently Asked Questions
What is Raw Material Assistance Scheme?
In order to assist the Micro, Small and Medium Enterprises (MSMEs) in procuring the raw material(s), NSIC arranges to provide raw material as per specific needs and requirement of the unit(s).
Who can avail assistance under the Scheme?
Any Manufacturing/Service MSME having Udyam Registration Certificate can apply for the assistance under the Scheme.
Does NSIC facilitate procurement of raw materials for trading activities?
No trading activity allowed under Raw Materials Assistance Scheme.
Does NSIC facilitate MSMEs for raw material procurement against advance payment or on credit?
NSIC facilitates MSMEs in raw material procurement in both way i.e. against advance payment and also on credit, as per the requirement of MSMEs
How to apply for raw material assistance on credit under the Scheme?
Any MSME needs raw materials through NSIC may apply to any of the NSIC field offices for Raw Material Assistance in the prescribed application forms, which can be downloaded from NSIC's website (www.nsic.co.in) or may be obtained from any of the field offices.
Where to submit application for raw material assistance?
The duly filled in application form along with prescribed documents can be submitted with the nearest branch office of NSIC. Details of NSIC offices are available on www.nsic.co.in.
How the limit is sanctioned for procurement of material on credit?
A limit is sanctioned keeping in view the raw materials requirements of the unit, financial position of the unit and available security of equivalent value in the form of bank guarantee.
Whether there is any ceiling of the limit to be sanctioned under the Scheme?
Maximum exposure to a single unit under the scheme is [?]1000 Lakhs in case of manufacturing unit and [?]600 lakhs in case of service unit. Maximum exposure to an Infrastructure unit will be [?]500 lakhs whether individual or group. The ceiling for maximum exposure to all associate/sister concerns or connected accounts belonging to a 'GROUP' is fixed at [?]2000 lakh for manufacturing units, [?]1500 Lakh for service units and [?]500 Lakh for Infrastructure unit.
What is the validity of the limits sanctioned under the Scheme?
One year. Thereafter, the limit can be renewed for one year provided conduct of the account was satisfactory during last year.
How does NSIC provide credit support to MSMEs for procurement of raw materials?
The unit has to submit proforma invoice/ original invoice/ material receipt note with the specific request to release the payment. The maximum assistance is provided upto 95% of the Bank Guarantee value.
Whether payment is released to the MSME?
No. NSIC releases the payment to the supplier as requested by the MSME.
What is the credit period of the assistance provided?
The credit is allowed for 180 days. However, it can further be extended on the request of MSME with the consent of the respective Zonal Head, provided the unit serves interest, the total outstanding is within the Bank Guarantee limit and the Bank Guarantee remains valid for an extended period.
What are the benefits to MSMEs under the Raw Material Assistance Scheme?
- Materials facilitated under Bulk supply arrangements are provided at the bulk supplier's rate by eliminating the middlemen.
- Discounts received under bulk supplies arrangements are shared with MSMEs, enabling them to reduce the cost of purchase of materials.
- Availability of raw material on credit and enabling MSMEs to execute the orders in hand
What is the rate of interest charged, if repayment is not made within 180 days?
1.25% per quarter
Ready to apply?
Visit the official government portal to apply for this scheme.
Apply on myScheme.gov.inDocuments Required
- Passport-size photograph of each proprietor/director/partner/society office bearer
- Identity proof (PAN card, Aadhaar card, etc.)
- Residence proof