Raw Material Assistance 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.
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
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
Application Process:
Step 01: The Entrepreneurs are required to apply for Raw Material Assistance only on the prescribed application forms. Step 02: The applicants may download the application forms from the official website of NSIC. Also, the blank forms are available free of charge from the Branch offices. Step 03: The duly filled application form along with the Application is to be submitted to the nearest Branch Office.
Post-Application Process:
Step 01: Preliminary appraisal and Unit inspection is carried out by NSIC. Step 02: Sanction of Limit to the Unit. Step 03: Signing of agreement between NSIC and Unit. Step 04: Disbursement of assistance to the unit.
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
- A passport-size photograph of each of the Proprietor/Directors/Partners/Society office bearers.
- Identity proof i.e. PAN Card, Aadhaar Card etc.
- Residence proof i.e. Utility Bill (Latest Telephone/postpaid mobile /Electricity bill), Property or Municipal Tax receipt, Bank Account or post office savings bank account statement, Passport, Driving Licence, Voter’s Identity Card.
- Self-attested photocopy of Udyam Registration Certificate/UAM, GST Registration Certificate,
- Self-attested statement of personal assets and liabilities along with the residential address of Proprietor/Directors/Partners/ Society office bearers.
- A copy of the Board Resolution in case of Pvt./Public Ltd. Co., Power of Attorney in case of a partnership firm & a Governing Body Resolution in case of Society authorizing the signatory to sign and to deal with NSIC in respect of financial assistance required, for and on behalf of the applicant unit.
- Specimen signatures of authorized signatory attested by the bank.
- Copy of sanction letter for credit limit sanctioned by the FIs/ banks.
- Audited/Provisional financial statements of the unit i.e. (i) Last year's Audited financial statements. (ii) Provisional current-year financial statements. (iii) For startup MSME unit Current year Estimates financial statements duly certified by its Auditors or Chartered accountants
- Bank statement of the unit for the last six months.
- Copy of the latest Electricity Bill.
- Conduct a Report of Accounts of the unit with Banks (Other than Bank Guarantee issuing Bank) and Financial Institutions in cases where the status/ conduct of loans is not available in the credit information report.
- Certificate/ undertaking from the unit that their name(s), name of the company/its owners/associates/sister concern/ members/directors, in any way does not fall in the list of CIBIL/RBI defaulters list or any sort of case is there against them.
- Copy of orders in hand, in case of enhancement of limit beyond five crores.
- > **Documents Required for Renewal of Cases:**
- Unit’s request letter for renewal of limit and declaration that there is no change in constitution, promoters & address.
- In case there is any change in the constitution, promoters & addresses, and relevant supporting documents are to be obtained.
- Copy of the latest and valid Bank Sanction letter.
- In case of renewal is due after the due date of filing of income tax return, a copy of the Audited Annual Accounts for the last financial year. In case, audited annual accounts are not finalized, a self-attested declaration of financial parameters of the last financial year of Appraisal form along with the latest available Audited Annual Accounts.
- Projected/Estimated annual accounts of the Current Financial Year or self-attested financial parameters as per the appraisal note.
- [Documents to be enclosed with the Application form](https://www.nsic.co.in/pdfs/Forms/RMA_DOC_REQ_14072023.pdf)