Raw Material Assistance Scheme

Raw Material Assistance Scheme helps MSMEs by financing the purchase of both indigenous and imported raw materials. The scheme offers credit support for up to 180 days through the National Small Industries Corporation (NSIC), a Government of India enterprise under the Ministry of Micro, Small and Medium Enterprises (MSME). NSIC updated the interest rates for this scheme on 10.07.2026, so the current rates below apply to any support taken from that date onward.

Raw Material Assistance Scheme - Introduction

Raw Material Assistance Scheme provides financial backing to MSMEs so they can buy raw materials without worrying about immediate money problems. This lets every business focus on making quality products and keep its production cycle running smoothly.

The scheme is run by the National Small Industries Corporation (NSIC), which has been supporting small enterprises since 1955. The main aim is to help MSMEs get raw materials easily, use bulk purchase discounts, and complete pending orders on time. This makes Raw Material Assistance a practical credit tool for micro, small and medium manufacturing and service units across the country.

Key Information

Benefits

MSMEs can get credit support for buying raw materials for up to 180 days. This helps units make the most of bulk purchase terms and cash discounts, which keeps raw material costs under control.

Support is given against the security of a Bank Guarantee from an approved bank. The interest rates for assistance taken on or after 10.07.2026 are given below.

Note: The lower rate for good rated MSMEs applies only when the unit repays on time. Units that do not clear the dues within the fixed 180 days are not eligible for the lower rate and are charged the rate for other units.

An extra penalty of 1.25% per quarter applies over and above the normal rate when any amount stays unpaid beyond 180 days.

Processing fee payable under the scheme is given in the table below.

Security is in the form of a Bank Guarantee from an approved bank.

Eligibility

To apply for this scheme, an enterprise must be a manufacturing or service MSME holding a valid Udyam Registration Certificate.

Important: The scheme does not support any trading activities.

Application Process

Applying takes only a few simple steps, and the application forms are available free from NSIC. Below is the offline process.

STEP 1 - Get the prescribed application form for Raw Material Assistance.

STEP 2 - Download the application form from the official NSIC website, or collect a blank form free of charge from the nearest branch office.

STEP 3 - Fill the form and submit it along with the required documents to the nearest NSIC branch office.

STEP 4 - NSIC officials carry out a preliminary appraisal and a physical inspection of the unit.

STEP 5 - Once approved, NSIC sanctions the credit limit, the unit signs the agreement, and support is given to the unit.

Entrepreneurs can also click on the "Show Your Interest" option on the official NSIC scheme page to register interest online.

Documents

You should keep the following documents ready before applying.

• Passport-size photographs of all Proprietors, Directors, or Partners, along with identity proof such as PAN Card or Aadhaar Card.
• Residence proof such as a utility bill, property tax receipt, or bank statement, plus self-attested copies of Udyam Registration and GST Registration certificates.
• Statement of personal assets and liabilities for all signatories, Board Resolution or Power of Attorney authorising the signatory, and bank-attested specimen signatures.

Along with these, units need the credit limit sanction letter from their current bank, audited financial statements for the last year (or provisional statements certified by a Chartered Accountant), bank statements for the last six months, and the latest electricity bill.

• A report on the conduct of accounts with other banks, if applicable, and an undertaking that the company or directors are not defaulters as per CIBIL or RBI.
• Copy of existing orders for limits above ₹500 Lakhs.

For renewal, units need a request letter stating no change in ownership or address, supporting documents if there is any change in management, the latest valid bank sanction letter, latest audited accounts, and projected financial statements for the current year.

Click here for the official document checklist.

References

Official Website

Application Form

NSIC Download Forms Page

FAQ's

What is Raw Material Assistance Scheme?

Raw Material Assistance Scheme helps MSMEs buy the raw materials they need for production by providing credit support for up to 180 days through NSIC.

Who can get support under the scheme?

Any manufacturing or service MSME holding a valid Udyam Registration Certificate can apply. Trading activities are not covered.

What are the current interest rates from 10.07.2026?

For units with SME 1 rating the rate is 9.25% for micro and 9.75% for small and medium units. For SME 2 rating it is 9.75% and 10.25%. Other units pay 10.25% and 10.75%.

How to apply for raw material assistance?

Download the application form from the official NSIC website, fill it in, and submit it with the required documents to the nearest NSIC branch office.

Is there a ceiling on the limit sanctioned?

Maximum exposure is around ₹1000 Lakhs for manufacturing units and ₹600 Lakhs for service units. Infrastructure units may receive up to ₹500 Lakhs, and group limits are capped at ₹2000 Lakhs for manufacturing.

How does NSIC provide the support?

The unit submits its proforma invoice or material receipt note to NSIC, which then releases payment directly to the supplier as per the request.

What is the credit period and penalty?

The standard credit period is 180 days, extendable under special conditions with Zonal Head approval. An extra charge of 1.25% per quarter applies to amount unpaid beyond 180 days.