The Andhra Pradesh State Aid to Industries Act, 1976.
**THE ANDHRA PRADESH STATE AID TO INDUSTRIES ACT, 1976**
**ACT No. 53 of 1976**

**ARRANGEMENT OF SECTIONS**

**SECTIONS**

**CHAPTER I**

**PRELIMINARY**

1. Short title, extent, commencement and application

2. Definitions

**CHAPTER II**

**BOARD OF INDUSTRIES**

3. Establishment and constitution of Board of
Industries and the term of office of its members, etc

**CHAPTER III**

**GENERAL PROVISIONS REGARDING THE**
**GRANT OF AID**

4. Industries to which aid may be given

5. Grant of aid by the Government

6. Powers of the Director to grant aid

7. Application for aid and procedure to be followed
in certain cases

8. Security to be obtained for loan

9. Prohibition of transfer of property without
permission of the sanctioning authority

10. Courts not to attach, sell, etc., without
permission of the sanctioning authority

11. Inspection and returns

12. Director to exercise powers of Government
under sections 8 and 11 in certain cases
13. Control of business by Government in certain
Cases

14. Repayment of loans

15. Training of Apprentices by recipient of aid

16. Disposal of profits when condition of aid is not
fulfilled

17. Power of Government to terminate aid on
account of default

18. Fees

19. Power of Government as regards starting or
conducting industries and giving aid of certain
kinds


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**CHAPTER IV**

**MISCELLANEOUS**

20. Method of recovery of moneys due

21. Protection acts done good faith

22. Power to make rules

23. Repeal and Savings


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**THE ANDHRA PRADESH STATE AID TO INDUSTRIES ACT, 1976**
**ACT No. 53 of 1976**

[18[th] August, 1976]

**AN ACT TO CONSOLIDATE AND AMEND THE LAW RELATING TO STATE**
**AID TO COTTAGE, SMALL-SCALE AND VILLAGE INDUSTRIES.**

BE it enacted by the Legislature of the State of Andhra Pradesh in the Twentyseventh Year of the Republic of India as follows:
**CHAPTER I**
**PRELIMINARY**

**1.** **Short title, extent, commencement and application – (1) This Act may**
be called the Andhra Pradesh State Aid to Industries Act, 1976.

(2) It extends to the whole of the State of Andhra Pradesh.

(3) It shall come into force on such date as the Government may, by
notification, appoint.

(4) It applies to cottage, Small-Scale and Village Industries.

**2. Definitions – In the Act, unless the context otherwise requires:-**

(a) “Board” means the Board of Industries established under
section 3;

(b) “cottage industry” means an industrial business or enterprise
carried on in any premises to which the Factories Act, 1948
(Central Act 63 of 1948), does not apply;

(c) “Director” means the Director of Industries, Andhra Pradesh,
and includes such other officer as may be authorised by the
Government to exercise the powers and perform the function of the
Director under this Act;

(d) “Government” means the State Government;

(e) “industry” means any business or enterprise relating to cottage,
small-scale or village industry conducted or undertaken, by any
individual, company or association or body of individuals, whether
incorporated or not, or by Panchayat Samithi or Zilla Parishad,
and includes an industry ancillary thereto;

(f) “notification” means a notification published in the Andhra
Pradesh Gazette and the word “notified” shall be construed
accordingly;

(g) “prescribed” means prescribed by rules made under this Act;

(h) “ small-scale industry” means an industry with a capital
investment of an amount not exceeding rupees ten lakhs,
irrespective of the number of persons employed; and includes such
other industrial business or enterprise with a capital investment
exceeding rupees ten lakhs but not exceeding rupee fifteen lakhs
as the Government may, by notification, for reasons to be recorded
therein, specify.

**Explanation - For the purpose of this clause the expression**
“capital investment” means the investment on plant and machinery
only, calculated as the price paid by the owner, irrespective of
whether the plant and machinery are new or second hand;


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(i) “village industry” means an industrial business or enterprise
which forms the normal occupation, whether whole-time or parttime, of the rural population of the State.

**CHAPTER II**
**BOARD OF INDUSTRIES**

**3. Establishment and constitution of Board of Industries and the term of**
**office of its members, etc. - (1) There shall be established by the Government**
by notification, a Board of Industries for the State consisting of not less than
seven and not more than nine members to advise the Government in regard to
the grant of aid under this Act.

(2) The Board shall consist of the following members, namely:
(i) two officers of the Government, not below the rank of a
Deputy Secretary, to be nominated by the Government, out
of whom one shall be from the Finance and Planning
(Finance Wing) Department and the other from the
Industries and Commerce Department;

(ii) the Director of Industries or the Additional Director of
Industries;

(iii) the remaining to be nominated by the Government from
among persons who are not holding any office under the
Central or the State Government and who have practical
experience or special knowledge in matters connected with a
cottage, small-scale or village industry.

(3) One of the non-official members shall be appointed by the
Government, by notification, as the Chairman of the Board.

(4) The term of office of the non-official members shall be such as may be
specified by the Government, from time to time.

(5) The procedure to be followed at the meetings of the Board, the
manner of filling of casual vacancies among its members for mis-conduct for
failure to attend the meetings of the Board or for other reasons shall be such as
may be prescribed.

**CHAPTER III**
**GENERAL PROVISION REGARDING THE GRANT OF AID**

**4. Industries to which aid may be given - (1) An industry to which aid may**
be given by the Government under this Act shall have an important bearing on
the economic development of the country and shall be—

(a) a new or nascent industry;

(b) an industry to be introduced in any area where such industry is
undeveloped; or

(c) an old or established industry:

Provided that the Government may, by notification and for reasons
recorded therein, declare that aid shall not be given under this Act to any
industry specified in such notification.

(2) No aid shall be given by the Government to any Company as defined
in section 3 of [1][the Companies Act, 1956 (Central Act 1 of 1956)] unless the
same is registered in India.

1. See the relevant provisions of the Companies Act, 2013 (Central Act 18 of 2013).


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(3) The decision of the Government on any question as to the industry to
which aid may be given by the Government under this Act shall be final and
shall not be called in question in any Court of law.

**5. Grant of aid by the Government – (1) Subject to the provisions of this Act**
and in accordance with the rules made thereunder, the Government may grant
aid to any industry by way of a loan for all or any of the following purposes:
(i) purchase of land and erection of buildings;

(ii) purchase of plant and machinery;

(iii) purchase of raw materials;

(iv) working capital or other incidentals necessary for the
purpose of carrying on the industry;

(v) paying the cost of employment of technical specialists or
experts and of training of personnel;

(vi) paying the cost of employment of managerial staff by
industrial co-operatives;

(vii) repayment of debts contracted for the purpose of
acquiring fixed assets;

(viii) recoupment and reimbursement of capital invested
within one year prior to the date of application for the
acquisition of fixed assets;

(ix) discharge of mortgaged debts secured, on fixed assets,
not more than one year prior to the date of application;

(x) payment towards the share capital of an industrial cooperative subject to a maximum of seventy-five per cent of
the share value or rupees one hundred and fifty per artisan,
whichever is less.

(2) The loan that may be granted by the Government under this section
shall not exceed—

(a) rupees twenty-five thousand in the case of an applicant who is
an individual; and

(b) rupees two lakhs in the case of an applicant which is an
industry, not being an individual.

**6. Powers of the Director to grant aid – (1) The Director on an application**
made to him and subject to such conditions, restrictions and limitations as
may be laid down by the Government, grant aid to any industry for all or any of
the purposes specified in section 5 in accordance with such rules as may be
made in this behalf:

Provided that the loan that may be granted by the Director to an industry
shall not exceed rupees ten thousand:

Provided further that the Government shall have power to control and
revise any act or proceeding of the Director.

(2) The decision of the Government or the Director to, grant or not to
grant aid in any case under sub-section (1) shall not be called in question in
any Court of law.

(3) Nothing in sections 3, 11 and 14 shall apply to any application for the
grant of aid under sub-section (1) or to any case where aid is granted under
that sub-section.

**7. Application for aid and procedure to be followed form in certain cases –**

(1) Every application for aid of an amount exceeding ten thousand rupees
shall be made to the Director in the prescribed form.


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(2) As soon as may be after an application is made to him under subsection (1), the Director shall make such enquiry as may be prescribed in
regard to such application and shall place the application together with this
report of inquiry before the Board. The Board shall consider the same and
make such recommendations to the Government as it considers necessary and
the Government may, after consideration of the report of the Director and the
recommendation of the Board, grant aid to any industry.

**8. Security to be obtained for loan - (1) No loan shall be granted under this**
Act, where the amount of the loan exceeds rupees two hundred, without
obtaining,
(a) security of immovable property owned by the applicant or two
sureties therefor or of the plant and machinery of the indentity or
of the immovable property as well as the plant and machinery as
aforesaid to the extent of the aid granted, seventy five per cent of
the market value of the immovable property or the plant and
machinery or the immovable property as well as the plant and
machinery, as the case may be, being taken as the value thereof
for the said purpose; or

(b) security by way of mortgage or floating charge upon the whole
of the assets of the industry subject to any encumbrance existing
at the time when the loan is granted and by such collateral
security, if any, as may be required by the Government:

Provided that where it is not possible to give security of the
immovable property as aforesaid the loan may be granted on the
personal security of two sureties on production of their solvency
certificates.

(2) The Government may, if considered necessary, bind the applicant to
invest such portion of the loan as determined by them on permanent
improvement to the industry.

(3) Notwithstanding anything in sub-section (1), the Government may, in
the case of any industrial co-operative society, grant loan which may extend to
an amount equivalent to ten times the paid-up share capital of such Industrial
Co-operative Society subject to such condition as may be prescribed.

**9. Prohibition of transfer of property without permission of the**
**sanctioning authority - (1) Where, before or after the commencement of this**
Act, any property has been taken as security towards any aid granted under
this Act, then, notwithstanding anything to the contrary in any other law for
the time being in force, or in the deed of transfer or other document relating to
the property, such property shall not be transferred without the written
permission of the Government or Director as the case may be, (thereafter in
this section and section 10 referred to as the “sanctioning authority”).

(2) The sanctioning authority may, in its discretion, by order, permit the
transfer or any such property, after satisfying itself that the property
remaining, after such transfer, as security for the aid, is sufficient to secure the
proper repayment of the outstanding loan due to the Government under this
Act together with interest chargeable thereon and the costs, if any, incurred
and that the transfer is in furtherance of the purposes for which the aid was
granted and the assets resulting from the transfer are to be wholly utilised in
furtherance of the said purposes.

**Explanation - When granting permission under this sub-section, the**
sanctioning authority may impose such condition as it may deem fit to ensure
that the assets resulting from the transfer are wholly utilised in furtherance of
the purpose for which the aid was granted, but a contravention of any such
condition imposed on the transfer or shall not invalidate the transfer.

(3) Where any such property is transferred without such permission the
transfer shall be null and void.


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**10. Courts not to attach, sell, etc., without to permission of the**
**sanctioning authority - (1) No property referred to in section 9 shall be liable**
to be attached, sold or made subject to a charge by any court, whether in
execution of a decree or order or otherwise, unless the person seeking such
relief from the Court has obtained the written permission of the sanctioning
authority to do so and files such permission in Court.

(2) When granting the permission the sanctioning authority may impose
such condition as it may deem fit to secure the proper repayment of the loan
together with any interest chargeable thereon and costs, if any, incurred.

(3) Where any such property is attached or sold or a charge is created
thereon by any Court without the permission of the sanctioning authority
having been obtained and filed as aforesaid or where any condition imposed by
the sanctioning authority when granting such permission is contravened, the
attachment, sale or charge, as the case may be, shall be null and void.

**11. Inspection and returns - Where a loan has been applied for under this**
Act, the applicant, and at any time during the currency of a loan that has been
granted under it, the grantee, shall be bound,
(a) to comply with any general or special order of the Government,
relating to the inspection of the premises, building or plant or
stock on hand of the industry;

(b) to submit the accounts of the industry to such audit as may be
prescribed.

**12. Director to exercise powers of Government under sections 8 and 11 in**
**certain cases - The power exercisable by the Government under sub-section**
(2) of section 8 and under section 11, may also be exercised by the Director in
cases where aid is granted by him under section 6.

**13. Control of business by Government is certain Cases - Where in any**
case, the amount of the loan given under this Act amounts to or exceeds one
lakh of rupees, the Government shall, and in any other case may, by the
appointment of Directors on their behalf or otherwise, take steps, to ensure
such control and supervision over the conduct of the industry as shall suffice
in their opinion to safeguard their interests, and to satisfy themselves that the
loan is utilised for the purpose and the object for which it was granted.

**14. Repayment of loans - Every loan granted under this Act shall bear**
interest from such date and at such rate as the Government may, in each case
or class of cases, determine and shall be payable in installments within such
period from the date of the actual advance of the loan, or where the loan is
advanced in installments, from the date of payment of the last installment, as
may be fixed by the order granting the loan:

Provided that the period so fixed shall not exceed ten years unless the
Government, by general or special order, extend the loan period.

**15. Training of Apprentices by recipient of aid - Every recipient of aid under**
this Act shall make such provision for the training of apprentices as the
Government may, from time to time, prescribe.

**16. Disposal of profits when condition of aid is not fulfilled - No recipient of**
aid to any industry, other than a cottage industry, shall pay any dividend or
distribute or take any profits in excess of such rate of percentage upon the
amount of the capital of the industry as the Government may, from time to
time, fix until the conditions on which the aid has been granted are fulfilled.
The balance of the profits, after proper amounts have been set aside for
depreciation or obsolescence of plant, machinery or buildings and for payment
of interest on debentures or loans, shall be carried to a reserve fund to be
utilised in such manner as the Government may approve.


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**17. Power of Government to terminate aid on account of default - (1) The**
Government may, by order and for reasons to be recorded therein, terminate
aid in respect of an industry on all or any of the following grounds:
(i) that any portion of the aid granted has been misapplied;

(ii) that there has been a breach by the recipient of aid of the
provisions of this Act, or of any rules made thereunder or of
any condition of the grant of aid;

(iii) that the application on which the aid has been granted
contained, or was accompanied by any material statement by
the applicant which he knew to be false or any intentional
concealment by him of any material fact, which in the
opinion of the Government, it was his duty to disclose or that
any such false statement or concealment was intentionally
made in any inquiry under this Act, by or with connivance of
the applicant or in any return under the Act, or in reply to
any requisition for information under this Act;

(iv) that the industry is being managed in such manner as to
endanger the repayment of the amount of the aid granted
thereto repayable under this Act, or make it impossible to
return the money value of the aid under this Act:

Provided that no such order shall be passed unless the
recipient is given an opportunity of making his
representation.

(2) Notwithstanding anything in this Act, the Government may, on the
termination of aid under sub-section (1), proceed to recover from the grantee:
(a) the whole of amount of any loan outstanding together with such
interest as may be due thereon;

(b) the cost of recovery, if any, and where the Government to direct,
the cost of any inquiry in connection therewith.

(3) Any order passed by the Government under sub-section (1) or subsection (2) shall be final.

**18. Fees - The Government may, in respect of an application, inquiry,**
inspection or audit made under this Act, charge such fees as may be
prescribed.

**19. Power of Government as regards starting or conducting industries and**
**giving aid of certain kinds -** Nothing in this Act shall preclude the
Government from –
(a) assisting an industry by agreement to purchase on business
terms the whole or portion of its products;

(b) starting or conducting an industry for experimental purposes or
with a view to stimulate industrial development;

(c) assisting an industry by giving gratis/or on favourable terms
the services of Government officials, experts, or others, either in
the capacity of advisers or otherwise for such periods, as the
Government may deem necessary for starting or conducting such
industry;

(d) assisting an industry in connection with industrial education or
the training of apprentice;

(e) assisting an industry in any manner which may be determined
by the Government;

(f) establishing a company for the purpose of giving financial or
other assistance to any industry or subscribing for shares in such
company, on such terms and conditions as the Government may,
by general order, lay down;


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(g) subscribing for shares in, or in any manner aiding any industry
on such terms and conditions as the Government may, by general
or special order, lay down;

(h) assisting an industry in the purchase of implements or
machinery;

(i) assisting in the marketing of products in the possession of any
industry;

**CHAPTER IV**
**MISCELLANEOUS**

**20. Method of recovery of moneys due – (1) All moneys payable under this**
Act, including any interest chargeable thereon and the costs if any, incurred, if
not paid when they are due, may be recovered from the recipient of the aid and
his sureties, if any, as if they were arrears of land revenue.

(2) When any sum due as aforesaid is paid by the surety or is recovered
from him or out of his property under sub-section (1), the Collector may, on the
application of the surety, so far as possible recover the same from the recipient
of the aid as if it were an arrear of land revenue and pay the amount so
recovered to the surety.

**21. Protection acts done good faith - No suit, prosecution or other legal**
proceeding shall be instituted against any person for anything which is in good
faith done or intended to be done under this Act.

**22. Power to make rules - (1) The Government may, by notification, make**
rules for carrying out all or any of the purposes of this Act.

(2) In particular and without prejudice to the generality of the foregoing
power such rules may provide for all or any of the following matters, namely:
(i) the quorum at the Board's meetings, the method of
arriving at its decisions, the appointment of the staff, the
remuneration of its members and all other matters relating
to the members of the Board and the conduct of its business;

(ii) the form of application for aid, the manner of making, the
applications and the information to be given in such
applications provided that no such rule shall require any
applicant or recipient of aid to divulge any information
relating to the technical detail of any process or any patent
owned by him;

(iii) the manner of conducting inquiries and the matters to be
specially inquired into in dealing with applications for aid
and the powers to be exercised by the Director for
conducting such inquiries;

(iv) the mode of ascertaining the value of the assets of an
industry, or of any property offered as collateral security for
a loan;

(v) the nature of the security to be taken for the due
application of loans and the rates of interest at which and
the condition under which loans may be given, and the
creation of a mortgage, floating charge or collateral security
under section 8;

(vi) the inspection of the premises, buildings, plant and stock
on hand and the accounts of any industry for which aid has
been granted;


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(vii) the mode of keeping and auditing the accounts and of
furnishing returns of any industry in respect of which aid
has been granted;

(viii) the appointment and functions of directors appointed
on behalf of the Government of the specifying of methods of
control of industry in respect of which aid has been granted;

(ix) the mode of application of profits in cases in which the
condition under which loans have been made have not been
fulfilled;

(x) the fixing of the period for the repayment of loans; and

(xi) the recovery of any moneys due under this Act and the
penal interest payable therefor.

(3) Every rule made under this Act shall, immediately after it is made, be
laid before each House of the State Legislature if it is in session and if it is not
in session, in the session immediately following, for a total period of fourteen
days which may be comprised in one session or in two successive sessions, and
if, before the expiration of the session in which it is so laid or the session
immediately following, both Houses agree in making any modification in the
rule or in the annulment of the rule, the rule shall from the date on which the
modification or annulment is notified, have effect in such modified form or
shall stand annulled, as the case may be, so however that any such
modification or annulment shall be without prejudice to the validity of anything
previously done under that rule.

**23. Repeal and savings - (1) The Andhra Pradesh (Andhra Area) State Aid to**
Industries Act, 1922(Act 5 of 1922) and the Andhra Pradesh (Telangana Area)
State Aid to (Small Scale and Cottage) Industries Act, 1956 (Act 7 of 1956) are
hereby repealed and upon such repeal, the provisions of sections 8 and 18 of
the Andhra Pradesh General Clauses Act, 1891(Act 5 of 1891) shall apply.

(2) Notwithstanding such repeal, anything done or any action taken
under the repealed Act, shall be deemed to have been done or taken in the
exercise of the powers conferred by or under this Act, as if this Act was in force
on the date on which such thing was done or action was taken.


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