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Question

Difficulty: HardExplicit and Fact-Based Information Extraction

Read the passage given below carefully:

In August 2025, the Ministry of Electronics and Information Technology (MeitY) issued updated operational guidelines for the National Semiconductor Component Development Scheme (NSCDS). Under these guidelines, non-refundable capital grants of up to 40% of eligible project expenditure are made available exclusively to domestic startups and micro, small, and medium enterprises (MSMEs) engaged in compound semiconductor fabrication. Foreign entities and large domestic conglomerates are restricted to receiving technical advisory support only. To qualify for financial disbursements, an applicant entity must demonstrate a minimum of 51% equity holding by Indian citizens throughout the 5-year tenure of the project. Furthermore, commercial production must commence within 36 months from the date of final approval, failing which any disbursed funding shall be clawed back with an annual penalty interest rate of 8%.

Based strictly on the explicit information provided in the passage, which of the following statements are correct? Select all that apply.

  1. Domestic MSMEs engaged in compound semiconductor fabrication can receive non-refundable capital grants of up to 40% of eligible project expenditure.Answer
  2. B
    Foreign entities qualify for 40% capital grants provided they maintain a minimum of 51% Indian equity holding throughout the project tenure.
  3. Disbursed funding is subject to clawback at an annual penalty interest rate of 8% if commercial production is delayed past 36 months from final approval.Answer
  4. D
    Large domestic conglomerates are eligible for non-refundable capital grants under the updated operational guidelines.

Answer

The correct statements are the ones indicating that domestic MSMEs in compound semiconductor fabrication can receive capital grants up to 40%, and that failure to begin commercial production within 36 months triggers a clawback with 8% annual penalty interest.
The passage explicitly confirms two key facts: first, domestic MSMEs in compound semiconductor fabrication are eligible for non-refundable capital grants up to 40% of project expenditure; second, commercial production must start within 36 months of final approval or disbursed funds will be clawed back with an 8% annual penalty interest rate.

Step-by-Step Solution

1
Analyze the text regarding eligibility for capital grants.
The text states that non-refundable capital grants of up to 40% are available exclusively to domestic startups and MSMEs in compound semiconductor fabrication, while foreign entities and large domestic conglomerates are restricted to technical advisory support only.
Establishes which entities can receive capital grants and which are restricted.
2
Evaluate the condition regarding equity holding.
The 51% Indian equity requirement applies to qualifying applicant entities, but foreign entities are already explicitly excluded from capital grants altogether.
Prevents conflating equity requirements with eligibility for foreign entities.
3
Verify the timeline and penalty terms for commercial production.
The text explicitly specifies a 36-month deadline from final approval for commercial production, with a clawback mechanism involving an 8% annual penalty interest rate upon failure.
Confirms the explicit parameters for funding retention.

Key Concept

Explicit and Fact-Based Information Extraction
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Explicit and Fact-Based Information Extraction

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