Aatmanirbhar Gujarat Scheme for Assistance to Mega Industries: Assistance of Interest Subsidy

What is the Aatmanirbhar Gujarat interest subsidy for mega industries?

Aatmanirbhar Gujarat Scheme for Assistance to Mega Industries is an industrial incentive package notified by the Industries and Mines Department, Government of Gujarat, through Government Resolution No. MIS-102022-1271(3)-I dated 5 October 2022. Assistance of Interest Subsidy is Scheme 1 inside that package, and it reimburses part of the interest a very large manufacturing project pays on its project term loan.

According to the scheme resolution published by the Industries Commissionerate, the operative period runs from 5 October 2022 to 4 October 2032. A ten-year window. The Industries Commissioner, through the Joint Commissioner of Industries (Large-INC Branch) at Udyog Bhavan, Gandhinagar, administers registration, eligibility certificates and claims.

The scheme is deliberately narrow. It exists to pull anchor-scale manufacturing investment into Gujarat in sectors the state has declared as thrust sectors, and the incentive is sized as a percentage of the project's own capital investment rather than as a flat grant.

How much is the interest subsidy?

Clause 4.1 of the Government Resolution fixes the quantum:

• Interest subsidy at 7% on the term loan, and
• subject to a maximum of 1.2% of eligible fixed capital investment (eFCI) per year, and
• payable for 10 years.

Three conditions shape what actually reaches the unit:

1. The industrial undertaking must bear a minimum of 2% interest itself. If the bank charges 8% on the term loan, the reimbursement rate is 6%, not 7%. Where there are several term loans, the 2% floor applies to each loan.
2. If the unit also draws an interest subsidy from the Government of India, the Gujarat subsidy is trimmed so the unit still bears at least 2% after both subsidies.
3. Reimbursement is made only on interest actually repaid within the ceiling. Penal interest and other bank charges are not treated as interest.

The guideline issued under approval letter PRCH-102022-1271-I dated 25 July 2023 works through an example: a project with total eligible FCI of Rs 10,000 crore faces an overall annual ceiling of Rs 120 crore (1.2% of Rs 10,000 crore), while the ceiling under a provisional certificate covering Rs 4,000 crore of eFCI is Rs 48 crore a year. Amounts a unit could not draw because of the lower provisional ceiling become arrears, and those arrears are released in equal instalments over the remaining incentive period once the provisional certificate is revised or the final certificate is issued.

Who is eligible for the mega industries interest subsidy?

A unit qualifies if:

• It is a new industrial unit, or an existing unit whose fresh expansion by itself meets the mega definition, and it commences commercial production during the operative period.
• It is a mega industrial unit. An undertaking in a thrust sector with at least Rs 2,500 crore invested in plant and machinery and at least 2,500 direct jobs. Payroll employees and direct contractual workers engaged through agencies registered with the labour and employment department both count.
• It operates in one of the notified thrust sectors: green energy ecosystem (green hydrogen and ammonia, electrolysers, renewable energy equipment, battery storage, fuel cells); mobility (aviation manufacturing, electric vehicles, auto components, space-related manufacturing); capital equipment; metals and minerals including ceramics; textiles and apparel; sustainability, covering municipal solid and liquid waste recycling equipment; agro and food processing; gems and jewellery including lab-grown diamonds; chemicals; and healthcare covering pharmaceuticals, APIs and medical devices.
• Chemical, pharmaceutical and API units additionally have a captive effluent treatment plant or documented access to a CETP. This is a condition precedent, not a formality.

Who cannot apply:

• Individuals, proprietors and households; there is no personal benefit here.
• MSMEs and mid-sized companies that do not cross both the Rs 2,500 crore and 2,500-job thresholds. They are not eligible under this resolution and should use the Aatmanirbhar Gujarat Scheme for Assistance to MSMEs or the Large Industries and Thrust Sector scheme.
• Units outside the thrust sector list, however large the investment.
• A unit that has already taken an incentive on the same gross fixed capital investment under another Gujarat government or state agency scheme, unless the resolution specifically allows it.
• A unit whose term loan comes from an NBFC rather than a bank, financial institution, external commercial borrowing or consortium of financial institutions.

What investment counts as eligible fixed capital investment?

Eligible FCI decides both the annual ceiling and the final entitlement, so the resolution defines it tightly.

Counted: new plant and machinery, buildings and civil works, utilities, and technology, design, drawings and patents limited to 10% of gross fixed capital investment. Desalination plants and captive renewable power plants set up anywhere in Gujarat exclusively for the mega unit count as eligible FCI even if they sit outside the factory premises. Project-related infrastructure — worker housing, a hospital or school for staff, feeder roads, dedicated water or gas pipelines, non-refundable electricity transmission deposits, training centres and worker transport: counts only up to 20% of the investment made in it.

Not counted: land and land development cost, working capital, goodwill, royalty, preliminary and pre-operative expenses, indigenous second-hand plant and machinery, capitalised interest, power generation other than captive use, and rented or leased property.

All components are valued at final invoice value including taxes. Where up to 10% of a contract is withheld as a performance guarantee and released later, that part payment still counts, provided the guarantee was executed within the eligible incentive period.

How to apply for the mega industries interest subsidy

1. Register with the Joint Commissioner of Industries (Large-INC Branch), Office of the Industries Commissioner, Udyog Bhavan, Gandhinagar, in the prescribed format with the Annexure-A checklist documents. File within one year of first term loan disbursement, one year of commercial production, or one year from 5 October 2022 to whichever is later. Registration alone does not create an entitlement.
2. Apply for the Provisional Eligibility Certificate (PEC) after commercial production begins, listing investment acquired and paid up to the date of commencement of commercial production, with the Annexure-B documents. A team appointed by the Industries Commissioner physically verifies the assets.
3. Revise the PEC if the project keeps investing. A project up to Rs 5,000 crore gets one revision after at least 12 months; projects up to Rs 10,000 crore and Rs 50,000 crore get two and three revisions respectively; very large projects get three revisions at 15, 18 or 24-month gaps depending on size.
4. File interest subsidy claims online in the prescribed format with the Annexure-D documents, the claim form, a bank certificate for the claim period, a bank-certified term loan account statement, the IEM Part B, IL or LOP in the first claim, and a valid GPCB consolidated consent where applicable. Claims run quarterly from the date of commercial production; half-yearly or annual claims are allowed, and a "nil" claim must be filed for periods with no interest.
5. Apply for the Final Eligibility Certificate (FEC) with the Annexure-C documents, including the statutory auditor certificate for fixed capital investment, chartered engineer certificates for civil work and installed capacity, the project completion certificate, the employment statement and the attendance or salary register. Assistance already drawn on the provisional certificate is then re-scheduled against the final entitlement.

Applications and claims are filed online through the state's Investor Facilitation Portal at ifp.gujarat.gov.in, with signed hard copies and annexures submitted to the Large-INC Branch.

How is the eligible investment period decided?

The window for counting investment depends on project size, measured from the date of commencement of commercial production (DoCP):

A unit may choose whether its 10-year interest subsidy clock starts from the date of first term loan disbursement or from the date of commercial production, but money is disbursed only after commercial production begins.

Units that had applied under the previous Capital Subsidy to Large Industries and Thrust Sector scheme (GR No. MIS-102020-327024-I dated 1 September 2020) but had not started commercial production could opt into the mega scheme, and for them assets acquired and paid for between 7 August 2020 and 4 October 2022 also count towards eligible FCI.

Why do mega industry claims get held up?

• Late registration or a late PEC application. The delay is deducted from the incentive period and, once deducted at the provisional stage, the reduction carries into the final certificate even if the FEC is filed on time.
• Term loan shared across projects. Where a bank has sanctioned one term loan for several projects in Gujarat or elsewhere, the unit must produce a bank certificate bifurcating the loan for the registered project, or maintain a separate account.
• Letters of credit and buyer's credit not converted. Such finance counts as term loan only after conversion into a term loan within the eligible investment period, and no interest for the pre-conversion period is reimbursed.
• Loan takeover by another bank. Only the outstanding principal on the takeover date is considered, and if the new bank releases less, only the lower amount counts.
• Missing "nil" claims, which break the quarterly claim series.
• Trading activity mixed with manufacturing. Where GST law does not allow separate registration, the unit must keep separate CA-certified books for the manufacturing unit.
• Payments withheld from vendors. Amounts counted as eligible FCI but never released to the vendor within the incentive period are adjusted against the last tranche of incentive.

Where do mega units go for help or a grievance?

Registration, eligibility certificates and interest subsidy claims for mega industrial units are handled by the Joint Commissioner of Industries (Large-INC Branch), Office of the Industries Commissioner, Udyog Bhavan, Gandhinagar 382 011. Scheme documents, guidelines and the taluka classification and sanctioning authority notifications are published at ic.gujarat.gov.in/atmanirbhargujaratscheme.aspx. Sanctioning authorities under the Aatmanirbhar Gujarat schemes were reconstituted by a Government Resolution dated 7 March 2024, so the competent authority for a particular claim should be checked against the current notification before escalating.

The guideline itself carries a standing caveat worth remembering: it is issued only for smoother processing of applications, and where the guideline and the Government Resolution differ, the provisions of the Government Resolution prevail.