Aatmanirbhar Gujarat Scheme for assistance to MSMEs: Assistance for Raising Capital through SME Exchange

What is Assistance for Raising Capital through SME Exchange?

Assistance for Raising Capital through SME Exchange is a reimbursement incentive of the Industries and Mines Department, Government of Gujarat, administered by the MSME Commissionerate at Gandhinagar. The incentive pays back part of what a small enterprise spends when it raises equity by listing on the SME platform of a recognised stock exchange, such as BSE SME or NSE Emerge.

Listing on an SME Exchange is expensive relative to the size of the issue. A small manufacturer raising Rs 8 crore may spend Rs 40 lakh to Rs 60 lakh on merchant bankers, registrars, legal drafting, depository charges and prospectus publication before a single rupee of capital arrives. Gujarat's incentive removes part of that upfront friction so that promoters look at equity, not only at term loans, when they expand.

The incentive is listed by the Industries and Mines Department among the schemes that MSMEs "will continue to avail" under the Aatmanirbhar Gujarat Scheme for assistance to MSMEs, the umbrella package that is operative from 5 October 2022 to 4 October 2027. The detailed working guideline is published by the MSME Commissionerate under Government Resolution No. SSI/102020/332278/Ch dated 1 September 2020, with a parallel resolution, No. SSI-102020-332376-CH, covering SC and ST entrepreneurs under the Dr. Babasaheb Ambedkar Udyog Uday Yojana.

How much money does the SME Exchange incentive pay?

According to the MSME Commissionerate guideline, the quantum of assistance is:

The ceiling is absolute. An enterprise that spends Rs 60 lakh on its issue still receives Rs 5 lakh, because 25% of Rs 60 lakh exceeds the cap. An enterprise that spends Rs 12 lakh receives Rs 3 lakh, since 25% of Rs 12 lakh is below the cap. Payment is released only after the listing is complete; there is no advance and no part payment against a draft red herring prospectus.

Eligible expenditure as set out in the guideline includes SME Exchange registration fees, registrar and lead manager charges, SEBI merchant banker fees, RTA, CDSL and NSDL charges, prospectus printing and advertising costs, and ROC and Ministry of Corporate Affairs fees.

Who is eligible for the SME Exchange incentive in Gujarat?

An enterprise qualifies if:

• The enterprise satisfies the definition of a micro, small or medium enterprise under the MSMED Act 2006 and holds a valid Udyam Registration (or the earlier Udyog Aadhaar acknowledgement).
• The enterprise operates in the manufacturing or service sector.
• At least one functioning unit of the enterprise is located in Gujarat.
• The enterprise has successfully raised capital and listed on an SME Exchange platform during the operative period of the scheme.
• The listing was done under a scheme approved by the SME Exchange concerned.

Under the Aatmanirbhar Gujarat definition used by the Industries and Mines Department, a micro enterprise has fixed capital investment in plant and machinery of up to Rs 1 crore, a small enterprise more than Rs 1 crore and up to Rs 10 crore, and a medium enterprise more than Rs 10 crore and up to Rs 50 crore.

The following are not eligible:

• Individuals, promoters, directors and shareholders cannot apply in their personal capacity. Only the listed enterprise can claim.
• Enterprises with no operating unit in Gujarat, even if the promoter is a Gujarat resident.
• Enterprises that listed before or after the operative period of the scheme.
• Enterprises that have already received reimbursement for the same expenditure under any other state or central scheme.
• Enterprises that applied more than one year after listing.
• Large enterprises above the medium threshold, and enterprises without a valid Udyam registration on the date of application.

What documents are required?

How to apply for the SME Exchange incentive

1. Complete the listing first. Assistance is paid only after the equity issue is successfully raised and the securities are admitted to trading on the SME platform. Note the exact listing date, because the application window is one year from that date.
2. Compile the expenditure statement. Ask your Chartered Accountant to prepare the certificate of eligible expenditure in the prescribed annexure format, supported by invoice-wise and payment-wise detail.
3. Register or log in on the Investor Facilitation Portal at ifp.gujarat.gov.in, which is the state's single-window portal for industrial incentives, and open the MSME incentive application for assistance for raising capital through SME Exchange.
4. Fill the online form and upload the Udyam certificate, listing approval, CA certificate, bills, payment proof and constitution documents.
5. Submit the signed printed application with the departmental checklist and self-attested copies to the office of the MSME Commissionerate, Block No. 1, Udyog Bhavan, Sector 11, Gandhinagar, or to your District Industries Centre if the district office is handling scrutiny.
6. Respond to scrutiny queries. The MSME Commissionerate verifies the listing, reconciles the CA certificate against the bills, and may ask for clarifications or a revised expenditure statement.
7. Collect the sanction order. After approval, the sanctioned amount is released to the enterprise's bank account.

How to check the status of an application

Applications filed through the Investor Facilitation Portal carry an application number, and the portal's dashboard shows the current stage: submitted, under scrutiny, query raised, sanctioned or rejected. Where a query is raised, the reply must be filed on the same portal application rather than as a fresh submission. For applications lying beyond the normal scrutiny period, enterprises can follow up with the Dy. Commissioner of Industries (MSME Incentive) on 079-23258381, 079-23258386 or 079-23258387, or by email at msmeinc@gujarat.gov.in, quoting the application number and Udyam number.

Why applications get rejected, and how to fix them

• Filed after the one-year window. This is the most common and the least fixable rejection. Diarise the listing date the day trading begins.
• Expenditure not supported by bills. The CA certificate must reconcile item by item with invoices and bank statements. Estimates and lump-sum figures fail.
• Ineligible heads claimed, such as promoter travel, entertainment or in-house salary costs. Removing them and refiling the annexure usually resolves this.
• Udyam registration lapsed or showing the wrong activity. Update the Udyam record before applying, so that the classification matches the books.
• Double claim. If the same merchant banker fee has been claimed under a central scheme, disclose it. Total assistance cannot exceed actual spend.
• Unsigned or unstamped pages in the printed application. The checklist requires signature and stamp on every page.

Key dates to remember

• 5 October 2022; start of the operative period of the Aatmanirbhar Gujarat Scheme for assistance to MSMEs.
• 4 October 2027 — end of that operative period as notified by the Industries and Mines Department.
• Listing date + 12 months. The last date to submit this particular application.

Where to raise a grievance

Grievances on this incentive go first to the Dy. Commissioner of Industries (MSME Incentive) at the MSME Commissionerate, Gandhinagar, on 079-23258381 / 23258386 / 23258387 or msmeinc@gujarat.gov.in. Unresolved matters can be escalated to the Industries Commissioner, Udyog Bhavan, Gandhinagar. District level assistance, including help with the paperwork, is available free of charge at the District Industries Centre. No fee is payable to any agent to have an application "processed", the only costs in this scheme are the professional fees you pay your own CA and merchant banker.