Scheme for Assistance to Micro, Small and Medium Enterprises (MSME): Assistance for Interest Subsidy (Manufacturing Sector)
Gujarat state government scheme
Gujarat's MSME interest subsidy scheme reimburses part of the interest a manufacturing MSME pays on its term loan to 7%, 6% or 5% depending on the taluka category, capped at Rs 35 lakh, Rs 30 lakh or Rs 25 lakh a year for 7, 6 or 5 years. Enterprises apply online through ifp.gujarat.gov.in with a bank sanction letter.
What is the Gujarat MSME interest subsidy?
The Scheme for Assistance to Micro, Small and Medium Enterprises (MSME) is an umbrella scheme of the Industries and Mines Department, Government of Gujarat. Under the Gujarat Industrial Policy 2020 it was notified by Government Resolution SSI/102020/332278/CH dated 1 September 2020 and carried fourteen separate components. The Assistance for Interest Subsidy component is the second of those and is the one most manufacturing units actually use.
The component is simple in principle. A manufacturing MSME that borrows a term loan to buy new plant and machinery pays interest to its bank every month. The Gujarat government reimburses a fixed percentage of that interest, up to an annual ceiling, for a fixed number of years. The subsidy is credit-linked, so no term loan means no benefit, and it is reimbursement-based, so the enterprise pays first and claims later.
From 5 October 2022 the state notified the Aatmanirbhar Gujarat Scheme for assistance to MSMEs, Government Resolution MIS-102022-1271(1)-I, which carries the interest subsidy forward with its own rate table and runs to 4 October 2027. New applicants are today routed through the Aatmanirbhar Gujarat resolution rather than the 2020 one, and the District Industries Centre will tell you which resolution your file sits under.
Interest subsidy rates for manufacturing MSMEs
| Particulars | Taluka Category 1 | Taluka Category 2 | Taluka Category 3 and municipal corporation areas |
|---|---|---|---|
| Rate on disbursed term loan | 7% | 6% | 5% |
| Maximum per annum | Rs 35 lakh | Rs 30 lakh | Rs 25 lakh |
| Tenure | 7 years | 6 years | 5 years |
An additional 1% interest subsidy is provided for enterprises promoted by women, differently-abled entrepreneurs, registered startups in the manufacturing sector and young entrepreneurs below the age of 35.
Who is eligible for the MSME interest subsidy in Gujarat?
An enterprise can apply if:
- It is a manufacturing micro, small or medium enterprise as classified under the MSMED Act; investment in plant and machinery up to Rs 1 crore with turnover up to Rs 5 crore for micro, up to Rs 10 crore and Rs 50 crore for small, and up to Rs 50 crore and Rs 250 crore for medium.
- It holds a valid Udyam Registration.
- It has a sanctioned term loan from a bank or a notified NBFC for new plant and machinery, equipment and related fixed assets.
- It is a new unit, or an expansion or diversification of an existing unit that meets the investment and capacity thresholds set out in the resolution.
- It has obtained Consent to Establish and Consent to Operate from the Gujarat Pollution Control Board.
- It employs at least 85% of its workforce from local candidates, a standing condition attached to the capital and interest subsidy components.
An enterprise is not eligible if:
- It has no term loan. Working capital limits, cash credit and overdraft do not qualify, and neither does an interest-free promoter contribution.
- It is a service enterprise. Service-sector MSMEs must use the separate service-sector interest subsidy component.
- It is a large or mega industry, which is covered by the Aatmanirbhar Gujarat schemes for large, thrust-sector and mega industries instead.
- Its unit is located outside Gujarat, or the investment is not made in Gujarat.
- It has already claimed the same interest under another state scheme, since the same expenditure cannot be subsidised twice.
- It is in default to the lending bank, or the loan has been classified as non-performing.
Individuals looking for a personal loan subsidy will not find it here. This is an enterprise incentive, not a citizen benefit. The applicant is the registered firm, LLP or company, and the money reaches the enterprise's own bank account.
What documents are required?
| Document | Mandatory | Notes |
|---|---|---|
| Udyam Registration certificate | Yes | Fixes the micro/small/medium classification |
| Term loan sanction letter | Yes | From a bank or notified NBFC |
| Bank certificate of interest charged and paid | Yes | The basis of each annual claim |
| CA certificate of Gross Fixed Capital Investment | Yes | Establishes eligible investment |
| GPCB Consent to Establish and Consent to Operate | Yes | Standing condition for disbursement |
| Proof of date of commercial production | Yes | First sale bill or equivalent |
| PAN, GST and constitution documents | Yes | Partnership deed, MoA/AoA or proprietorship proof |
| Shop and Establishment certificate | No | Where the unit is inside a municipal area |
How to apply for the Gujarat MSME interest subsidy
- Complete Udyam Registration free at udyamregistration.gov.in and keep the certificate, because the incentive application asks for the Udyam number.
- Get the term loan sanctioned from a bank or a notified NBFC for new plant and machinery. Keep the sanction letter and the disbursement schedule.
- Register your enterprise on the Investor Facilitation Portal at ifp.gujarat.gov.in, Gujarat's single-window system for investor and incentive applications.
- Open the MSME incentive application on the portal, select the interest subsidy component for the manufacturing sector, and fill in the unit details, taluka, Gross Fixed Capital Investment and loan particulars.
- Upload the annexures, Udyam certificate, sanction letter, CA certificate, GPCB consents, proof of commercial production and constitution documents, and submit the application.
- Submit the hard-copy set to your District Industries Centre with the portal acknowledgement on top. The DIC scrutinises the file and puts it up to the sanctioning committee.
- File the annual claim each year with the bank's certificate of interest actually charged and paid, so that the reimbursement for that year is released.
Time your step 4 carefully. The resolutions require the application to be filed within the operative period and within a defined window; commonly one year, of the first disbursement of the term loan or the start of commercial production. Filing late is the most avoidable way to lose the entire benefit.
How to check your application status
- Sign in to ifp.gujarat.gov.in with the credentials used at registration.
- Open the application dashboard, which lists every incentive application filed by your enterprise and its current stage.
- For files pending at district level, follow up with the District Industries Centre quoting the portal application number and the inward number of the hard-copy submission.
- Call the IFP toll free helpline 1800 233 1847 between 10:30 am and 6:10 pm on working days for portal and login problems.
Why interest subsidy claims get rejected
- Application filed after the prescribed window from loan disbursement or commencement of commercial production.
- No GPCB Consent to Operate on the date of claim.
- Loan used for land and building, which is outside the eligible investment for this component.
- Mismatch between the CA certificate and the bank's figures for Gross Fixed Capital Investment or disbursed loan amount.
- Missing annual interest certificate, which stalls the reimbursement even after sanction.
- Unit classified as service rather than manufacturing on the Udyam certificate.
- Local employment condition not evidenced, where the file lacks payroll proof of the 85% local workforce requirement.
Most rejections are curable. A file returned for a missing certificate can be resubmitted with the document; a file rejected for late filing usually cannot.
Key dates
- 1 September 2020: GR SSI/102020/332278/CH notifying the Scheme for Assistance to MSMEs under the Gujarat Industrial Policy 2020.
- 2 November 2020 — GR MIS-102020-347965-I notifying the taluka classification that decides which rate applies to your unit.
- 5 October 2022, GR MIS-102022-1271(1)-I notifying the Aatmanirbhar Gujarat Scheme for assistance to MSMEs.
- 4 October 2027, end of the Aatmanirbhar Gujarat operative period.
Help and grievance redressal
- Investor Facilitation Portal; ifp.gujarat.gov.in, toll free 1800 233 1847, 10:30 am to 6:10 pm on working days.
- Industries Commissionerate; Block No. 1, 2nd Floor, Udyog Bhavan, Gandhinagar 382 010; 079-23252683 / 079-23252617; iccord@gujarat.gov.in.
- MSME Commissionerate, Gujarat; scheme-wise application forms and checklists at msmec.gujarat.gov.in.
- District Industries Centre, the first stop for file-level queries and for confirming which resolution governs your application.
No consultant is required to file this application, and no government office charges a fee to accept it.
Documents required
Frequently asked questions
How much interest subsidy does a manufacturing MSME get in Gujarat?
A manufacturing MSME gets 7% interest subsidy in a Taluka Category 1 area, 6% in Category 2 and 5% in Category 3 and municipal corporation areas, on the disbursed term loan amount. The annual ceilings are Rs 35 lakh, Rs 30 lakh and Rs 25 lakh respectively, payable for 7, 6 and 5 years.
Is the interest subsidy paid to the bank or to the enterprise?
The subsidy is reimbursed to the enterprise after it has actually paid the interest to the lender. It is not a concessional loan and the bank does not reduce your EMI — you pay the full instalment and then claim the subsidy component back from the state.
Which enterprises cannot claim the interest subsidy?
Enterprises without a sanctioned term loan cannot apply, because the scheme is credit-linked. Working capital loans, loans for land and building alone, units that have not obtained Gujarat Pollution Control Board consent, and enterprises that have defaulted to the lender are also outside the scheme.
Do I need Udyam registration to apply?
Yes, Udyam registration is required, because the classification as micro, small or medium is what makes an enterprise eligible under this scheme. Register free at udyamregistration.gov.in before filing the incentive application.
What is a Taluka Category in the Gujarat incentive schemes?
A Taluka Category is Gujarat's three-way classification of talukas by industrial development, notified by Government Resolution MIS-102020-347965-I dated 2 November 2020. Category 1 is the least developed and gets the highest incentive, Category 3 and municipal corporation areas get the lowest.
Can a service enterprise claim under this component?
No, this component is the manufacturing-sector interest subsidy. Gujarat runs a separate interest subsidy component for micro, small and medium service enterprises, with its own rates and ceilings, so a service unit must apply under that component instead.
Is there an extra subsidy for women or young entrepreneurs?
Yes, an additional 1% interest subsidy is provided for enterprises promoted by women, differently-abled entrepreneurs, registered startups in the manufacturing sector and young entrepreneurs below 35 years of age. Confirm the exact wording and the combined ceiling in the governing Government Resolution before budgeting for it.
How long does the sanction take?
There is no statutory time limit published for this scheme; in practice the District Industries Centre scrutinises the file, the state-level committee sanctions it, and reimbursement then follows each year against the bank's interest certificate. Keep the annual certificates coming or the disbursal cycle stalls.
Related Gujarat schemes
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