Gujarat Textile Policy 2024: Interest Subsidy (Fiscal Incentives to Labour Intensive Unit)

What is the Gujarat Textile Policy interest subsidy for labour intensive units?

Gujarat Textile Policy 2024 is a policy of the Industries and Mines Department, Government of Gujarat, notified through Resolution No. IMD/WRT/e-file/9/2023/2817/CH dated 15 October 2024. Its operative period runs five years, from 1 October 2024 to 30 September 2029. The policy replaces the Scheme for Assistance to Strengthen Specific Sectors in the Textile Value Chain 2019, notified vide Resolution No. TEX/102018/3327/CH dated 10 January 2019.

Inside the policy, para 6 carries a separate and richer package of Fiscal Incentives to Labour Intensive Units. This guide covers the interest subsidy in that package: a credit-linked interest subsidy of 7% on the term loan for 8 years, capped at 3% of eligible fixed capital investment per year.

The design point is employment. Where the general textile incentives in para 5 vary sharply by activity and taluka, Activity-2 units in a Category 3 taluka get only 5% for 5 years, capped at 2% of eFCI a year, the labour intensive package gives the same top rate everywhere: 7% for 8 years, up to 3% of eFCI a year, for both Activity-1 and Activity-2, in Category 1 and PM MITRA Park, Category 2 and Category 3 talukas alike. A unit that hires at scale is not penalised for where it locates within eligible areas.

What is a "labour intensive unit"?

The policy defines a labour intensive unit as a new industrial unit that provides employment to a minimum of 4,000 persons duly registered under the EPF scheme, of whom at least 1,000 must be female employees.

An existing industrial unit carrying out expansion or diversification of eligible activities during the operative period also qualifies, provided it creates totally new employment of at least 4,000 EPF-registered persons, including at least 1,000 women.

Two related definitions matter when counting. A worker under the policy is a person on the payroll doing manual, unskilled, skilled, semi-skilled, technical or operational work in the manufacturing process: accounts, administration and marketing staff do not count. Payroll or wages means basic salary plus dearness allowance for workers registered under EPF; other perks and allowances are excluded.

Which activities qualify?

Activity-1; garments, apparel and made-ups, and technical textiles, including composite units. Garments, apparel and made-ups are defined as wearable or non-wearable stitched fabric with at least two sides stitched using sewing machinery. Technical textiles covers the 12 segments identified by the Ministry of Textiles: Agrotech, Meditech, Buildtech, Mobiltech, Clothtech, Oekotech, Geotech, Packtech, Hometech, Protech, Indutech and Sportech.

Activity-2, weaving with or without preparatory, knitting, dyeing and processing, texturising, twisting, embroidery, and man-made fibre spinning to make yarn from polyester staple fibre or viscose staple fibre. Spinning of cotton and synthetic filament yarn is expressly excluded.

A composite unit is one that integrates spinning, weaving, knitting, dyeing, printing, finishing and packaging within its premises.

Who is eligible, and who is not eligible?

Who can claim

• An industrial undertaking — a company, partnership firm, LLP, industrial cooperative society or proprietary concern: engaged in an eligible activity. Self Help Groups engaged in these activities are also brought within the policy's benefits.
• A new industrial unit that commences commercial production of an eligible activity during the operative period, with a separate IEM or Udyam Registration and separately identifiable fixed capital investment.
• An existing industrial unit doing expansion; at least a 25% increase in gross fixed capital investment with at least 60% of it in plant and machinery, and at least a 25% increase in installed capacity, or diversification or modernisation.
• Units that meet the labour intensive thresholds get the para 6 package instead of the ordinary para 5 rates.

Who cannot apply or is not eligible

• An industrial undertaking located within the limits of a notified municipal corporation is not eligible for incentives under the policy.
• Units that commenced commercial production before 1 October 2024, whether or not they applied under the previous scheme, continue under the previous 2019 scheme as extended to 30 September 2024, and had to apply under it within 6 months of the new GR.
• Units without a term loan. The interest subsidy is credit-linked, and the companion capital subsidy is expressly available only to units availing a term loan.
• Units that fall short of 4,000 EPF-registered workers or 1,000 women do not get the labour intensive package, though they may still qualify for the general para 5 incentives.
• Individuals. No person applies for a personal benefit under this policy; workers receive their normal wages and EPF, and the payroll assistance is paid to the employer.
• A unit that becomes a defaulter loses interest subsidy for the default period, determined under RBI guidelines, and that period is deducted from the eligible period.

How much does a labour intensive unit get in total?

Payroll assistance goes only to domicile workers registered under EPF, and the capital subsidy ceiling of Rs 150 crore for a labour intensive unit is 50% higher than the Rs 100 crore ceiling for an ordinary Activity-1 unit.

How to apply for the Gujarat Textile Policy interest subsidy

1. Register with the Industries Commissioner. Other than MSME units, an industrial unit must apply for registration to the Industries Commissioner in the prescribed format within one year of the first disbursement of the term loan, one year of commencement of commercial production, or one year from the effective date of the policy: whichever is later. Attach the registration document and IEM, land possession papers with non-agricultural permission, GPCB Consent to Establish where applicable, the Detailed Project Report and the term loan sanction letter.
2. Commence commercial production during the operative period, since a registered project must do so to keep its eligibility.
3. Apply for the Provisional Eligibility Certificate to the Industries Commissioner within one year of the date of commercial production or of the registration certificate, whichever is later. MSME units with GFCI up to Rs 10 crore apply to the General Manager of the District Industries Centre, and those above Rs 10 crore and up to Rs 50 crore to the MSME Commissioner.
4. Apply for the Final Eligibility Certificate directly if the whole investment is already complete, or within one year of the last date of the eligible investment period if it is not. Late applications lose the delayed period.
5. Claim the interest subsidy after obtaining the eligibility certificate, choosing the date of eligibility either from the first disbursement of the loan or from the date of commercial production.
6. Cooperate with asset verification. The Industries Commissioner constitutes an Asset Verification team whose report decides the entitlement and goes to the sanctioning authority.

Sanction for a labour intensive unit, and for any unit with GFCI above Rs 50 crore, rests with the State Level supported Committee chaired by the Minister or Minister of State for Industries, with the Industries Commissioner as Member Secretary.

What conditions attach to the interest subsidy?

• Subsidy is calculated only on the term loan actually disbursed against the sanctioned amount for gross fixed capital investment counted in eFCI.
• Only interest and instalments actually paid are reimbursed. Penal interest and other charges are not treated as interest.
• The unit must pay regular instalments and interest; default periods are cut out of the eligible period.
• The unit must bear at least 2% of the interest in every case, including after any Government of India interest subsidy is offset.
• For a project under implementation as on 1 October 2024, only term loan amounts disbursed after 1 January 2024 are eligible, and assets acquired and paid for between 1 January 2024 and 30 September 2024 count towards eFCI.
• The eligible investment period extends 12 months from the date of commercial production for projects up to Rs 500 crore of gross capital investment, and 24 months above Rs 500 crore.

Where to get help

The implementing office is the Industries Commissionerate, Block No. 1, 2nd Floor, Udyog Bhavan, Gandhinagar 382 010, telephone 23252683 / 23252617, email iccord@gujarat.gov.in. The Industries Commissioner is authorised to implement, monitor and review the policy, and issues the detailed guidelines, third party inspection and audit procedures separately.

Any dispute, interpretation or contention under the policy is referred to the State Level supported Committee, whose decision is final and binding on the applicant. Registration and claim filing carry no fee.

How to check your application status

The Gujarat Textile Policy 2024 runs on an offline, paper-based file process through the Industries Commissionerate, not a self-service online tracking portal, so status has to be pulled at each stage from the office that is holding the file.

• Registration stage. After submitting the registration application with the Industries Commissioner (or the District Industries Centre / MSME Commissioner for MSME units), call the Industries Commissionerate at 23252683 / 23252617 with your file or application reference number, or email iccord@gujarat.gov.in, to confirm the application has been logged and to ask which officer is handling it.
• Provisional Eligibility Certificate stage. Once applied for, status sits with the sanctioning office (Industries Commissioner, District Industries Centre, or MSME Commissioner depending on investment size). Follow up in writing or by phone, quoting the registration certificate number, since the certificate cannot issue until the Asset Verification team has visited and filed its report.
• Asset verification. This is the stage most applications wait on. The Industries Commissioner constitutes the verification team, and its report is what the sanctioning authority acts on. If verification is pending, ask the Industries Commissionerate directly whether the team has been constituted and whether a site visit date has been fixed; there is no independent tracking number for this step.
• Final Eligibility Certificate and disbursement. For a labour intensive unit, sanction rests with the State Level Empowered Committee chaired by the Minister or Minister of State for Industries. Because this committee meets periodically rather than continuously, expect the file to sit for a review cycle; a written follow-up to the Industries Commissioner as Member Secretary is the way to ask where the file stands before the next meeting.
• Keep a paper trail. Since there is no applicant-facing dashboard, retain the acknowledgement or dispatch number for every submission (registration, provisional certificate, final certificate, and each interest subsidy claim) and quote it in every follow-up call or email; without a reference number the office has to search manually, which slows down any status check.

Common reasons for rejection

• Falling short of the 4,000 worker or 1,000 women threshold. The labour intensive package is an all-or-nothing gate: only EPF-registered workers on the manufacturing payroll count, not administrative, accounts, or marketing staff. A unit that miscounts by including non-manufacturing staff, or that has not yet reached the threshold on the date it applies, gets pushed back to the ordinary para 5 rates instead of the 7 percent, 8 year package. Fix: reconcile the EPF roll against the policy's own worker definition before applying, and apply for the labour intensive certificate only after the threshold is actually met and evidenced by EPF records.
• Unit located inside a notified municipal corporation. The policy excludes industrial undertakings located within the limits of a notified municipal corporation outright, regardless of investment or employment size. Fix: confirm the unit's revenue village or taluka status against the notified municipal corporation list before investing in land, since this is not a curable defect after the fact.
• No term loan, or a mismatch between the sanctioned loan and eligible fixed capital investment. Because the subsidy is credit-linked, a unit funding its project entirely through internal accruals or equity has nothing to claim it against, and a claim that includes assets outside the sanctioned term loan or outside eFCI gets trimmed or rejected at the asset verification stage. Fix: keep the term loan sanction letter, disbursement schedule, and asset purchase invoices aligned to the same eFCI figure used in the Detailed Project Report.
• Missed application windows. Registration must be filed within one year of first loan disbursement, commercial production, or the policy's effective date, whichever is later; the Provisional Eligibility Certificate application has its own one-year clock from commercial production or registration; and a Final Eligibility Certificate filed late loses the delayed period rather than the whole claim, but a registration filed after its window closes can lose eligibility altogether. Fix: calendar all three deadlines against loan disbursement and commercial production dates as soon as either occurs, not after the fact.
• Unit commenced commercial production before 1 October 2024. Any unit that started commercial production before the new policy's effective date falls under the 2019 scheme as extended, not this policy, and had to have applied under the old scheme within six months of the new Resolution. An application under the 2024 policy for a pre-existing unit is rejected on this ground alone. Fix: check the commercial production date on record with GPCB or the registration certificate before filing under the 2024 policy.
• Incomplete or inconsistent documentation at registration. Missing land possession papers with non-agricultural permission, an absent or expired GPCB Consent to Establish, or a Detailed Project Report that does not match the term loan sanction letter's figures are common grounds for the Industries Commissioner to return an application rather than process it. Fix: cross-check every figure (investment amount, activity classification, installed capacity) across the DPR, the loan sanction letter, and the registration form before submission, since discrepancies between these documents are what trigger a return.
• Defaulting on loan instalments or interest. A unit that defaults loses the interest subsidy for the default period as determined under RBI guidelines, and that period is deducted from the total eligible period rather than merely postponed. Fix: treat regular instalment and interest payment as a condition of the subsidy itself, not just of the loan, and flag any restructuring discussion with the lender early since a default period cannot be recovered later.