MSME Innovative Scheme (Incubation, IPR and Design)

What is the MSME Innovative Scheme?

MSME Innovative Scheme is a component of the MSME Champions Scheme run by the Office of the Development Commissioner (MSME), Ministry of Micro, Small and Medium Enterprises. MSME Innovative merges three formerly standalone sub-schemes; Incubation, Design and Intellectual Property Rights, into a single programme that carries an idea from proof of concept through design development to registered intellectual property.

According to the scheme guidelines published on innovative.msme.gov.in, the three verticals continue to operate separately but share a common set of implementing institutions: recognised Host Institutes, the Indian Institute of Science, IITs, NITs and Intellectual Property Facilitation Centres.

MSME Innovative is distinct from the other two Champions components. MSME Sustainable (ZED) subsidises certification, and MSME Competitive (Lean) subsidises consultancy: neither is applied for on this portal.

Who is eligible for the MSME Innovative Scheme?

Eligibility differs by component.

Incubation component

• Institutions eligible to register as a Host Institute (HI): technical colleges, universities, professional institutes, R&D institutions, NGOs involved in incubation, MSME-Development Institutes, Technology Centres, and Central or State government institutes.
• Incubatees: MSMEs, individuals and students whose ideas are shortlisted by a Host Institute and uploaded to the portal.
• Plant and machinery assistance is available only to a Host Institute that already has two or more approved ideas.

Design component

• The beneficiary must be a micro, small or medium enterprise with a valid Udyam Registration or UAM.
• A manufacturing MSME should preferably have been profitable in at least one of the last three financial years; the Project Monitoring and Advisory Committee can relax this.
• The designer engaged must be a qualified industrial designer.
• Student design projects are open to students of any AICTE or UGC accredited institution, working on an MSME's design problem.

IPR component

• The applicant enterprise or individual must hold a valid Udyam Registration. For a partnership firm, the applicant must hold at least 51% shareholding.
• GI reimbursement is open to agencies, associations, societies, trusts and other non-commercial bodies with valid incorporation documents and PAN.

Who cannot apply

• Salaried individuals and households looking for a personal grant cannot apply; MSME Innovative is an enterprise and institution scheme, not an individual benefit.
• An MSME that has taken a Central or State subsidy for the same patent, trademark, design or the same plant and machinery is not eligible for a second benefit on that item.
• Applications for IP that has been filed but not yet registered are not eligible; reimbursement follows registration.
• Renewal fees, assignment costs and corrections to an IP application are not covered.

What documents are required for the MSME Innovative Scheme?

How to apply for the MSME Innovative Scheme

1. Open the scheme portal at innovative.msme.gov.in and choose the relevant vertical — Incubation, Design or Intellectual Property Rights.
2. For Incubation, approach a recognised Host Institute with your idea. The Host Institute evaluates it with its own experts and uploads only shortlisted ideas to the portal.
3. For an institution seeking Host Institute recognition, register on the portal; the proposal goes to the MSME-Development Institute in whose jurisdiction you fall, which verifies it physically and forwards a recommendation within 15 days.
4. For Design, submit the design project or student design project through the Implementing Agency, an IISc, IIT or NIT empanelled under the scheme, which places it before a Project Assessment Panel.
5. For IPR reimbursement, file the claim on the portal at innovative.msme.gov.in with the registration certificate, original bills and Udyam certificate; an Intellectual Property Facilitation Centre scrutinises the claim before it goes to the Ministry.
6. Track approval. Incubation and Design proposals are cleared by the Project Monitoring and Advisory Committee (PMAC) after a Domain Expert Selection Committee screening; acceptance or rejection of a plant and machinery application is communicated within 30 days.
7. On approval, submit the utilisation certificate at the milestones set in the sanction, since further instalments and future eligibility depend on it.

How much does the MSME Innovative Scheme pay?

Incubation. Up to Rs 15 lakh per idea to the Host Institute, released as 70% on approval and 30% after 60% of the first instalment is used. Within the Rs 15 lakh, the indicative split is Rs 10 lakh for technology-related expenditure, Rs 3 lakh for mentors and Rs 2 lakh for travel and overheads, with variation of up to 25% between sub-heads permitted. Separately, a Host Institute with two or more approved ideas can get up to Rs 1 crore for plant and machinery, covering capital and maintenance for up to five years. Procurement must be completed within six months of receiving the funds, with a utilisation certificate for 50% within nine months and the full certificate within 18 months.

Design. The government pays 75% of project cost for a micro enterprise and 60% for a small or medium enterprise, up to Rs 40 lakh, released in three stages. Student design projects get 75% of cost up to Rs 2.5 lakh, released half on approval and half on completion. Implementing Agencies are paid 15% of the released grant as implementation charges. The project must finish within one year of receiving the money.

IPR. One-time 100% reimbursement of actual registration expenditure, capped at Rs 5 lakh for a foreign patent, Rs 1 lakh for a domestic patent, Rs 2 lakh for a GI, Rs 15,000 for a design and Rs 10,000 for a trademark. An Intellectual Property Facilitation Centre can receive a grant of up to Rs 1 crore in milestone-based instalments, with the first instalment up to 40% of the approved cost, and must provide free professional IP services to MSMEs.

Seed capital. The guidelines provide for up to Rs 1 crore as equity for commercialising an idea, design or patent, from a corpus managed by SIDBI on an 80:20 basis where the government contributes a maximum of 80%.

How MSME Innovative relates to other MSME schemes

MSME Innovative funds ideas, design and IP protection. It does not provide working capital or credit guarantees, for those, see the Credit Guarantee Fund Trust for Micro and Small Enterprises. It does not subsidise certification or consultancy, which fall under MSME Sustainable (ZED) and MSME Competitive (Lean). It is also not a self-employment loan scheme like PMEGP.

Help and grievance redressal

• Portal: innovative.msme.gov.in, with separate logins for Host Institutes and applicants
• Ministry of MSME CHAMPIONS helpline: 1800-180-6763
• Field offices: the MSME-Development Institute in your district acts as the Implementing Agency for Host Institute recognition and physical verification

The Ministry of MSME does not charge a fee for registering an idea, a design project or an IPR reimbursement claim on the portal.