Scheme for Assistance for Start Ups/ Innovation: Interest Subsidy

What is the Gujarat startup interest subsidy?

The Scheme for Assistance for Start Ups/ Innovation is an umbrella scheme of the Industries and Mines Department, Government of Gujarat, notified under the Gujarat Industrial Policy 2020 and operative from 7 August 2020 for five years. Its Interest Subsidy component reduces the cost of borrowing for a startup that has been recognised under the scheme and has taken a term loan to build its business.

According to the Industrial Policy 2020 scheme documents published by the Industries and Mines Department, startups approved under the scheme are eligible for an additional interest subsidy of 1%, up to a maximum of 9% on term loans, under the provisions of the scheme for assistance to MSMEs. In plain terms: the startup first qualifies for the ordinary MSME interest subsidy, and the startup scheme adds one percentage point on top, with 9% as the outer limit of combined relief.

The base MSME rates depend on where the project sits. Under the Aatmanirbhar Gujarat Scheme for assistance to MSMEs, which replaced the 2020 MSME scheme from 5 October 2022, interest subsidy runs at 7% for Category 1 talukas up to Rs 35 lakh a year for 7 years, 6% for Category 2 talukas up to Rs 30 lakh a year for 6 years, and 5% for Category 3 talukas and municipal corporation areas up to Rs 25 lakh a year for 5 years. That scheme separately gives 1% additional interest subsidy to a registered startup in the manufacturing sector, 1% to a woman or differently abled entrepreneur, and 1% to a young entrepreneur below 35 years of age on the date of loan sanction.

Whichever route the claim travels, one rule holds: the enterprise must bear a minimum of 2% interest on the term loan itself.

Who is eligible for the startup interest subsidy?

A startup can claim if:

• It is recognised as a startup under the scheme on the recommendation of an approved Nodal Institution.
• It has taken a term loan from a bank or financial institution and that loan is being serviced.
• It files within the time limit, within one year of the first disbursement of the term loan, one year of the date of commencement of production, or one year of the date of the Government Resolution, whichever is later.
• It bears at least 2% interest itself after the subsidy.
• It furnishes annual information on production, sales, turnover and employment to the District Industries Centre, and complies with the pollution control and local employment conditions attached to Gujarat's industrial incentives.

Who cannot apply or is not eligible:

• A startup with no term loan is not eligible. Equity funding, grants and founder capital carry no interest, so there is nothing to subsidise.
• Individuals applying directly to the government cannot apply. Recognition under the scheme runs through an approved Nodal Institution.
• A startup already availing incentives as a startup under another Government of Gujarat startup scheme cannot draw the same benefit twice.
• Businesses formed by splitting up or reconstructing an existing enterprise are not recognised as startups.
• Penal interest and bank charges are not eligible, and neither is interest on working capital limits, the subsidy attaches to term loans.
• An enterprise whose term loan was sanctioned more than one year after production began is not eligible under the Gujarat interest subsidy rules.

How to apply for the Gujarat startup interest subsidy

1. Get recognised as a startup. Approach an approved Nodal Institution, a university, incubator or R&D institution listed by the Industries Commissionerate — and submit your innovation proposal for screening. The institution's committee evaluates the idea and forwards a recommendation.
2. Register and file the startup application on startup.gujarat.gov.in through that Nodal Institution, uploading incorporation documents, founder KYC and the business plan.
3. Take the term loan from a bank or financial institution and keep the sanction letter, the disbursement advice and the loan account statement.
4. File the interest subsidy application on ifp.gujarat.gov.in, the Investor Facilitation Portal of the Industries and Mines Department, within one year of first disbursement or of the start of commercial production, whichever is later. Attach the sanction letter, bank-certified loan statement, CA certificate of interest paid, Udyam registration and bank details.
5. Submit the physical file at the District Industries Centre for projects below Rs 10 crore, or at the head office of the Industries Commissionerate for projects of Rs 10 crore and above.
6. File periodic claims with a fresh CA certificate and bank statement for each claim period, and respond to any queries raised during verification.

How the subsidy is calculated in practice

Interest subsidy in Gujarat is a reimbursement of interest actually paid, not a reduction in the rate the bank charges. If the bank charges 10% and the total eligible subsidy is 8%, the startup still pays 10% to the bank each month and receives 8% back after the claim is processed, subject to the annual ceiling for its taluka category and to the rule that it must bear at least 2% itself.

Two conditions decide how long the benefit lasts. The startup must opt for the date of eligibility; either the date of first disbursement of the loan or the date of commencement of commercial production, and that choice fixes the start of the subsidy period. And any default period counts against it: if instalments or interest are unpaid for 90 days past the due date, the default period as determined under RBI guidelines is deducted from the eligible period.

Prepayment also ends the benefit. If a unit repays the entire term loan before the eligible incentive period is over, it is not eligible for further interest subsidy.

How to check the status of an interest subsidy claim

Log in to ifp.gujarat.gov.in with the credentials used at the time of application and open the incentive application dashboard, which shows the current stage of each claim. For case-level updates, contact the District Industries Centre where the file was submitted, quoting the application number on the acknowledgement. The Deputy Commissioner of Industries (MSME Incentive) at Udyog Bhavan, Gandhinagar can be reached on 079-23258386 for escalation on MSME-route claims.

Common reasons interest subsidy claims fail

• Late application beyond one year from first disbursement or from the start of production, which costs the delayed period.
• Term loan sanctioned after production began by more than a year, which disqualifies the claim entirely.
• CA certificate missing or not in the prescribed format.
• Claiming penal interest, processing fees or working capital interest, none of which is eligible.
• Default period during the claim window, which is deducted.
• Local employment condition not met; Gujarat requires at least 85% of total employment and 60% of supervisory and managerial staff to be persons domiciled in Gujarat.
• Annual information not filed with the District Industries Centre before the end of September.

Is the scheme still open?

The Scheme for Assistance for Start Ups/ Innovation came into force on 7 August 2020 and ran for five years, to 6 August 2025. Gujarat has since announced a new industrial policy, reported as effective from 1 June 2026, with revised startup assistance. The 1% additional interest subsidy described here is the published 2020 figure; confirm the operative scheme, rate and ceiling on ifp.gujarat.gov.in under Government Policies before you apply.

Help and contacts

• Startup Gujarat portal: startup.gujarat.gov.in
• Industries Commissionerate startup cell: 1800-233-0616, 079-23252588, icstup@gujarat.gov.in
• Investor Facilitation Portal helpline: 1800 233 1847, 10:30 AM to 6:10 PM on working days
• Office of the Industries Commissionerate: Block No. 1, 2nd Floor, Udyog Bhavan, Gandhinagar 382 010

Filing is free. No fee is charged for startup recognition or for an interest subsidy claim, and no bank can require you to use an agent to file one.