Scheme for Assistance to Micro, Small and Medium Enterprises (MSME): Assistance for Interest Subsidy (Manufacturing Sector)
7% interest subsidy up to ₹35L/year · Gujarat MSME manufacturing sector 7 years
Gujarat manufacturing MSMEs can receive an interest subsidy on term loans from recognized banks, reducing the effective borrowing cost over multiple years. The subsidy rate ranges from 5% to 7% and the duration from 5 to 7 years, depending on the location of the business — with businesses in less-developed talukas getting higher benefits. Apply via the Investor Facilitation Portal (ifp.gujarat.gov.in) within one year of loan disbursement or before commercial production starts.
About This Scheme
Gujarat manufacturing MSMEs can receive an interest subsidy on term loans from recognized banks, reducing the effective borrowing cost over multiple years. The subsidy rate ranges from 5% to 7% and the duration from 5 to 7 years, depending on the location of the business — with businesses in less-developed talukas getting higher benefits. Apply via the Investor Facilitation Portal (ifp.gujarat.gov.in) within one year of loan disbursement or before commercial production starts.
Full official description
The scheme "Scheme for Assistance to Micro, Small and Medium Enterprises (MSME)" is an umbrella scheme launched by the Industries and Mines Department, Gujarat. It aims to empower the state's dynamic MSME sector, which significantly contributes to employment, GDP, and exports. Effective from August 7th, 2020 to August 6th, 2025, this initiative supports entrepreneurs and strengthens MSMEs, making them globally competitive. The component "Assistance for Interest Subsidy (Manufacturing Sector)" aims to support manufacturing enterprises by providing an interest subsidy on term loans. The subsidy percentage and duration vary based on the category of the taluka. Additional benefits are available for differently-abled entrepreneurs, women entrepreneurs, registered startups, and young entrepreneurs below 35 years.
Benefits
- Category I talukas: 7% interest subsidy, up to ₹35 lakh/year, for 7 years
- Category II talukas: 6% interest subsidy, up to ₹30 lakh/year, for 6 years
- Category III & Municipal Corporation areas: 5% interest subsidy, up to ₹25 lakh/year, for 5 years
- Additional benefits available for women entrepreneurs, differently-abled founders, registered startups, and entrepreneurs under 35 years of age
💡 Why Startups Should Care
This is essentially Gujarat's flagship general-purpose MSME interest subsidy — 7% for 7 years on manufacturing term loans. For any Gujarat manufacturer without SC/ST/textile-specific eligibility, this is your default route to significantly cheaper capital.
Who Can Apply (Eligibility)
- Must be a Micro, Small, or Medium enterprise in the manufacturing sector
- Term loan must be from a recognized bank or financial institution (NBFCs are not eligible)
- Apply within one year of loan disbursement or before commercial production starts, whichever is earlier
- Must remain operational for at least 7 years after subsidy approval
- Must comply with pollution control norms
- Only one investment type (expansion, diversification, backward/forward integration) is eligible at a time
How to Apply
- Visit ifp.gujarat.gov.in/DIGIGOV/ and register as a new investor.
- Log in and select the Interest Subsidy (Manufacturing Sector) component.
- Fill in enterprise, investment, and banking details.
- Upload the signed application form, Udyog Aadhaar/Udyam certificate, and loan documents.
- Submit and note your Reference Number — reimbursement follows annually after verification.
Frequently Asked Questions
What is the "Scheme for Assistance to Micro, Small and Medium Enterprises (MSME)"?
The "Scheme for Assistance to Micro, Small and Medium Enterprises (MSME)" aims to position Gujarat as a global business destination by promoting sustainable manufacturing, inclusive development, and balanced regional growth.
What is the duration of the scheme?
The scheme is effective from August 7, 2020, and will remain in operation until August 6, 2025.
What is the objective of the component "Assistance for Interest Subsidy (Manufacturing Sector)"?
The component "Assistance for Interest Subsidy (Manufacturing Sector)" aims to support manufacturing enterprises by providing an interest subsidy on term loans.
Who is eligible to apply under this scheme?
Any manufacturing enterprise that has taken a term loan from an RBI-regulated bank or financial institution and meets the employment, investment, and compliance conditions is eligible for the subsidy.
What is the maximum amount of interest subsidy that an enterprise can receive?
The maximum subsidy amount depends on the category of the taluka:
[?]35 lakhs per annum for Category I talukas. [?]30 lakhs per annum for Category II talukas. [?]25 lakhs per annum for Category III talukas and municipal corporation areas.
Can a service sector enterprise apply for this subsidy?
No, this scheme is specifically designed for enterprises in the manufacturing sector.
Are all term loans eligible for the interest subsidy?
No, only term loans sanctioned by RBI-regulated banks and financial institutions are eligible. Loans from Non-Banking Financial Companies (NBFCs) are not covered under this scheme.
Can an enterprise avail both state and central government interest subsidies?
Yes, an enterprise can avail of both state and central government subsidies, but the total subsidy received from both sources cannot exceed the total interest paid to the bank or financial institution.
Are existing businesses eligible to apply for the subsidy?
Yes, existing businesses can apply, particularly if they are investing in expansion, diversification, forward or backward integration, or installing renewable energy solutions.
Does the scheme provide any additional benefits for specific entrepreneurs?
Yes, the scheme offers an additional 1% interest subsidy for women entrepreneurs, differently-abled entrepreneurs, registered startups, and young entrepreneurs below the age of 35 years.
Will an enterprise continue to receive the subsidy if it defaults on loan repayments?
No, if an enterprise defaults on interest or loan repayments, the subsidy will not be provided for the default period.
What happens if an enterprise ceases operations before completing seven years?
If an enterprise discontinues production within seven years, the subsidy amount disbursed will be recovered as arrears of land revenue.
Is it mandatory for an enterprise to comply with pollution control regulations?
Yes, all enterprises must adhere to the pollution control norms prescribed by the relevant authority, such as the Gujarat Pollution Control Board (GPCB) or other competent bodies.
Can an enterprise claim the subsidy for installing a solar power plant?
Yes, an enterprise installing a solar power plant or other renewable energy systems for captive consumption is eligible for the interest subsidy. However, this incentive is available only once.
Ready to apply?
Visit the official government portal to apply for this scheme.
Apply on myScheme.gov.inDocuments Required
- Printed application form with declaration (signed by authorised person with stamp)
- Copy of acknowledgment of Udyog Aadhaar / Udyam registration
- Term loan sanction letter
- CA certificate for fixed capital investment
- Bank statement / repayment schedule