Scheme for Assistance to Micro, Small and Medium Enterprises (MSME): Assistance for Interest Subsidy (Service Sector)
8% interest subsidy up to ₹35L/year · Gujarat MSME service sector 7 years
New Gujarat MSMEs in the service sector can get an interest subsidy on term loans used to set up new machinery, equipment, and fixtures (excluding land and buildings). The subsidy rate is higher for businesses in less-developed areas, and registered startups with Udyam/MSME registration receive an additional 1% on top. Apply through the Investor Facilitation Portal (ifp.gujarat.gov.in) within one year of loan disbursement or before commercial production starts.
About This Scheme
New Gujarat MSMEs in the service sector can get an interest subsidy on term loans used to set up new machinery, equipment, and fixtures (excluding land and buildings). The subsidy rate is higher for businesses in less-developed areas, and registered startups with Udyam/MSME registration receive an additional 1% on top. Apply through the Investor Facilitation Portal (ifp.gujarat.gov.in) within one year of loan disbursement or before commercial production starts.
Full official description
The "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 (Service Sector)" provides interest subsidies on term loans for new MSMEs in the service sector. The subsidy applies to new machinery, equipment, and furniture/fixtures (excluding land and buildings).
Benefits
- Category I talukas: 8% interest subsidy, up to ₹35 lakh/year, for 7 years
- Category II talukas: 7% interest subsidy, up to ₹30 lakh/year, for 6 years
- Category III & Municipal Corporation areas: 6% interest subsidy, up to ₹25 lakh/year, for 5 years
- Registered startups get an extra 1% interest subsidy on top of the standard rate
💡 Why Startups Should Care
Service businesses — IT, consultancy, logistics, healthcare — are increasingly the backbone of Gujarat's economy, and this scheme's 8% subsidy (higher than manufacturing's 7%) reflects that priority. If you're running a service-sector MSME with a term loan, this is a straightforward way to cut financing costs.
Who Can Apply (Eligibility)
- Must be a new Micro, Small, or Medium enterprise in an eligible service sector (from government-approved Annexure A & B list)
- 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
Exclusions
- Loans sanctioned by Non-Banking Financial Institutes are not eligible
How to Apply
- Visit ifp.gujarat.gov.in/DIGIGOV/ and register as a new investor.
- Log in and select the Interest Subsidy (Service 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 for annual reimbursement.
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 (Service Sector)"?
The component "Assistance for Interest Subsidy (Service Sector)" provides interest subsidies on term loans for new MSMEs in the service sector. The subsidy applies to new machinery, equipment, and furniture/fixtures (excluding land and buildings).
Who is eligible to apply for the interest subsidy under this scheme?
Only new MSMEs in the service sector, as listed in Annexure A & B, are eligible to apply for the interest subsidy.
What is the maximum amount of interest subsidy an enterprise can receive?
The maximum interest subsidy varies by location, with the highest being [?]35,00,000/- per annum for up to 7 years.
Can an existing MSME apply for this subsidy?
Existing MSMEs are not eligible unless they invest at least 25% in expansion, diversification, or integration, with a minimum of 60% investment in plant and machinery.
Is it mandatory for an enterprise to have GST registration to qualify for the subsidy?
Yes, GST registration is a mandatory requirement for eligibility under this scheme.
Can an enterprise avail the subsidy if the loan is taken from an NBFC?
No, only loans sanctioned by banks or financial institutions following RBI guidelines are eligible for the subsidy.
What happens if an enterprise shuts down before completing 7 years of operation?
If an enterprise ceases operations before 7 years, the subsidy amount disbursed will be recovered as arrears of land revenue.
Can an enterprise avail this subsidy while also receiving a similar subsidy from the Central Government?
Yes, an enterprise can avail both subsidies, but the total subsidy amount (State + Central) cannot exceed the total interest paid on the loan.
Is it necessary for an enterprise to have a shop and establishment registration?
Yes, if the enterprise is located in a municipal area, it must obtain a shop and establishment registration.
Will the subsidy cover penalties or additional bank charges on the loan?
No, the subsidy only covers standard interest on the term loan and does not include penalties or other bank charges.
Do registered startups receive any additional benefits under this scheme?
Yes, startups with Udyam registration receive an additional 1% interest subsidy.
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