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Business & Entrepreneurship

Scheme for Assistance to Micro, Small and Medium Enterprises (MSME): Assistance for Interest Subsidy (Manufacturing Sector)

The scheme "Scheme for Assistance to Micro, Small and Medium Enterprises (MSME)" launched by the Industries and Mines Department aims to position Gujarat as a global business hub, promoting sustainable manufacturing, MSME growth, and export competitiveness.

Authority

State/ UT

Region

Gujarat

Status

Verified 2026

Updated

March 2026

What you get

Financial Assistance: | Category of Taluka Quantum of Incentive Category I7% on Term Loan with a maximum amount of ₹35,00,000/- per annum for a period of 7 yearsCategory II6% on Term Loan with a maximum amount of ₹30,00,000/- per annum for a period of 6 years Category III & Municipal Corporation Areas5% on Term Loan with a maximum amount of ₹25,00,000/- per annum for a period of 5 years

Who can apply

The firm must be a Micro/Small/Medium enterprise.; The enterprise must be in the manufacturing sector.; The term loan must be sanctioned by a recognized Bank/Financial Institution (excluding NBFCs).; The enterprise must apply within one year of loan disbursement or before the commercial production starts.; The enterprise must remain operational for at least 7 years post-subsidy approval.; The enterprise must comply with pollution control measures.; Only one type of investment (Forward Integration, Backward Integration, Diversification, or Expansion) will be eligible for subsidy.

Required Paperwork

  • Aadhaar Card
  • PAN Card
  • Income Certificate
  • Residence Proof (Domicile)

Common 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.