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Business & Entrepreneurship

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

The "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 I8% on Term Loan with a maximum amount of ₹35,00,000/- per annum for a period of 7 yearsCategory II7% on Term Loan with a maximum amount of ₹30,00,000/- per annum for a period of 6 years Category III & Municipal Corporation Areas6% on Term Loan with a maximum amount of ₹25,00,000/- per annum for a period of 5 years | Additional Subsidy: 1% extra interest subsidy for registered startups in the service sector with Udyam/MSME Registration.

Who can apply

The firm must be a new Micro/Small/Medium enterprise.; The enterprise must be in the service sector (listed in [Annexure A & B](https://ic.gujarat.gov.in/documents/commondoc/2020/3-GR_02092020.pdf)) are eligible. 1. The term loan must be sanctioned by a recognized Bank/Financial Institution.; 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 (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.