Capital and Interest Subsidy

MSMEs (except service enterprise)

1Name of the Scheme

Scheme for financial assistance by way of Capital Subsidy and Credit linked Interest Subsidy to Micro, Small and Medium Enterprises.
2 Operative Period
From 01/01/2015 to 31/12/2019
3 Who will be eligible?
  • The Enterprise registered as an industrial unit under MSME Development act, 2006 with respective DIC as manufacturing enterprise.
  • For setting up new enterprise during operative period of the scheme such enterprise has to commence production during the operative period.
  • For carrying out expansion or diversification by existing enterprise with investment in fixed capital more than 50% of its existing gross fixed capital investment as on date of initiation of expansion/diversification. However, such investment should be minimum 60% only in plant and machinery. Such expansion/ Diversification should have been completed and it should commence production during the operative period.
  • For carrying out Modernization of existing unit with investment in plant –machinery and equipment by more than 25% of its existing gross fixed capital investment, such modernization should be carried out by way of adopting new technology/ production process and/or improving quality of products.
  • Only one expansion/diversification and one modernization during operative period is eligible to new unit set up during operative period of the scheme. Similarly one expansion/ Diversification and one Modernization during operative period shall be eligible to existing enterprises as on 1st January 2015.
  • Old & second hand machinery will not be eligible for assistance.
4 Assistance Available
4.1 Capital Investment subsidy for Manufacturing Enterprises:-
  • Capital Investment subsidy will be eligible only on Loan Amount disbursed by the Bank/Institution.
  • In Municipal Corporation Areas: Subsidy @ 10% of term loan amount disbursed by the bank/ Financial Institution with maximum amount of Rs.15 lakhs
  • Area Outside Municipal Corporation limit: Subsidy @ 15% of term loan amount disbursed by the bank/ Financial Institution maximum amount of Rs.25 lakhs.
4.2 Interest subsidy for Manufacturing Enterprise:-
  • Enterprise which has obtained first disbursement during the operative period of the scheme will eligible for the assistance.
  • Interest Subsidy will be reimbursed after payment to the Bank/Institution
Area Rate of Interest subsidy Maximum limit No. of Years
Municipal Corporations limit 5% on Outstanding term loan Rs. 25 lakhs per annum 5 years
Other areas outside Municipal Corporations limit 7% on Outstanding term loan Rs. 30 lakhs per annum 5 years
  • 1% additional interest subsidy, if enterprise is set up with required equity contribution for the project @ 100% by youth/s having age less than 35 years as on the date of sanction of the term loan
  • 1% additional interest subsidy, if enterprise is set up by with required equity contribution for the project @100% by SC/ST/Physically Challenged and Woman Entrepreneurs.
  • In all maximum rate of interest subsidy shall not exceed 7% in municipal corporation areas and 9% in other areas.
5 Conditions for the Capital Investment subsidy
  • Enterprise which has obtained first disbursement during the operative period of the scheme will eligible for the assistance.
  • In case term loan is sanctioned after one year from the date of commencement of commercial production, such enterprise will not eligible for subsidy under the scheme.
  • The Unit shall have to continue production at least for 5 years from the date of commencement of commercial production, and if, it fails to do so than subsidy already been disbursed will be recovered as land revenue arrears.
  • Total quantum of Capital Subsidy (State + Central) in any case shall not exceed the total loan amount disbursed by the bank/Financial Institutes.
6 Conditions for the Interest subsidy
  • Enterprise shall have option for date of availment of interest subsidy either from the date of first disbursement of the loan or from the date of commencement of commercial production. This opted date will be final and period of 5 year will start from that date.
  • The interest subsidy will be reimbursed to the enterprise who pays regular installments and interest there of to the financial institution. If the enterprise becomes defaulter for any period, it will not be eligible for reimbursement of interest subsidy for that default period.
  • In case term loan is sanctioned after one year from the date of commencement of commercial production, such enterprise will not eligible for Interest subsidy under the scheme.
  • Total quantum of Interest Subsidy (State + Central) in any case shall not exceed the total loan amount disbursed by the bank/Financial Institutes
7 Other Conditions for Capital Investment / Interest Subsidy
  • The enterprise has to apply to concerned DIC in prescribed format with documents as specified in check list.
  • The application should be submitted within one year from the date of first disbursement of term loan or from the date of commencement of commercial production whichever is later.
  • First commercial sale bill will be the date of commencement of commercial production.
  • The enterprise shall have to obtain NOC from Municipal Corporation for doing the business, if enterprise located in the Municipal Corporation area.
  • Subsidy will be reimbursed only after the commencement of commercial production of the enterprise.
  • For the purpose of assistance under this resolution, the investment made in Gujarat shall be clubbed to decide the status of MSME.
  • The enterprise shall have to file information about annual production, sales, power consumptions and such other details as may be called for by DIC.(for each year ended on 31st March regularly).
  • The enterprise will have to employ at least 85% of the total employment and 60% of supervisory and managerial employment from local persons.
  • The enterprise has to give undertaking on his letter head singed by authorized signature to confirm that all Government dues are paid as on date.
  • Enterprise will have to observe pollution control measures as prescribe by GPCB or other competent authority.