Policy notes & long-reads from the partners.

The capital subsidy is the anchor benefit. It is a percentage of Eligible Fixed Capital Investment (EFCI), and the rate turns on the size of the enterprise, the sector and the category of the taluka.

Micro, Small and Medium in the General sector: 35% in Category-A and 25% in Category-B, with an overall ceiling of 45% / 35%. Micro receives it as a lump sum in Year 1; Small and Medium in equal instalments over five years. MSME in a Selected Thrust sector: 35% / 30%, ceiling 50% / 45%.

Large - General: 15% / 10% over ten years, ceiling 20% / 15%. Large - Thrust: 25% / 15% over eight years, ceiling 35% / 25%. Mega - Thrust: 25% / 20% over ten years, ceiling 35% / 30%. Ultra-Mega - Thrust: 30% / 25% over twelve years, ceiling 40% / 35%. Large, Mega or Ultra-Mega in a Selected Thrust sector: 35% / 30%, ceiling 50% / 45%.

The operative period is 01.06.2026 to 31.05.2031, and commercial production must start within it. Assets acquired and paid from 01.01.2026 count towards EFCI. Capital, interest and power subsidies may be combined, but their total is limited by the overall ceiling - the components are not additive.

Under the earlier Aatmanirbhar Gujarat scheme (2022) the capital subsidy was for Micro enterprises only, computed as 25% / 20% / 10% of the disbursed term loan and capped at Rs. 35 / 30 / 10 lakh. No bank loan meant no capital subsidy.

Under the MSME Government Resolution dated 25.09.2026 the subsidy runs to Micro, Small and Medium, is computed on EFCI at 35% (Category-A) or 25% (Category-B), has no rupee cap - only the overall ceiling of 45% / 35% of EFCI - and own funds count. Self-financed projects qualify.

MSME GR para 5.1(a) bases the subsidy on eligible fixed capital investment with no term-loan condition. Para 2.3 provides that for a self-finance project, a Statutory Auditor, Chartered Accountant, Chartered Engineer or Company Secretary certificate, or the asset verification report of the MSME Commissionerate or DIC, whichever is lower, is considered. Para 5.2(b) keeps the interest subsidy tied to a term loan actually disbursed for EFCI.

The Policy booklet's MSME table is headed 'Capital Subsidy on Term Loan'. The operative GR carries no such condition, and where the Policy and a GR differ, the GR prevails.

Illustration - a Rs. 10 Cr Rajkot engineering unit that is entirely self-financed: nil under the previous scheme, against a capital subsidy of Rs. 1.95 Cr and a total benefit of Rs. 2.73 Cr under VGIP 2026.

Eligible applicants: a company, partnership firm including LLP, society, trust, industrial co-operative society or proprietary concern, engaged in manufacturing, production, processing or job work of articles, setting up a new unit or expanding or diversifying an existing one.

The Date of Commercial Production - the date of the first commercial sale bill - must fall between 01.06.2026 and 31.05.2031. Registration through Udyam, IEM, Letter of Intent, Letter of Approval or MCA21 filing is required; Large, Mega and Ultra-Mega units need an IEM or Government of India licence and must register with the Industries Commissionerate before DoCP.

Not eligible: units with DoCP before 01.06.2026, investment for renovation, rehabilitation, rationalisation or modernisation, the same GFCI already incentivised under another State scheme, and service or trading activities.

Continuing conditions: at least 85% of all employees and 60% of managerial and supervisory staff domiciled in Gujarat, separately identifiable fixed investment and books for the project, and continuous production through the incentive period.

Expansion requires a rise in gross fixed capital investment excluding land of at least 50%, with at least 60% of it in plant and machinery, an increase in installed capacity of at least 50%, prior capacity utilisation of at least 75% in one of the preceding three years, and the same premises. Diversification requires an increase of at least 25% for Micro and Small and 50% for Medium and above, with 60% in plant and machinery.

Micro: investment in plant and machinery up to Rs. 2.5 Cr. Small: Rs. 2.5-25 Cr. Medium: Rs. 25-125 Cr. The MSME class is tested on plant and machinery across all units of the enterprise in India, not only the new project - a small new unit of a medium-sized group is Medium.

Large: GFCI in plant and machinery above Rs. 125 Cr, any sector. Mega: GFCI of Rs. 1,000 Cr or more, Thrust sectors only, with at least 250 direct jobs plus 50 for every additional Rs. 200 Cr. Ultra-Mega: GFCI of Rs. 10,000 Cr or more, Thrust sectors only, with at least 3,000 direct jobs plus 500 for every additional Rs. 5,000 Cr.

Worked: GFCI of Rs. 2,000 Cr is five blocks of Rs. 200 Cr above the threshold, so 250 + 250 = 500 direct jobs are needed. Direct employment includes payroll staff and contract staff engaged through agencies registered with the Labour and Employment Department.

Missing the Mega test is not fatal. Investment above Rs. 1,000 Cr that misses the employment test, or falls outside a Thrust sector, remains eligible as Large - General, Large - Thrust or Large - Selected Thrust, with the rates, ceiling and benefit period of a Large unit.

Extended investment period after DoCP: 12 months for MSMEs with plant and machinery up to Rs. 50 Cr and 18 months for Rs. 50-125 Cr; 18 to 48 months for Large and above, by GFCI slab.

All talukas are notified as Category-A (130 talukas) or Category-B (138). Category-A always carries the higher rate, so the taluka of the site is a rate decision, not a formality. Where a project lies in more than one taluka, the taluka holding the largest share of the project's land area decides the category.

What changes with the taluka: power tariff subsidy of Rs. 2 against Rs. 1 a unit; MSME General capital subsidy 35% against 25%; MSME annual ceiling for Small and Medium 9% against 7% a year; Large capital subsidy 15% / 25% against 10% / 15%.

In the Rajkot district, Vinchhiya and Jamkandorna are Category-A, while Rajkot, Gondal, Lodhika, Kotda Sangani, Jetpur, Dhoraji, Upleta, Jasdan and Paddhari are Category-B. In Morbi, Maliya is Category-A while Morbi, Wankaner, Tankara and Halvad are Category-B.

On EFCI of Rs. 10 Cr in a General sector, moving from a Category-B to a Category-A taluka lifts the ceiling from Rs. 3.5 Cr to Rs. 4.5 Cr and doubles the power subsidy rate.

Sixteen Thrust sectors decide the higher rates for Large units and above: Green Energy Ecosystem; Mobility; Capital Equipment; Metals and Minerals; Textiles and Apparels; Sustainability; Agro Processing; Chemicals; Healthcare; Ancillary to Semiconductor; Nuclear Power Equipment; Vehicle Scrapping Facilities; E-Waste Recycling Units; Textile Waste Recycling Units; Shipping Containers; and Heavy Earth Moving Equipment.

The five Selected Thrust sectors are sports goods and equipment, toys, footwear, robots and drones, plus any sector notified later. These carry the richest ceilings in the policy at 50% for Category-A and 45% for Category-B.

Key point for MSMEs: only the five Selected Thrust sectors attract higher rates. An MSME making chemicals, ceramics or auto parts is on General rates, even though those are Thrust sectors for Large units.

Chemical and pharmaceutical units must have a captive effluent treatment plant or access to a CETP - this is a condition precedent. Disputes about sub-sectors are decided by the Committee on the basis of the HSN code and expert opinion.

The sequence is: classify the enterprise, locate the taluka category, fix the sector track, compute EFCI, then apply rates and caps.

Capital subsidy of 10% to 35% of EFCI, paid only after commercial production starts, as a Year 1 lump sum for Micro and in equal annual instalments for all others; no bank loan is needed.

Interest subsidy of 7% a year on the term loan actually disbursed for EFCI, capped at 10% to 25% of EFCI. The unit must bear at least 2% itself. No subsidy applies for default periods, penal interest is excluded, and NBFC loans do not qualify. An additional 1% is available for women entrepreneurs, registered start-ups and first-generation entrepreneurs, within the overall ceiling.

Power tariff subsidy of Rs. 1 to Rs. 2 a unit on DISCOM power or renewable power through open access, capped at 10% to 25% of EFCI. Power from the unit's own captive plant does not qualify. For an expansion, only additional consumption through a sub-meter counts, and bills must be in the unit's name.

Layer 1 is the component cap, each component limited to its own percentage of EFCI. Layer 2 is the annual ceiling - a percentage of EFCI, plus an absolute rupee cap for Large units and above; amounts cut by the annual ceiling are not carried forward. Layer 3 is the overall ceiling of 15% to 50% of EFCI, with State and Central incentives together not exceeding 100% of EFCI.

Because the sum of the component caps always exceeds the overall ceiling, the components are not additive. Where the annual ceiling multiplied by the years equals the overall ceiling, every year's cap must be used in full - a year with low claims is lost for good. Plan the loan drawdown and power connection so claims start in the first year.

MSME, five-year benefit period from DoCP. Micro - General: capital 35% (A) or 25% (B) in Year 1, interest 7% capped at 10% of EFCI, power Rs. 2 / Rs. 1 capped at 25%, annual ceiling 37% / 27% in Year 1 then 2%, overall 45% / 35%. Small and Medium - General: the same rates spread over five years, annual ceiling 9% (A) or 7% (B).

MSME - Selected Thrust: capital 35% (A) or 30% (B), interest 7% capped at 20%, power capped at 20%, annual ceiling 10% (A) or 9% (B), overall 50% / 45%.

Large - General: 15% / 10% over ten years, annual 2.0% / 1.5% with an absolute cap of Rs. 150 Cr a year, overall 20% / 15%. Large - Thrust: 25% / 15% over eight years, annual 4.5% / 3.5% with a Rs. 300 Cr cap, overall 35% / 25%.

Mega - Thrust: 25% / 20% over ten years, annual 3.5% / 3.0% with a Rs. 750 Cr cap, overall 35% / 30%. Ultra-Mega - Thrust: 30% / 25% over twelve years, annual 3.5% / 3.0% with a Rs. 1,250 Cr cap, overall 40% / 35%.

Selected Thrust for Large, Mega and Ultra-Mega: capital 35% (A) or 30% (B) over 8, 10 or 12 years, interest and power each capped at 20%, overall ceiling 50% / 45%. For Mega and Ultra-Mega projects in Thrust and Selected Thrust sectors, a High-Power Committee chaired by the Chief Minister may sanction a customised package.

GFCI checks eligibility; EFCI calculates the subsidy. Large status means GFCI in plant and machinery above Rs. 125 Cr; Mega needs GFCI of Rs. 1,000 Cr and Ultra-Mega Rs. 10,000 Cr, with the job tests. The investment-period slab is set by plant and machinery for MSMEs and by GFCI for Large and above.

Every rate and ceiling is a percentage of EFCI: the capital subsidy is the applicable rate multiplied by EFCI, the interest and power caps are percentages of EFCI, and the annual and overall ceilings are percentages of EFCI. The Provisional Eligibility Certificate is issued for up to 40% of EFCI at DoCP.

Final eligibility is the lowest of the GFCI actually made, the cost certified in the bank or FI Project Completion Certificate, and the asset verification report of the DIC, MSME Commissionerate or Industries Commissionerate. For a self-financed project, the Statutory Auditor, CA, CE or CS certificate is compared with asset verification and the lower figure taken.

MSME and Large differ on three points: the DG-set cap of 5 MW against 25 MW; project infrastructure at a flat 50% against 100% inside and 20% outside the premises; and GFCI excluding land for MSMEs but including it for Large units. EFCI excludes land in both.

The flow is: total project cost, less non-eligible costs, then apply the specific limits, giving EFCI - counting only assets acquired and paid between 01.01.2026 and the end of the extended investment period. In the worked Rs. 10 Cr example, only 78% of the project cost qualifies as EFCI, and the benefit of 35% of EFCI is about 27% of project cost.

Eligible at actual cost: new factory and process buildings, including buildings for plant and machinery, R&D, in-house testing and storage; other construction such as compound wall, gates, security cabins, internal roads, borewell, water tank and internal water and gas pipelines; new plant and machinery, utilities, dies and moulds; new imported machinery at capitalised cost; transport, foundation, erection, installation and electrification including sub-station and transformer; captive power plant within the premises; pollution control, ETP and hazardous-waste facilities; desalination and water purification; in-premises vehicles and material handling; and constructed GIDC sheds.

Eligible with a limit: the administrative building at the lower of actual cost and the R&B Schedule of Rates; an acquired new and unused building on the same basis; technology, design, drawings and patents up to 10% of EFCI in plant and machinery; a DG set up to 50% of connected load and 5 MW for MSMEs or 25 MW for Large; project infrastructure - worker housing, dormitory, hospital, school, creche, feeder road, dedicated pipelines, telecom cabling, training centre, buses for workers and the non-refundable DISCOM deposit - at 50% of actual for MSMEs, and at 100% within the premises or 20% outside for Large units; and a building on leased or rented land where the deed covers the incentive period.

Not eligible: land and land development; working capital and margin money; preliminary and pre-operative expenses; capitalised interest; goodwill and royalty; second-hand plant and machinery, whether indigenous or imported; rented or leased assets and buildings except GIDC sheds; old buildings, repairs and refurbishment; non-captive or independent power plants; consultancy, design-drawing, supervision and inspection fees without technology acquisition; road vehicles and cars; software, furniture and office equipment; existing common utilities; reimbursed stamp duty and registration; and any asset not paid within the eligible investment period.

A cost is not eligible just because it is capitalised in the books. Tag every line of the fixed-asset register green, amber or red, with the vendor, invoice date and payment date, from the first day of the project - it makes the CA certificate, the bank's completion certificate and the asset verification agree.

Example 4: a Rs. 10 Cr auto-parts and pump-components machining unit, a Small enterprise at Rajkot taluka (Category-B) in the General sector, with a term loan of 60% of EFCI at 9.5% and 20 lakh units a year. Illustrative only - the actual benefit depends on eligibility, EFCI, utilisation and the applicable GR conditions.

From cost to EFCI: land and development of Rs. 0.80 Cr excluded; factory building Rs. 1.45 Cr at actual; administrative building Rs. 0.40 Cr taken at the SOR value of Rs. 0.32 Cr; other construction Rs. 0.30 Cr; new indigenous plant and machinery Rs. 3.05 Cr; new imported plant Rs. 1.20 Cr; erection and electrification Rs. 0.35 Cr; utilities Rs. 0.25 Cr; ETP Rs. 0.15 Cr; DG set Rs. 0.12 Cr; a second-hand imported machine of Rs. 0.30 Cr excluded; know-how of Rs. 0.60 Cr capped at Rs. 0.51 Cr; consultancy of Rs. 0.08 Cr excluded; feeder road and DISCOM deposit of Rs. 0.20 Cr taken at 50%, that is Rs. 0.10 Cr; furniture, staff car, pre-operative expenses, capitalised interest and working-capital margin all excluded. EFCI is Rs. 7.80 Cr, or 78% of cost.

Component claims: capital subsidy 25% of Rs. 7.80 Cr is Rs. 1.95 Cr; interest subsidy on the Rs. 4.68 Cr loan is Rs. 0.78 Cr at the 10% cap; power subsidy of Rs. 1 for 20 lakh units over five years is Rs. 1.00 Cr. Gross claims of Rs. 3.73 Cr exceed the overall ceiling of 35%, that is Rs. 2.73 Cr.

Year by year, within the annual ceiling of 7% of EFCI (Rs. 0.546 Cr), the capital instalment of Rs. 0.390 Cr is applied first, then interest, then power - the cap is reached in each of the five years, totalling Rs. 2.73 Cr. The excess of Rs. 1.00 Cr is not payable and is not carried forward. The benefit is 35% of EFCI, about 27.3% of project cost.

One Category-A and one Category-B example for each enterprise class, using Rajkot and Morbi engineering and ceramic units. Figures are undiscounted totals over the benefit period and are illustrative.

1. Precision parts, Micro General, Jamkandorna (A): cost Rs. 2.00 Cr, EFCI Rs. 1.39 Cr, ceiling 45%, benefit Rs. 0.63 Cr (31% of cost). 2. Frit and glaze, Micro General, Morbi (B): Rs. 2.50 Cr, EFCI Rs. 1.84 Cr, 35%, Rs. 0.64 Cr (26%).

3. Wall tiles, Small General, Maliya (A): Rs. 15.00 Cr, EFCI Rs. 12.40 Cr, 45%, Rs. 5.58 Cr (37%). 4. Auto and pump parts, Small General, Rajkot (B): Rs. 10.00 Cr, EFCI Rs. 7.80 Cr, 35%, Rs. 2.73 Cr (27%).

5. Forging and CNC, Medium General, Vinchhiya (A): Rs. 60.00 Cr, EFCI Rs. 49.00 Cr, 45%, Rs. 22.05 Cr (37%). 6. Vitrified tiles, Medium General, Morbi (B): Rs. 100.0 Cr with plant and machinery of Rs. 64.5 Cr, EFCI Rs. 83.30 Cr, 35%, Rs. 29.15 Cr (29%).

7. Porcelain slabs, Large Thrust, Maliya (A): Rs. 300.0 Cr, EFCI Rs. 269.9 Cr, 35%, Rs. 94.46 Cr (31%). 8. CNC machine tools, Large Thrust, Lodhika (B): Rs. 250.0 Cr, EFCI Rs. 220.8 Cr, 25%, Rs. 55.20 Cr (22%).

9. Tiles and sanitaryware, Mega Thrust, Maliya (A): Rs. 1,500 Cr, EFCI Rs. 1,324 Cr, 35%, Rs. 463.4 Cr (31%). 10. Earth-moving equipment, Mega Thrust, Rajkot (B): Rs. 1,200 Cr, EFCI Rs. 1,062 Cr, 30%, Rs. 318.5 Cr (27%).

11. Ceramic and solar glass, Ultra-Mega Thrust, Maliya (A): Rs. 12,000 Cr, EFCI Rs. 10,977 Cr, 40%, Rs. 4,391 Cr (37%). 12. EV and auto components, Ultra-Mega Thrust, Kotda Sangani (B): Rs. 11,000 Cr, EFCI Rs. 10,038 Cr, 35%, Rs. 3,513 Cr (32%).

Common assumptions: a term loan of 60% of EFCI at 9.5% for MSMEs and 9.25% / 9.0% / 8.75% for larger projects; equal annual principal repayment over 7 to 12 years; all assets acquired and paid within the eligible period; power drawn from the DISCOM. In every example the gross claims exceed the overall ceiling, so the ceiling decides the benefit.

EPF reimbursement of 100% of the employer's statutory contribution for new employees without a UAN before joining, up to Rs. 1,800 a month for male, Rs. 2,500 for female and Rs. 3,000 for specially-abled employees, or 12% of basic pay plus DA, whichever is lower - five years for MSMEs, eight years for Large Thrust and ten years for other Large, Mega and Ultra-Mega units, claimed quarterly.

Electricity duty exemption as applicable under the Gujarat Electricity Duty Act, 1958. Stamp duty and registration on land reimbursed 100% for Ultra-Mega Thrust units and all Selected Thrust units, claimed within three months of DoCP for Large and above and six months for MSMEs; it is not part of EFCI.

MSME support schemes: ERP systems at 65% up to Rs. 1 lakh; quality certification and testing equipment at 50% up to Rs. 10 lakh; ZED certification at 50% up to Rs. 50,000; ICT, Industry 4.0 and AI equipment at 65% up to Rs. 5 lakh; technology acquisition at 65% up to Rs. 50 lakh; patent registration at 75% up to Rs. 25 lakh; energy or water audit at 75% up to Rs. 50,000 and recommended equipment at 25% up to Rs. 20 lakh; raising capital on an SME Exchange at 25% up to Rs. 5 lakh; the CGTMSE annual service fee at 100% for five years; power connection charges outside GIDC at 35% up to Rs. 5 lakh; and shed rent at 65%, or 75% if wholly women-owned, up to Rs. 3 lakh a year for five years. Most applications must be made within six months of the triggering event.

Selected Thrust sectors additionally receive 100% stamp duty and registration on land, intellectual property support up to Rs. 1 Cr, technology acquisition up to Rs. 1 Cr for MSMEs and Rs. 5 Cr for larger units, international certification up to Rs. 5 Cr, manpower training of Rs. 8,000 or Rs. 15,000 per employee per month for the first twelve months, and creative design studio support.

Inclusion measures: an additional 1% interest subsidy for women entrepreneurs, registered start-ups and first-generation entrepreneurs, within the overall ceiling, and rent assistance at 75% instead of 65% for a micro or small enterprise wholly owned by women. The SC/ST additional 5% announced in the Policy does not appear in the MSME GR dated 25.09.2026 and is therefore not applied in this guide.

01.01.2026: assets acquired and paid from this date count for EFCI. 01.06.2026: the schemes start and DoCP must be on or after this date. Before DoCP: Large and above must register with the Industries Commissionerate. DoCP: the date of the first commercial sale bill. 31.05.2031: the last date for DoCP under VGIP 2026.

The PEC application is due within three months of DoCP for Large and above and six months for MSMEs, and is issued for up to 40% of EFCI. The extended investment period runs 12 to 48 months from DoCP depending on the slab, and the FEC application follows within three months (Large and above) or six months (MSME) of completion or the end of the period.

Delayed filing: MSMEs up to two years late and Large units up to one year late suffer a pro-rata cut in benefit and period. Beyond that, applications are not entertained. Large units file claims every three months in the prescribed form.

A unit not in production before 01.06.2026 may opt for the previous Aatmanirbhar Gujarat scheme or this scheme. The option must be exercised within six months of the GR, is irrevocable, and is available only where commercial production starts on or before 04.10.2027.

Breach of conditions means recovery: incentives disbursed are recoverable as arrears of land revenue with interest at 18% a year from the date of first availment, and undisbursed amounts may be forfeited under the Large GR.

Treating total project cost as EFCI - exclusions typically remove 10% to 30% of cost. Including excluded costs such as second-hand machines, road vehicles, consultancy without technology, rented assets, goodwill and royalty. Ignoring prescribed limits - the SOR limit on the administrative building, technology at 10% of plant and machinery EFCI, the DG-set limits and project infrastructure at 50% or 20%.

Adding up the components as if they were cumulative. Ignoring the location category, which moves the MSME ceiling by ten points and the power subsidy from Rs. 2 to Rs. 1 a unit. Ignoring the sector classification - Thrust rates apply only to Large units and above, and MSMEs need a Selected Thrust sector.

Missing timelines: assets paid after the extended period, DoCP after 31.05.2031, or registration after DoCP for Large units are all fatal. Missing employment conditions: the Mega and Ultra-Mega job counts, the 85% / 60% domicile rule, and EPF only for new employees without an earlier UAN.

Incorrect machinery treatment - classification uses plant and machinery across all units in India, second-hand plant is not EFCI, and captive power earns no power subsidy. Assuming no loan means no capital subsidy, which is no longer correct. Misreading the interest subsidy, which is 7% a year on the term loan disbursed for EFCI, capped at 10% or 20% of EFCI over five years. Documentation and claim issues: late PEC or FEC, bills not in the unit's name, no sub-meter, NBFC loans, penal interest claimed and unpaid invoices.

Entity and registration: constitution documents, PAN and GST registration; Udyam, IEM, Letter of Intent, MCA21 filing or licences; a list of all units in India with their plant-and-machinery values; details of incentives already availed from the State and the Centre; and proof of women-entrepreneur, start-up or first-generation status where claimed.

Land and location: title, lease or rent deed covering the incentive period, or the GIDC possession letter; taluka and survey numbers with the land share if the project spans talukas; and stamp duty and registration receipts.

Project and EFCI: the project report with cost break-up and means of finance; the fixed-asset register with vendor, invoice date, payment date and a green, amber or red tag; invoices, bills of entry for imports and payment proofs; the architect or CE certificate and SOR working for the administrative building; DG-set capacity against connected load; technology agreements; project-infrastructure bills showing inside or outside the premises; the bank Project Completion Certificate or CA / CE / CS certificate; and the first commercial sale bill.

Loan, power and people: the term-loan sanction, disbursement statements, interest certificates and repayment record; electricity bills in the unit's name with sub-meter readings for an expansion; the employee register with domicile and managerial split, EPF challans and the UAN list; the GPCB consent to establish and operate; and, for an expansion, the capacity appraisal, three-year utilisation data and separate books.

Our working sequence: classification, taluka, sector and scheme-option memo in Week 1; the EFCI model and asset tagging in Weeks 2 to 3; registration, loan and power structuring before DoCP; and PEC / FEC filing with periodic claims after DoCP.

Rates, ceilings, definitions and timelines in this guide are taken from the Viksit Gujarat Industrial Policy 2026, the MSME Government Resolution dated 25.09.2026, the Large, Mega and Ultra-Mega Government Resolution dated 08.09.2026, and the taluka classification Government Resolution dated 08.09.2026. Where the Policy and a GR differ, the GR prevails.

All figures and examples are illustrative and for general guidance. The actual benefit for any project depends on its eligibility, EFCI, utilisation and the applicable GR conditions. For a unit-specific position, work with our team on a written eligibility opinion.

The policy runs from 01.06.2026 to 31.05.2031. This note is written to the two operative Government Resolutions, both dated 08.09.2026: G.R. No. IMD/WRT/e-file/9/2026/2320/I on assistance to Large, Mega and Ultra Mega industries, and G.R. No. IMD/HMR/e-file/9/2026/2211/I classifying all 268 talukas into Category-A and Category-B.

Micro, Small and Medium rates are not covered by these two Resolutions and must be read against the separate MSME Government Resolution before any figure is committed to a client.

Micro: gross fixed capital investment in plant and machinery up to Rs. 2.50 Cr. Small: above Rs. 2.50 Cr up to Rs. 25 Cr. Medium: above Rs. 25 Cr up to Rs. 125 Cr. Large (Para 1.3): above Rs. 125 Cr, with IEM filed or amended or another licence prescribed by the Government of India.

Mega (Para 1.4): total gross fixed capital investment of the project of Rs. 1,000 Cr or more, in a thrust sector, with direct employment of at least 250 plus 50 more for every additional Rs. 200 Cr of investment. Ultra Mega (Para 1.5): Rs. 10,000 Cr or more, thrust sector, direct employment of at least 3,000 plus 500 more for every additional Rs. 5,000 Cr.

Micro to Large are tested on plant and machinery aggregated across all units of the undertaking in India; Mega and Ultra Mega are tested on total project investment. Confusing the two bases is the most common costly error in a fitment note.

There are three sector tracks, not two. Beyond General and Thrust, Para 1.7 creates a Selected Thrust Sector track covering sports goods and equipment, toys, footwear, robot manufacturing and drone manufacturing, plus any sector the Para 12(b) Committee recommends and Government approves. Selected Thrust carries the richest ceilings in the policy - 50% for Category-A and 45% for Category-B - and unlocks six further heads of support under Para 5.

The employment escalator is not optional. A Rs. 1,400 Cr Mega project needs 350 direct employees, not 250; a Rs. 20,000 Cr Ultra Mega project needs 4,000. Direct employment includes both direct payroll and contractual employees engaged through agencies registered with the Labour and Employment Department. If the criterion is missed, Paras 4B(v), 4C(v) and 4F(v) push the project down to the corresponding Large table - the project is not disqualified, but it loses tenure and the wider interest and power caps.

Every rate and every ceiling in the policy is a percentage of EFCI, not of GFCI and not of plant and machinery. Getting the EFCI build-up right is where the advisory value sits.

GFCI (Para 1.14) covers land, building, plant and machinery, utilities, tools and equipment and other fixed assets required to manufacture the end product. Only assets acquired and paid for during the eligible investment period count. GFCI sets Mega and Ultra Mega eligibility and the extended investment period - it is not the subsidy base.

EFCI (Para 1.15) is the subsidy base and has four heads only. (A) New building - newly constructed, or acquired new and unused, including the administrative building, costed at actual cost or the R&B Department Schedule of Rates for the year, whichever is lower; buildings for installing plant and machinery, R&D, in-house testing and storage are taken at actual expenditure; leased or rented buildings are excluded, except GIDC sheds. (B) Other construction - compound wall and gates, security cabins, internal roads, bore well, water tank and internal water and gas pipelines, at actual cost.

(C) Plant and machinery - new plant and machinery, utilities, dies and moulds, including transportation, foundation, erection, installation and electrification capitalised under the head, sub-station and transformer, captive power generation within the premises, vehicles and material handling equipment used only within the premises, sea water desalination or water purification and pollution control plant. Technology, design, drawings and patents are capped at 10% of the EFCI in plant and machinery. DG sets qualify only up to 50% of connected electric load or 25 MW, whichever is less.

(D) Project related infrastructure - residential colony or dormitory, hospital, school, sports facilities, rest rooms, day care or creche, feeder road to the nearest approach road, dedicated water, gas or raw material pipelines, non-refundable deposit to the electricity company for transmission from the nearest sub-station, digitisation of the communication network and telecom cabling, a bank or post office building provided free of charge at SOR, a training and skill development centre, and worker transport from nearby villages or towns. Counted at 100% inside the project premises, but at only 20% of actual expenditure if located outside.

Para 1.16 lists eleven exclusions: land and land development cost, working capital, goodwill, royalty, preliminary and pre-operative expenses, second hand or leased or rented plant and machinery whether indigenous or imported, capitalised interest, power generation other than captive use within the premises, rented or leased building except GIDC, design drawing or consultancy or supervision or third party inspection fees where there is no technology acquisition, and independent power plants including renewable energy. Land is the single largest exclusion and the one clients most often assume is covered.

All 268 talukas are now notified as Category-A (less developed) or Category-B (relatively developed). Category-A always carries the higher rate, so the taluka of the site is a rate decision, not a formality.

New unit, expansion and diversification are defined separately (Paras 1.10 onwards) and each has its own qualifying tests. Renovation is not expansion: Para 18(4) expressly excludes investment for renovation, modernisation, rehabilitation or rationalisation, so a capacity-neutral machine replacement will not qualify however large the spend.

The overall ceiling is expressed as a percentage of EFCI and differs by size, sector track and taluka category. Selected Thrust Large units sit at the top of the ladder at 50% for Category-A and 45% for Category-B, with an eight year tenure. General sector Large units sit near the bottom at around 20% for Category-A, with a ten year tenure.

Mega thrust units run at roughly 35% of EFCI over ten years and Ultra Mega thrust units carry the longest tenure at twelve years. Small enterprises are illustrated at 45% of EFCI for Category-A over a five year tenure, and Medium enterprises at a comparable band with the interest cap set at 10% and the power tariff cap at 25%.

Within each track the benefit is split across capital subsidy, interest subsidy at 7% on the term loan, and power tariff support at Rs. 1 or Rs. 2 per unit depending on category. The unit may take any one component or any combination, but the components are not additive beyond the overall ceiling. Where a client's term loan is small the interest cap is unreachable and the mix should be weighted to capital and power.

Each track also carries an annual ceiling expressed as a percentage of EFCI per year, together with an absolute rupee cap per year. In practice the annual draw, not the headline percentage, decides how quickly a client actually receives the money.

For every track there is an EFCI level above which the absolute cap starts to bite. Below that level the absolute cap is irrelevant; above it, the year-by-year draw must be modelled before any number is given to a client.

Para 5 provides six further heads of assistance to Large, Mega and Ultra Mega undertakings in the Selected Thrust Sectors only. These sit over and above the capital, interest and power ceiling.

Capital subsidy (Para 6A) is claimable only after the Provisional or Final Eligibility Certificate and is disbursed only after commencement of commercial production, in equal annual instalments over the prescribed tenure from the date of commencement of production.

Interest subsidy (Para 6B) is computed at 7% on the term loan within the applicable cap, and power tariff support is paid per unit consumed within its own cap.

Each stage carries its own deadline and its own consequence for delay, so the calendar should be built backwards from the intended date of commercial production. The Final Eligibility Certificate is sanctioned by a Committee chaired by the Industries Commissioner for investment up to Rs. 1,000 Cr, and by higher authority above that threshold (Para 12).

Standing conditions attach to the certificate and continue after disbursement, so the compliance obligation does not end when the first instalment is received.

Settled by the Resolutions dated 08.09.2026: the Category-A and Category-B taluka list for all 268 talukas, and the EFCI inclusion and exclusion list in full.

Still open: treatment of R&D centres and private industrial parks referenced in the policy but not in this Resolution, the Project THRIVE relocation package terms, and the SC/ST, Divyang and women entrepreneur top-ups which appear in the policy summary but not in this Resolution.

Test size on the correct investment base, cost EFCI head by head, confirm the taluka category from the notified list, verify the employment escalator for Mega and Ultra Mega, and model the annual ceiling before quoting a total benefit.

Rate tables, ceilings, annual caps, definitions and timelines in this note are taken from Government Resolution No. IMD/WRT/e-file/9/2026/2320/I dated 08.09.2026. For a unit-specific position, work with our team on a written eligibility opinion.