Policy notes & long-reads from the partners.

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.