Gujarat MSME scheme GR issued: what Viksit Gujarat Industrial Policy 2026 now pays micro, small and medium units

On 25 September 2026 the Industries and Mines Department, Government of Gujarat, issued Resolution No. IMD/WRT/e-file/9/2026/2630/CH: the Scheme for assistance to MSMEs under Viksit Gujarat Industrial Policy 2026. It comes seventeen days after the Large, Mega and Ultra Mega scheme and the taluka classification GRs of 8 September, carries the concurrence of the Finance Department, and is operative from 1 June 2026 to 31 May 2031. It is the document every micro, small and medium manufacturer in Gujarat has been waiting for since the policy was announced on 15 June, and it settles the three questions the policy document left open: whether the capital subsidy needs a term loan, what per-year caps apply, and how much each support scheme actually pays.

Short version: the capital subsidy is on eligible fixed capital investment and self-financed projects are expressly eligible; small and medium units are paid at no more than 9% of that investment a year in Category A talukas and 7% in Category B, with nothing carried forward; and every support line from ERP to patents now has a rupee cap. The headline 45% is real, but it arrives over five years and only if you plan for the annual ceiling. We have read all 32 pages, hosted a searchable copy, and rebuilt our MSME page and estimator on the GR. This article is the decode.

Want the number for your unit first? The estimator applies the GR slabs, component caps, per-year ceilings and EPF to your inputs, with the taluka finder built in. Open the MSME page and estimator

What the GR pays

• Capital subsidy: 35% of eligible fixed capital investment (EFCI) in Category A talukas, 25% in Category B. Micro units receive it in year one; small and medium units in five annual instalments (paragraph 4.2).
• Interest subsidy: 7% a year on the term loan for five years, up to 10% of EFCI. An extra 1% for women entrepreneurs, registered manufacturing startups and first-generation entrepreneurs, within the overall ceiling (paragraph 4.2 b).
• Power tariff: ₹2 per unit in Category A and ₹1 in Category B for five years, up to 25% of EFCI. DISCOM supply or renewable power through open access; captive power excluded (paragraph 5.3).
• Overall ceiling: 45% of EFCI in Category A and 35% in Category B over five years, for the three components together.
• Selected thrust sectors (sports goods, toys, footwear, robots, drones): 35% or 30% capital subsidy, interest and power caps of 20% each, ceilings of 50% and 45%, plus 100% stamp duty reimbursement and six further lines (paragraphs 4.3 and 19).
• On top: EPF reimbursement of 100% of the employer contribution for five years, capped per employee, and full electricity duty exemption (paragraphs 7 and 18).

Sector	Taluka	Capital subsidy	Interest subsidy	Power tariff	Ceiling, 5 years
General	Category A	35% of EFCI	7% for 5 years, up to 10% of EFCI	₹2 per unit, up to 25% of EFCI	45%
General	Category B	25% of EFCI	7% for 5 years, up to 10% of EFCI	₹1 per unit, up to 25% of EFCI	35%
Selected thrust	Category A	35% of EFCI	7% for 5 years, up to 20% of EFCI	₹2 per unit, up to 20% of EFCI	50%
Selected thrust	Category B	30% of EFCI	7% for 5 years, up to 20% of EFCI	₹1 per unit, up to 20% of EFCI	45%

The Category A and B split is the one notified on 8 September 2026: 130 talukas in A, 138 in B, and the GR adds a rule the taluka GR did not have. If a project straddles two talukas, the taluka holding the largest share of its land area decides the category (paragraph 1.14).

All 268 talukas, district by district, searchable. Check your taluka category

The per-year ceiling is the number that matters

The policy document quoted 45% and stopped. The GR pays it at a fixed pace. For small and medium enterprises the three components together cannot exceed 9% of EFCI in any year in Category A, or 7% in Category B (paragraph 4.2 c). For micro enterprises the year-one ceiling is 37% or 27%, and years two to five are capped at 2% each (paragraph 4.2 d). Paragraph 4.2 e closes the door: incentive lost to the per-year ceiling is not carried forward.

Per-year ceiling, % of EFCI	General, Cat A	General, Cat B	Selected thrust, Cat A	Selected thrust, Cat B
Small and medium, each year	9%	7%	10%	9%
Micro, year 1	37%	27%	38%	33%
Micro, each of years 2 to 5	2%	2%	3%	3%

Work the arithmetic for a small unit in Category A. The capital subsidy alone is 35% of EFCI over five years, which is 7% a year. The annual ceiling is 9%. So interest subsidy and power tariff together have 2% of EFCI a year to fit into, whatever the 10% and 25% component caps say. A unit with a ₹8 crore loan at 10% and 20 lakh units of annual consumption on a ₹12 crore EFCI would earn ₹96 lakh of interest and power in year one; the ceiling lets it keep ₹24 lakh. Over five years it still reaches the full 45%, but ₹2.85 crore of computed incentive is forfeited along the way. In Category B the room is the same 2% a year against a 7% ceiling.

Rule of thumb for small and medium units: the capital subsidy fills 7% of the 9% annual room in Category A and 5% of the 7% in Category B. Size the term loan for the interest subsidy that fits in the remaining 2% a year, not for the 10% component cap. Micro units are different: the whole capital subsidy lands in year one, and years two to five are worth 2% of EFCI each, so a micro unit with a long loan tenure leaves most of its interest subsidy on the table.

Self-financed projects are in

The policy document headed the MSME capital column "Capital Subsidy on Term Loan", and under the 2020 scheme the subsidy was a percentage of the loan. The GR drops that reading. Paragraph 5.1 grants the capital subsidy on eligible fixed capital investment as defined in the resolution, disbursed after commercial production. Paragraph 2.3 then says in terms that for a self-financed project eligibility is decided on a Statutory Auditor, Chartered Accountant, Chartered Engineer or Company Secretary certificate or an asset verification report from the MSME Commissionerate or DIC, whichever is lower. A promoter funding the plant from equity gets the same 35% or 25%.

The term loan matters only for the interest subsidy, and there the rules are strict. Term loan means a loan from an RBI-recognised bank or financial institution, external commercial borrowing, or NDDB, GSFS, HUDCO, REC or PFC; NBFC loans are excluded (paragraph 1.8). Only amounts actually disbursed against EFCI inside the eligible investment period count (paragraph 5.2 b and c). Only interest levied by the lender is reimbursed, never penal interest; default periods are deducted; and the unit must bear at least 2% of the rate itself, even after any Government of India interest subsidy is offset (paragraph 5.2 d to g).

Two smaller changes from the policy document. The additional 1% interest subsidy goes to women entrepreneurs, registered startups in manufacturing and first-generation entrepreneurs; it is one 1%, not cumulative, and it sits inside the overall ceiling. And the 5-point ceiling addition for SC and ST entrepreneurs that the policy document promised is not in this GR; it belongs to the Dr. Babasaheb Ambedkar and Bhagwan Birsa Munda schemes and will need its own notification.

Who is an MSME now

Paragraph 1.2 adopts the revised definition by gross fixed capital investment in plant and machinery: micro up to ₹2.5 crore, small above ₹2.5 crore up to ₹25 crore, medium above ₹25 crore up to ₹125 crore. Two details are new. The investment is counted across all of the enterprise's units in the country, not the Gujarat unit alone. And status is decided on the date of project completion (paragraph 3.3), so a unit that starts as small and completes as medium is a medium enterprise for the whole claim. Above ₹125 crore in plant and machinery the unit is a Large industrial undertaking under the GR of 8 September 2026, decoded in our separate explainer.

Expansion counts when an existing enterprise adds at least 50% to its gross fixed capital investment excluding land, with at least 60% of that in plant and machinery, adds at least 50% capacity, and had reached 75% utilisation in one of the previous three years; the expansion becomes eligible a year after project completion (paragraph 1.5). Micro units get the 50/60/50 test without the utilisation condition. Diversification needs 25% more investment for micro and small units and 50% for medium, again with 60% in plant and machinery (paragraph 1.6). An expansion at a different premises is treated as a new project. Renovation, rehabilitation and rationalisation do not qualify (paragraph 22.2).

What counts as eligible investment

Eligible fixed capital investment (paragraphs 1.10 and 1.11) is new building at actual cost or the R&B schedule of rates, whichever is lower; other construction; new plant and machinery including installation, captive power, in-premises vehicles and material handling equipment, desalination, pollution control, technology, design and patents up to 10% of plant and machinery cost, and DG sets up to 50% of connected load or 5 MW; and project-related infrastructure at 50% of cost. Out: land, working capital, goodwill, royalty, pre-operative expenses, second-hand machinery whether indigenous or imported, capitalised interest, rented or leased assets including the building, non-captive power plants, and consultancy fees not tied to technology acquisition.

The window is generous. Assets acquired and paid for from 1 January 2026 count (paragraph 3.2). After commercial production the unit has a further 12 months to complete eligible investment where plant and machinery is up to ₹50 crore, and 18 months where it is between ₹50 crore and ₹125 crore, even if that runs past 31 May 2031, provided production started inside the operative period. Final eligibility is the lowest of the investment made, the bank completion certificate and the asset verification report (paragraph 2.3), and no incentive is paid twice on the same investment under any state scheme (paragraph 2.2). State and central incentives together cannot exceed EFCI (paragraph 5.4 c).

The deadlines

1. Provisional Eligibility Certificate: within six months of commercial production or within six months of the GR, whichever is later (paragraph 6.1). For a unit already in production that means 25 March 2027. The PEC covers up to 40% of EFCI (paragraph 6.6), and interest and power claims start only after it.
2. Final Eligibility Certificate: directly, if the investment is complete at production; otherwise within six months of completing it, or within six months of the end of the 12 or 18 month investment period (paragraphs 6.2 to 6.5).
3. Sunset clause: a FEC application more than six months late but within two years is sanctioned with a proportionate reduction; beyond two years it is not entertained (paragraph 21).
4. Previous scheme option: a unit that had not started production before 1 June 2026 may opt for the Aatmanirbhar Gujarat MSME scheme of 5 October 2022 within six months of the GR, so by 25 March 2027. The option is irrevocable, and no unit gets the previous scheme unless production starts by 4 October 2027 (paragraph 4.1). Units already producing before 1 June 2026 stay on the previous scheme.
5. Support schemes: ERP, quality certification, ZED, ICT, technology acquisition, patents, energy and water audits, SME exchange listing, power connection charges and rent each carry their own six-month application window from the expense, certificate or listing.

EPF, electricity duty and the support schemes, quantified

EPF reimbursement (paragraph 7) is 100% of the employer's statutory contribution for new employees working in Gujarat, for five years from commercial production, capped at 12% of basic plus DA and retaining allowance or ₹1,800 a month for male employees, ₹2,500 for women and ₹3,000 for specially-abled employees, whichever is lower. New means an employee with no Universal Account Number before joining. Claims are quarterly, expansions get it on incremental headcount only, and no period already reimbursed under another scheme qualifies. Electricity duty exemption under the 1958 Act is 100% (paragraph 18). The support lines the policy document named without figures now read as follows.

Support (GR paragraph)	Assistance	Cap
ERP software (8.1)	65% of capital cost; SaaS subscription counts, hardware excluded	₹1 lakh
Quality certification (8.2)	50% of certification fees and 50% of testing equipment; not statutory certifications or renewals	₹10 lakh
ZED certification (9)	50% of charges after GoI assistance	₹50,000
ICT and Industry 4.0 (10)	65% of capital expenditure on cloud, networking and AI equipment	₹5 lakh
Technology acquisition (11)	65% of cost including two years of royalty	₹50 lakh
Patent registration (12)	75% of cost; attorney fee capped at ₹50,000 domestic and ₹2 lakh per country; half on publication, half on grant	₹25 lakh
Energy and water audit (13)	75% of each audit, once; 25% of recommended equipment if savings reach 10%	₹50,000 each; ₹20 lakh
SME exchange listing (14)	25% of issue expenses after listing, one time; GVFL may take equity	₹5 lakh
CGTMSE guarantee fee (15)	100% of the annual fee on a collateral-free term loan for five years, micro and small units	Actual fee
Power connection charges (16)	35% of LT or HT service-line charges, outside GIDC and approved estates	₹5 lakh
Rent, micro and small units (17)	65% of rent for a rented or leased shed, 75% when 100% women-owned, for five years	₹3 lakh a year

Selected thrust sectors get more

For sports goods, toys, footwear, robots and drones, paragraph 19 adds seven lines to the higher slab: 100% reimbursement of stamp duty and registration charges on project land bought in the eligible period, applied for within six months of production; IPR support of 75% up to ₹1 crore across patents, designs, copyrights, trademarks and geographical indications; technology acquisition at 65% up to ₹1 crore; international certification at 100% of fees up to ₹5 crore; a training grant of ₹8,000 per Gujarat-domiciled employee per month for the first twelve months, claimable once; a creative design studio grant of 50% up to ₹5 crore; and, for micro enterprises and artisans, AI subscription fees at 80% up to ₹1 lakh a year for three years.

What is not in this GR

The GR is a manufacturing scheme. It does not cover the service sector, whose GR is awaited, and it does not carry the wider startup package from section 12 of the policy document: the sustenance allowance, seed support and acceleration grants still need their own notification. A registered manufacturing startup gets the extra 1% interest subsidy here and nothing more. The SC and ST ceiling addition, the enhanced incentives for persons with disabilities, cleaner production and zero liquid discharge grants, and relocation support under Project T.H.R.I.V.E. are likewise policy promises without a scheme yet. We track each on the policy overview and update the day one lands.

2020 to 2026 in one table

Item	2020 scheme	2026 scheme GR
Capital subsidy	25%, 20% or 10% of term loan, capped ₹35 lakh, ₹30 lakh or ₹10 lakh	35% or 25% of EFCI, no lakh cap, self-financed eligible
Annual ceiling	None	9% or 7% of EFCI a year for small and medium; micro 37% or 27% then 2%; no carry forward
Interest subsidy	7%, 6% or 5% for 7, 6 or 5 years, capped ₹35 lakh a year	7% for 5 years up to 10% of EFCI; +1% women, registered startups, first-generation
Power tariff	None for MSMEs	₹2 or ₹1 per unit for 5 years, up to 25% of EFCI
EPF reimbursement	Not in the MSME scheme	100% for 5 years, capped ₹1,800, ₹2,500 or ₹3,000 a month
Application	Within a year of first disbursement or production	PEC within 6 months of production or of the GR; late up to 2 years cut proportionately
MSME definition, plant and machinery	₹1 crore, ₹10 crore, ₹50 crore	₹2.5 crore, ₹25 crore, ₹125 crore, across all units in India

A ₹10 crore project in a Category A taluka could claim at most ₹35 lakh of capital subsidy in 2020, and only against a loan. Under this GR it is ₹3.5 crore, loan or no loan, paid at ₹70 lakh a year against a ₹90 lakh annual ceiling. Ten times the money, inside a ceiling that has to be planned for.

What to do this week

1. Confirm the taluka category against the district, and if the site touches two talukas, apply the largest-land-share rule.
2. Add up plant and machinery across every unit of the enterprise in India and place it against the ₹2.5, ₹25 and ₹125 crore lines. Remember status is fixed at completion, not at start.
3. Decide whether a bank term loan is worth taking. The capital subsidy no longer needs it; the interest subsidy does, and only 2% of EFCI a year of room exists beside the capital instalment for small and medium units.
4. Model the per-year ceiling against your draw-down and power ramp-up. The estimator on our MSME page does it year by year.
5. If the unit was not producing on 1 June 2026, compare the 2022 and 2026 outcomes and diarise 25 March 2027 for the option.
6. Get Udyam registration, GPCB consent and the EFCI working in order, and diarise the PEC deadline: six months from production or 25 March 2027, whichever is later.
7. Keep the 85% Gujarat-domicile workforce test in view from the first hire; it applies to all three components (paragraph 5.4 a).

We prepare the EFCI working and the certificate the GR asks for, structure the loan and the draw-down so the annual ceiling does not eat the capital subsidy, file the PEC inside the six-month window, and run the quarterly claims for the full five years. Send us the DPR and the taluka and we return the modelled number, year by year, within a week.

Every figure above, with the estimator, the worked examples and the searchable GR. Go to the MSME incentives page

Above ₹125 crore in plant and machinery? That is the Large, Mega and Ultra Mega scheme, with a different GR, different ceilings and a calculator of its own. Read the Large, Mega and Ultra Mega decode