Reviewed by Ashish Shah, Managing Director26 October 20269 min readSource: MSME GR dated 25.09.2026 · Large & Mega GR dated 08.09.2026
Under the Viksit Gujarat Industrial Policy 2026 the State reimburses ₹2 for every unit of electricity an eligible unit draws in a Category A taluka and ₹1 a unit in Category B — for five years from the date of commercial production (DoCP) for MSMEs, up to 25% of eligible fixed capital investment (EFCI) (para 4.2 of the MSME GR), and for 8 to 12 years with caps of 10% to 25% of EFCI for Large, Mega and Ultra Mega units (paras 4B–4H of the Large GR). Only DISCOM power or renewable power through open access counts; captive generation does not (para 5.3). The per-unit rate is the headline; what a plant actually collects is set by the annual ceiling it shares with capital and interest subsidy. A 2 MW connection in Ankleshwar running round the clock draws about 94.6 lakh units a year and earns ₹94.6 lakh at ₹1 — but a ₹30 crore medium enterprise taking its full capital subsidy is paid ₹60 lakh a year of it, no more.
Power subsidy for industries in Gujarat: rate, tenure and cap by size of unit
The per-unit rate is the same for every size of unit and every sector: ₹2 a unit in Category A talukas, ₹1 in Category B, per the 2026 taluka GR. What changes with size is the period and the cap, both a share of EFCI — building, plant and machinery and related assets acquired and paid for from 1 January 2026, excluding land.
Swipe sideways to see every column
| Unit | Rate a unit | Period from DoCP | Power tariff cap | Combined ceiling | Annual ceiling |
|---|---|---|---|---|---|
| MSME — general and thrustpara 4.2 | ₹2 / ₹1 | 5 years | 25% / 25% | 45% / 35% | 9% / 7%micro: 37% / 27%, then 2% |
| MSME — selected thrustpara 4.3 · toys, sports goods, footwear, robots, drones | ₹2 / ₹1 | 5 years | 20% / 20% | 50% / 45% | 10% / 9%micro 38% / 33%, then 3% |
| Large — generalpara 4B | ₹2 / ₹1 | 10 years | 15% / 10% | 20% / 15% | 2.0% / 1.5%max ₹150 crore |
| Large — thrustpara 4C | ₹2 / ₹1 | 8 years | 20% / 15% | 35% / 25% | 4.5% / 3.5%max ₹300 crore |
| Mega — thrustpara 4D | ₹2 / ₹1 | 10 years | 25% / 20% | 35% / 30% | 3.5% / 3.0%max ₹750 crore |
| Ultra Mega — thrustpara 4E | ₹2 / ₹1 | 12 years | 25% / 20% | 40% / 35% | 3.5% / 3.0%max ₹1,250 crore |
| Large, Mega, Ultra Mega — selected thrustparas 4F–4H | ₹2 / ₹1 | 8 / 10 / 12 years | 20% / 20% | 50% / 45% | 6.5% / 6% · 5% / 4.5% · 4.5% / 4% |
Micro, small and medium are defined by plant and machinery: up to ₹2.5 crore, ₹25 crore and ₹125 crore (MSME GR para 1.2). Mega: a thrust-sector project of at least ₹1,000 crore with 250 direct jobs; Ultra Mega: ₹10,000 crore and 3,000 jobs; a project that misses either test is Large (paras 4B(v), 4C(v)).
It is Component 3 of the package for units starting commercial production between 1 June 2026 and 31 May 2031 — see our Viksit Gujarat Industrial Policy 2026 guide and the power tariff subsidy page.
Why ₹1 a unit is not what you collect
Para 4.2 lets an enterprise “choose any one component or a combination” of capital, interest and power tariff subsidy, “maintaining the individual ceiling of that component and overall ceiling”. Three limits apply at once; for a heavy consumer the third one bites:
1. The component cap
Power tariff subsidy alone stops at 25% of EFCI over five years (20% in selected thrust sectors) — ₹7.5 crore on ₹30 crore.
2. The combined ceiling
All three together stop at 45% of EFCI in Category A, 35% in Category B (50% and 45% in selected thrust sectors).
3. The annual ceiling
Small and medium enterprises receive at most 9% (A) or 7% (B) of EFCI in any year; micro units 37% or 27% in year one, then 2%. Nothing carries forward.
Take the capital subsidy in full — 25% of EFCI in Category B, “disbursed over 5 years”, which we read as five equal parts of 5% — and under the 7% annual ceiling only 2% of EFCI a year remains for interest and power tariff subsidy together. Category A (35%, 7% a year, 9% ceiling) leaves the same 2%. How the two share it is worked through in our article on the VGIP 2026 combined ceiling; here there is no term loan.
A 2 MW connection in Ankleshwar, year by year
The meter earns ₹94.6 lakh a year at ₹1 a unit, but only ₹60 lakh is paid: the capital subsidy already takes ₹1.5 crore of the ₹2.1 crore annual ceiling.
- The unit: a new, self-financed medium enterprise in Ankleshwar (Anklesvar, Bharuch — Category B in the 2026 taluka GR; confirm it in writing before filing) with ₹30 crore of EFCI and no term loan.
- The connection: 2,000 kVA HT from DGVCL, running round the clock: 2,000 kVA × 0.9 power factor × 0.6 load factor × 8,760 hours = 94.6 lakh units a year, about 7.88 lakh a month.
- The capital subsidy: 25% of EFCI = ₹7.5 crore, paid ₹1.5 crore a year for five years.
| Each year | Amount |
|---|---|
| Annual ceiling, 7% of ₹30 crore | ₹2.1 crore |
| Capital subsidy instalment | ₹1.5 crore |
| Room left for power tariff subsidy | ₹60 lakh |
| Earned by the meter94.6 lakh units × ₹1 | ₹94.6 lakh |
| Paid | ₹60 lakh |
| Not paid, and never carried forwardpara 4.2(e) | ₹34.6 lakh |
Over five years: ₹7.5 crore of capital subsidy + ₹3 crore of power tariff subsidy = ₹10.5 crore, the whole 35% combined ceiling. Interest subsidy on a term loan would come out of the same ₹60 lakh a year.
- Same plant in a Category A taluka: capital 35% (₹2.1 crore a year) against a 9% ceiling (₹2.7 crore) leaves the same ₹60 lakh, filled by 30 lakh units at ₹2 — ₹13.5 crore in all, the 45% ceiling.
- As a Large unit (general sector, ₹200 crore of EFCI, Category B): capital 10% as ₹2 crore a year against a 1.5% ceiling of ₹3 crore leaves ₹1 crore a year, so all ₹94.6 lakh is paid, for ten years — ₹9.46 crore.
- Without the capital subsidy the meter alone would collect ₹4.73 crore over five years at ₹1, or ₹7.5 crore at ₹2, where the 25%-of-EFCI component cap stops it in year four.
Source: MSME GR paras 4.2 and 5.3; Large GR para 4B · illustrative. With the capital subsidy taken, the power tariff subsidy is worth 2% of EFCI a year in either category — 20 lakh units a year per ₹10 crore of EFCI in Category B, 10 lakh in Category A. Run your figures through the combined subsidy calculator before filing.
Electricity subsidy for MSMEs in Gujarat: what qualifies and what does not
Para 5.3 of the MSME GR (para 6C of the Large GR, in the same words) names two eligible sources and one excluded.
- Qualifies: DISCOM supply — “availing power either from DISCOM or Renewable Power through open access” (para 5.3(a)).
- Qualifies: renewable power through open access — solar or wind from a third-party generator; para 4.2(f) allows renewable energy “except captive”.
- Does not qualify: your own captive plant — “shall not be eligible” (para 5.3(c)), captive solar included.
- Not named: group captive. The GRs name only DISCOM supply and open-access renewable power; a group-captive arrangement is neither on the face of the text — take a written view first.
- Does not qualify: the existing unit’s consumption. An expansion is paid “only for additional consumption of power”, on a sub-meter (para 5.3(b)); a micro enterprise without one is measured against its three-year average.
- Does not qualify: bills in another name — subsidy is paid only on a bill or invoice “in the name of Enterprises” (para 5.3(d)).
Electricity duty is a different file. The 15% duty on an HT bill (10% on LT) is waived for five years under the Gujarat Electricity Duty Act, 1958, which para 18 of the MSME GR preserves “as applicable”. It is claimed from CEICED, not the Commissionerate, and on our reading sits outside the ceiling — see electricity duty exemption.
How to claim the power tariff subsidy for a new industrial unit in Gujarat
Fix EFCI and the taluka category
Every ceiling is a share of EFCI — assets acquired and paid for in the eligible investment period, from 1 January 2026 (para 3.2). Confirm the category in writing: ₹1 or ₹2 a unit follows from it, as does the interest-versus-power split inside the 2% room.
Before the site is fixedPut the connection in the enterprise’s name
The DISCOM connection or open-access agreement must be in the claiming enterprise’s name (para 5.3(d)); for an expansion, install the sub-meter before the new project draws power (para 5.3(b)).
Before productionApply for the Provisional Eligibility Certificate (PEC)
Within six months of DoCP, or of 25 September 2026 if later (para 6.1); the PEC covers 40% of EFCI (para 6.6). A late Final Eligibility Certificate (FEC) is cut in proportion to the delay and not entertained after two years (paras 21.2–21.3); Large units have three months and one year (Large GR para 9).
Within 6 months of DoCPFile claims with the bills
After the PEC or FEC (para 5.3(e)), submit copies of the DISCOM bills or open-access invoices — to the GM, District Industries Centre for micro and small units, the MSME Commissioner for medium (para 23.2); Large units claim every three months from the Industries Commissioner (Large GR para 11).
Each claimStay in production and keep the conditions
Continuous production through the period (para 22.3); 85% of employees and 60% of managerial staff Gujarat-domiciled; GPCB certificate on file (para 5.4). On breach the subsidy is recoverable with 18% interest (para 22.4).
Five years
Power tariff subsidy in Gujarat: frequently asked questions
How much is the power tariff subsidy in Gujarat under VGIP 2026?
₹2 for every unit of electricity consumed in a Category A taluka and ₹1 a unit in Category B, the same for MSMEs and for Large, Mega and Ultra Mega units (MSME GR para 4.2; Large GR paras 4B–4H). MSMEs get it for five years from DoCP up to 25% of EFCI; Large units and above for 8 to 12 years up to 10–25% of EFCI, depending on sector and taluka.
Who is eligible for the power subsidy for industries in Gujarat?
New enterprises, and existing ones that expand or diversify, that start commercial production between 1 June 2026 and 31 May 2031 and draw power from a DISCOM or renewable power through open access. The bills must be in the enterprise’s name and, for an expansion, only the additional consumption on a sub-meter counts. No term loan is needed; a self-financed unit qualifies on the same terms.
Does captive solar qualify for the power tariff subsidy?
No. Para 5.3(c) of the MSME GR excludes power consumed from the enterprise’s own captive power plant, and para 4.2(f) allows renewable energy “except captive”. Renewable power qualifies only when bought from a third party through open access. The GRs do not mention group-captive arrangements; take a written view before relying on one.
What is the maximum power tariff subsidy an MSME can get?
On its own, 25% of EFCI over five years (20% in the selected thrust sectors). In practice the annual ceiling bites first: after the full capital subsidy, a small or medium enterprise has 2% of EFCI a year left for interest and power tariff subsidy together — ₹60 lakh a year on ₹30 crore of EFCI, which is 60 lakh units at ₹1 or 30 lakh units at ₹2. Consumption above that earns nothing, and nothing carries forward.
How many units does a 2 MW connection consume in a year?
At a 0.9 power factor, a 0.6 load factor and round-the-clock running, 2,000 kVA is 1,800 kW connected, 1,080 kW on average and 1,080 × 8,760 hours = 94,60,800 units a year, about 7.88 lakh a month. That earns ₹94.6 lakh a year at ₹1 a unit or ₹1.89 crore at ₹2 — before the component cap, the combined ceiling and the annual ceiling are applied.
Is the power tariff subsidy paid for 5 years or 10 years?
For MSMEs, five years counted from DoCP, the date of the first commercial sale bill (MSME GR paras 1.9 and 4.2(a)). For Large units it is 10 years in general sectors and 8 years in thrust and selected thrust sectors; Mega units get 10 years and Ultra Mega units 12 (Large GR paras 4B–4H). In every case the period runs from DoCP and claims open only after the Provisional or Final Eligibility Certificate.
Can I claim power tariff subsidy and electricity duty exemption together?
Yes. The power tariff subsidy is Component 3 of the VGIP 2026 package, claimed from the Commissionerate within the combined ceiling. Electricity duty exemption is a separate benefit under the Gujarat Electricity Duty Act, 1958, which para 18 of the MSME GR and para 7 of the Large GR preserve; it is claimed from CEICED within 90 days of first production and, on our reading, does not use up the ceiling.
Know what your connection is worth before you sign for it
Send us the taluka, the EFCI, the capital subsidy you intend to claim and the expected monthly units. We run the five years against the annual ceiling and the caps and tell you, in rupees, what the power tariff subsidy will actually pay.
Written by the NeoApex Saver advisory team · Reviewed by Ashish Shah, Founder and Managing DirectorNeoApex Saver Pvt Ltd (formerly Apex Consultants) has filed Gujarat industrial incentive claims for over twenty years — 300+ projects, 99% filing success. Every figure in this article is taken from the Government Resolution linked above; worked examples and the reading of grey areas are ours.Last reviewed 26 October 2026 · About the team · Report a correction