Viksit Gujarat Industrial Policy 2026
Interest Subsidy in Gujarat under the Viksit Gujarat Industrial Policy 2026
Gujarat pays interest subsidy at 7% a year on term loans that fund eligible fixed capital investment — 8% for MSMEs of women entrepreneurs, registered manufacturing startups and first-generation entrepreneurs. MSMEs get it for five years, capped at 10% of EFCI (20% in selected thrust sectors); Large, Mega and Ultra Mega units for 8 to 12 years, capped at 10% to 25%. The unit always bears at least 2%.
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Example: on a 9.5% term loan the state pays 7 percentage points and the unit 2.5 — for five years (MSMEs) or 8 to 12 years (Large, Mega and Ultra Mega). The unit always bears at least 2%.
- 7%a year on your term loan; 8% for women, first-generation and start-up MSMEs
- 5 yrsfor MSMEs · 8–12 years for Large and above
- 10–25%of EFCI — the lifetime cap
On this page
Interest subsidy under VGIP 2026, in brief
VGIP 2026 interest subsidy reimburses 7 percentage points of the interest on a term loan used for eligible fixed capital investment, as long as the unit still bears 2% itself. It runs five years for MSMEs and 8 to 12 years for Large, Mega and Ultra Mega units, within a cap of 10% to 25% of EFCI.
What is an interest subsidy? Also called interest subvention or interest reimbursement, it is the government paying part of the interest on your loan. In VGIP 2026 it is Component-2 of the package — alongside capital subsidy and power tariff subsidy, within one combined ceiling — and it applies only to term loans that finance eligible fixed capital investment (EFCI).
- Rate
- 7% a year on the term loan; 8% for MSMEs of women entrepreneurs, registered startups in manufacturing and first-generation entrepreneurs
- You always pay
- At least 2%. If your loan rate is below 9% (10% for the 8% category), the subsidy is your rate minus 2%.
- Period
- MSMEs 5 years · Large 10 years (general) or 8 years (thrust and selected thrust) · Mega 10 years · Ultra Mega 12 years
- Cap
- MSMEs 10% of EFCI (20% in selected thrust sectors) · Large 10–20% · Mega and Ultra Mega 20–25%
- Eligible lenders
- RBI-recognised banks and financial institutions, ECB from overseas institutions, and government FIs such as NDDB, GSFS, HUDCO, REC and PFC — not other NBFCs
- Eligible amount
- Only the loan actually disbursed within the eligible investment period, against a term loan sanctioned for EFCI
Interest subsidy rates by size, sector and taluka
Every MSME gets 7% on its term loan for five years, capped at 10% of EFCI — 20% in the five selected thrust sectors. Large, Mega and Ultra Mega units get the same 7% for 8 to 12 years, with caps from 10% to 25% of EFCI. The taluka category does not change the rate; it changes the combined ceiling the interest subsidy shares.
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| Taluka | Interest subsidy | Period | Cap | Combined ceiling |
|---|---|---|---|---|
| General sectors | ||||
| Category A | 7% a year8% for eligible MSMEs* | 5 years | 10% of EFCI | 45% |
| Category B | 7% a year8% for eligible MSMEs* | 5 years | 10% of EFCI | 35% |
| Selected thrust sectors | ||||
| Category A | 7% a year8% for eligible MSMEs* | 5 years | 20% of EFCI | 50% |
| Category B | 7% a year8% for eligible MSMEs* | 5 years | 20% of EFCI | 45% |
*8% for women entrepreneurs, registered startups in the manufacturing sector and first-generation entrepreneurs, within the overall ceiling. Selected thrust sectors: sports goods, toys, footwear, robots and drones, plus any sector notified later. The MSME definition now runs to ₹125 crore in plant & machinery, so many units that were “large” under the old scheme qualify as MSMEs.
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| Category | Interest subsidy | Period | Cap | Combined ceiling |
|---|---|---|---|---|
| LargeGeneral sectors | 7% a year | 10 years | 15% / 10% | 20% / 15% |
| LargeThrust sectors | 7% a year | 8 years | 20% / 15% | 35% / 25% |
| MegaThrust sectors | 7% a year | 10 years | 25% / 20% | 35% / 30% |
| Ultra MegaThrust sectors | 7% a year | 12 years | 25% / 20% | 40% / 35% |
| LargeSelected thrust sectors | 7% a year | 8 years | 20% / 20% | 50% / 45% |
| MegaSelected thrust sectors | 7% a year | 10 years | 20% / 20% | 50% / 45% |
| Ultra MegaSelected thrust sectors | 7% a year | 12 years | 20% / 20% | 50% / 45% |
Large units must apply for registration with the Industries Commissionerate before production starts (or by 8 December 2026, if later), and claims are filed every three months. Mega means a thrust-sector project with at least ₹1,000 crore of gross fixed capital investment and 250 direct jobs, plus 50 jobs for every further ₹200 crore; Ultra Mega, at least ₹10,000 crore and 3,000 jobs, plus 500 for every further ₹5,000 crore.
Read the ceiling, not just the cap. A general-sector Large unit in Category B can earn interest subsidy of up to 10% of EFCI on paper. But if it also takes the full 10% capital subsidy, the 15% combined ceiling leaves only 5% for interest and power tariff together.
What “7%” really means for your loan
The subsidy is 7% or your loan rate minus 2%, whichever is lower. Below a 9% loan rate, the 2% floor — not the 7% rate — sets your subsidy.
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| Your loan rate | Subsidy at 7% | You pay | Subsidy at 8%* | You pay |
|---|---|---|---|---|
| 11% | 7% | 4% | 8% | 3% |
| 9.5% | 7% | 2.5% | 7.5% | 2% |
| 9% | 7% | 2% | 7% | 2% |
| 8.5% | 6.5% | 2% | 6.5% | 2% |
*The 8% rate applies to MSMEs of women entrepreneurs, registered manufacturing startups and first-generation entrepreneurs. If you also receive an interest subvention from the Government of India, the state subsidy is reduced so that you still bear at least 2% after both. Penal interest and other bank charges are never reimbursed.
Which loans qualify for interest subsidy
Only term loans that finance EFCI, from banks, financial institutions or specified government lenders, qualify — and only the amount disbursed within the eligible investment period.
Qualifies
- Term loans from RBI-recognised banks and financial institutions
- External Commercial Borrowings from overseas institutions
- Loans from government financial institutions such as NDDB, GSFS, HUDCO, REC and PFC (the scheme committee can approve others)
- The portion disbursed within the eligible investment period, against a term loan sanctioned for EFCI
Does not qualify
- Loans from other NBFCs
- Working-capital and cash-credit limits — only term loans for EFCI qualify
- Loan money spent on land, working capital or other costs outside EFCI
- Penal interest and other bank charges, and interest for any period in which the loan is in default under RBI norms — that period is also deducted from the subsidy period
The subsidy period runs from the date of commercial production, and any interest you capitalise during construction is excluded from EFCI. Micro and small enterprises with a collateral-free term loan under the CGTMSE scheme also get 100% of the annual CGTMSE fee reimbursed for five years (para 15 of the MSME GR), paid once a year together with the interest subsidy; service and trading activities are not eligible.
Interest subsidy and capital subsidy together
Interest subsidy shares one ceiling with capital and power tariff subsidy. For MSMEs taking the full capital subsidy, 10% of EFCI is left for interest and power tariff in general sectors and 15% in selected thrust sectors — released at about 2% or 3% of EFCI a year.
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| Segment | Capital subsidy | Combined ceiling | Left for interest + power |
|---|---|---|---|
| MSME — general sectors | 35% / 25% | 45% / 35% | 10% of EFCI |
| MSME — selected thrust sectors | 35% / 30% | 50% / 45% | 15% of EFCI |
| Large — general sectors | 15% / 10% | 20% / 15% | 5% of EFCI |
| Large, Mega, Ultra Mega — thrust sectors | 25–30% / 15–25% | 35–40% / 25–35% | 10% of EFCI |
| Large, Mega, Ultra Mega — selected thrust | 35% / 30% | 50% / 45% | 15% of EFCI |
For a small or medium enterprise taking its full capital subsidy, roughly 2% of EFCI a year is available for interest and power tariff together.
- The loan that room covers. At 7%, it is used up by a loan balance of about 29% of EFCI (about 43% in selected thrust sectors); any balance above that earns no extra interest subsidy in that year, and the excess cannot be carried forward.
- Skipping capital subsidy never raises the total. Interest and power tariff subsidy have caps of their own (10% and 25% of EFCI for a general-sector MSME), so without capital subsidy a Category-A unit tops out at 35% of EFCI against a 45% ceiling.
- Capital subsidy is the more certain component — a set percentage of EFCI rather than a function of the interest your lender actually charges.
Interest subsidy calculator
Enter your unit type, EFCI and loan terms — leave the loan amount, rate or tenure blank and the calculator assumes typical figures and says so. It applies the 7% rate, the 2% floor, a reducing loan balance, the interest-subsidy cap and the combined and annual ceilings, year by year.
Don’t know where your taluka falls? Look it up in the taluka category GR (PDF, district-wise list) or read Category A or B on our capital subsidy page. Category A carries the higher rates; if in doubt, ask us to confirm it in writing.
Estimated interest subsidy
—
Enter your EFCI (in ₹ crore) to see the estimate.
- Year-1 subsidy earned (loan × subsidy rate)—
- Payable in Year 1 within the annual room—
- Interest-subsidy cap—
- Maximum alongside the full capital subsidy—
Indicative only. Principal is assumed to be repaid in equal annual instalments with interest on the opening balance each year; the capital subsidy in equal instalments (in one year for micro units); no power tariff subsidy. The actual subsidy is worked out on the interest your lender charges.
Get this estimate checkedWorked example: a ₹6 crore term loan
A ₹10 crore plant in Vapi with a ₹6 crore term loan
Vapi (Valsad) is a Category-B taluka (neighbouring Nanapodha is Category A). EFCI of ₹10 crore; a ₹6 crore bank term loan at 9.5%, fully drawn within the investment window. For simplicity, the whole loan is outstanding through Year 1, the capital subsidy comes in five equal instalments and no power tariff subsidy is claimed.
- Subsidy rate (9.5% loan, so the full 7% applies)7% a year
- Interest subsidy earned in Year 1 (7% × ₹6 crore)₹42 lakh
- Room in the 7% annual ceiling after the ₹50 lakh capital instalment₹20 lakh
- Interest subsidy payable in Year 1₹20 lakh
- Lifetime interest subsidy alongside capital subsidy (10% of EFCI)up to ₹1 crore
Skipping the capital subsidy would release the full ₹42 lakh in Year 1, but total interest subsidy would still stop at ₹1 crore — and the ₹2.5 crore of ceiling left over could only be filled by power tariff subsidy. For most units, capital subsidy plus about ₹20 lakh a year of interest subsidy is the stronger mix. Any loan balance above about ₹2.9 crore earns nothing extra while the capital subsidy is being paid.
How to claim interest subsidy in Gujarat
Interest subsidy is claimed after the eligibility certificate is issued — but the loan has to be structured correctly long before that.
Size the loan and get it sanctioned for EFCI
Decide how much of the project to fund with a term loan and from which lender, with the combined and annual ceilings in view. The sanction should clearly relate to the eligible fixed capital investment; loans from other NBFCs do not qualify. Large, Mega and Ultra Mega units must also register with the Industries Commissionerate before production starts (or by 8 December 2026, if later).
Bank, FI, ECB or specified government FIDraw it within the eligible investment period
Only the amount disbursed from 1 January 2026 until the end of the eligible investment period counts — 12 or 18 months after DoCP for MSMEs, 18 to 48 months for Large projects.
Disbursement inside the windowApply for PEC or FEC
MSMEs apply within six months of the date of commercial production, or of 25 September 2026 if later. Large units apply within three months of production, the registration certificate or 8 September 2026, whichever is latest.
Claims start after the certificateFile interest claims
Claims are typically supported by your lender’s interest and repayment statements, in the format the Commissionerate prescribes. Micro and small units are sanctioned by the GM, District Industries Centre and medium units by the MSME Commissioner. Large units file every three months with the Industries Commissioner and are sanctioned by the committee for their investment size.
Keep the account regular
Pay every instalment and interest on time. Default periods, determined under RBI norms, earn no subsidy and are deducted from the subsidy period.
Old scheme or new? Your six-month option window
If your unit had not started commercial production before 1 June 2026, you can opt for the Aatmanirbhar Gujarat Scheme instead of VGIP 2026 by applying within six months of the relevant GR — by 25 March 2027 for MSMEs, 8 March 2027 for Large units — and only if commercial production starts by 4 October 2027. The choice is final; after the window, VGIP 2026 applies. A unit that started production before 1 June 2026 stays on the old scheme.
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| Aatmanirbhar Gujarat (2022) | VGIP 2026 | |
|---|---|---|
| Operative period | 5 Oct 2022 – 4 Oct 2027 | 1 Jun 2026 – 31 May 2031 |
| Rate | 7%, 6% or 5% by taluka category (+1% for some entrepreneur categories) | 7% in every taluka (8% for MSMEs of women entrepreneurs, registered manufacturing startups and first-generation entrepreneurs) |
| Period | 5–7 years by taluka category | 5 years |
| Cap | ₹25–35 lakh a year | 10% of EFCI (20% in selected thrust sectors) |
| MSME upper limit (plant & machinery) | ₹50 crore | ₹125 crore |
Both schemes make the unit bear at least 2%. See the capital subsidy comparison for the rest of the package.
Where interest subsidy claims get cut
Interest subsidy is lost less often to rates than to loan structure — the wrong lender, the wrong timing or an irregular account.
- Borrowing from an NBFC.Apart from the government FIs the GRs name, such as REC and PFC, an NBFC loan falls outside both VGIP 2026 schemes.
- Drawing the loan too late, or for the wrong costs.Disbursements after the eligible investment period, and money spent on land, working capital or pre-operative costs, earn no subsidy.
- Missing instalments.Default periods earn nothing and are deducted from the subsidy period.
- Ignoring the annual ceiling.With the full capital subsidy, MSMEs have about 2% of EFCI a year (3% in selected thrust sectors) for interest and power tariff.
- Assuming the full 7% always applies, or filing late.On loans priced below 9% the 2% floor cuts the subsidy; a Government of India subvention is offset so that you still bear 2%; and late FECs lose incentive period and amount in proportion.
How we help with interest subsidy
NeoApex Saver Pvt Ltd (formerly Apex Consultants) has worked on Gujarat industrial incentives for over two decades. On an interest subsidy file we:
- Size the term loan against the combined and annual ceilings, before the bank sanctions it
- Check lender eligibility and that the sanction is clearly linked to EFCI
- Model interest against power tariff subsidy for the room left after capital subsidy
- Prepare PEC and FEC applications and the periodic interest claims, and track repayments so that default periods don’t erode the subsidy
Interest subsidy across Gujarat’s industrial belts
The rate is the same in every taluka — 7% a year on the term loan, 8% for MSMEs of women entrepreneurs, registered manufacturing startups and first-generation entrepreneurs, with the unit always bearing at least 2% — so geography changes the cap, not the rate: 10% of EFCI for MSMEs, 10% to 25% for larger units. What does change by district is who processes the claim. For micro and small enterprises the application goes to the General Manager of the District Industries Centre (GM-DIC) for the district the plant is in; medium enterprises go to the MSME Commissioner, and Large units to the Industries Commissioner. These are the belts we file in most, with the DIC each one reports to.
South Gujarat
Ankleshwar, Jhagadia, Panoli, Dahej and Bharuch report to the Bharuch DIC; Surat, Hazira and Sachin to the Surat DIC; Vapi, Sarigam, Umbergaon and Valsad to the Valsad DIC. Chemical and textile projects here usually carry the largest term loans, so the 10%-of-EFCI cap tends to bind in year three or four.
Ahmedabad belt
Sanand, Changodar, Bavla, Vatva and Naroda report to the Ahmedabad DIC; Kadi, Mehsana and Becharaji to the Mehsana DIC; Himmatnagar to the Sabarkantha DIC. Auto-component and engineering units with loans around 30% of EFCI are the typical case, which is roughly the loan size that fills the annual ceiling after the capital subsidy for MSMEs in Gujarat.
Vadodara
Vadodara, Savli, Waghodia and Nandesari report to the Vadodara DIC; Halol to the Panchmahal DIC. Bank-financed capital-goods projects, often with a second lender — only disbursements from banks, RBI-recognised financial institutions and ECB count, not NBFC loans.
Kutch
Gandhidham, Anjar, Mundra and Bhuj report to the Kutch DIC at Bhuj. Steel and pipe plants with large loans and a short construction period: only the loan disbursed within the eligible investment period qualifies, so the drawdown schedule matters.
Also served. Saurashtra — Rajkot, Morbi, Jamnagar, Bhavnagar and Surendranagar — through the respective district DICs.
- Sanand
- Changodar
- Mehsana
- Vadodara
- Halol
- Savli
- Bharuch
- Ankleshwar
- Surat
- Rajkot
- Morbi
- Jamnagar
- Bhavnagar
- Surendranagar
- Gandhidham
- Anjar
- Himmatnagar
The claim is filed against the bank’s interest certificate after the eligibility certificate is issued; a default period in the loan account is deducted from the eligible period, whichever district you are in.
Interest subsidy in Gujarat: frequently asked questions
What is the interest subsidy scheme under the Viksit Gujarat Industrial Policy 2026?
The interest subsidy scheme reimburses interest at 7% a year on term loans that fund eligible fixed capital investment (8% for MSMEs of women entrepreneurs, registered manufacturing startups and first-generation entrepreneurs). MSMEs get it for five years, up to 10% of EFCI (20% in selected thrust sectors); Large, Mega and Ultra Mega units for 8 to 12 years, up to 10% to 25% of EFCI.
Is the interest subsidy always 7%?
It is 7% or your loan rate minus 2%, whichever is lower, because the unit must always bear at least 2% interest. On a 9.5% loan you get the full 7%; on an 8.5% loan you get 6.5%. If you also receive a Government of India interest subvention, the state subsidy is limited so that you still bear 2% after both.
Who gets the additional 1% interest subsidy?
MSMEs of women entrepreneurs, registered startups in the manufacturing sector and first-generation entrepreneurs get 8% instead of 7%, within the same overall ceiling. The additional 1% is not part of the Large, Mega and Ultra Mega scheme.
What is the maximum interest subsidy I can get?
For MSMEs, 10% of EFCI (20% in selected thrust sectors). For Large units, 10% to 20%; for Mega and Ultra Mega units, 20% to 25%, depending on sector and taluka. In practice, the combined ceiling shared with capital and power tariff subsidy is often the lower limit.
Are NBFC loans eligible for interest subsidy in Gujarat?
Generally no. Both VGIP 2026 schemes exclude loans availed from NBFCs, but they name government financial institutions such as NDDB, GSFS, HUDCO, REC and PFC as eligible lenders, even though REC and PFC are themselves registered as NBFCs. The other eligible lenders are RBI-recognised banks and financial institutions and overseas lenders under ECB.
Can I claim interest subsidy together with capital subsidy?
Yes, within one combined ceiling. With the full capital subsidy, MSMEs have 10% of EFCI left for interest and power tariff subsidy in general sectors and 15% in selected thrust sectors, released at about 2% or 3% of EFCI a year.
What happens if I miss loan instalments?
Interest subsidy is paid only to units that pay instalments and interest regularly. Any default period, determined under RBI norms, earns no subsidy and is deducted from the subsidy period.
Is the CGTMSE fee reimbursed?
Yes, for micro and small enterprises. The MSME scheme reimburses 100% of the annual CGTMSE service fee on collateral-free term loans for five years, paid once a year along with the interest subsidy.
How do I apply for interest subsidy in Gujarat?
After commercial production starts, apply for the Provisional or Final Eligibility Certificate. MSMEs have six months from the date of commercial production, or from 25 September 2026 if later. Large units, which must apply for registration before production starts (or by 8 December 2026, if later), have three months from production, the registration certificate or 8 September 2026, whichever is latest. Then file interest claims supported by your lender’s statements. Micro and small units are sanctioned by the District Industries Centre, medium units by the MSME Commissioner, and Large units by a committee for their investment size — chaired by the Industries Commissioner up to ₹1,000 crore.
Download the Government Resolutions
Every VGIP 2026 figure on this page comes from three Government Resolutions of the Industries & Mines Department. Read them yourself — or send us your project and we will read them for you.
Scheme for assistance to MSMEs
GR No. IMD/Capital, interest and power tariff subsidy, EPF, CGTMSE, rent and the other MSME components.
Download PDFScheme for Assistance to Large, Mega and Ultra Mega Industries
GR No. IMD/Definitions, incentive matrices for every category, registration and PEC/FEC rules, thrust-sector list.
Download PDFCategory-wise classification of talukas
GR No. IMD/District-wise annexure of the 130 Category-A and 138 Category-B talukas that set the rates.
Download PDFSources. Industries & Mines Department, Government of Gujarat — the three Government Resolutions above, read in full. Old-scheme figures refer to the Aatmanirbhar Gujarat Scheme for assistance to MSMEs (GR MIS-102022-1271(1)-I(Ch) dated 05.10.2022). Rates are the maximums the GRs allow; your entitlement is fixed by the sanctioning authority after asset verification. Worked examples use round figures and our reading of the GRs’ ceilings. The MSME Commissioner may issue separate implementation guidelines (para 22.5 of the MSME GR); we update this page when they appear. Useful official portals: Industries Commissionerate, Gujarat and the Investor Facilitation Portal.
Plan the loan before the bank sanctions it
Send us your EFCI, loan amount and taluka. We’ll show how much interest subsidy you can actually draw under VGIP 2026 — year by year, within every ceiling.