To promote a vibrant business community and generate employment, the Government of India provides a variety of subsidies and incentives for businesses. For any entrepreneur, whether managing a startup or an established business, it is essential to know about these subsidies and incentives to reduce capital costs, lessen interest burdens, and achieve break-even faster. Here we present a list of 7 must-know subsidies for Indian entrepreneurs.
Many small-scale industries (SSI) in India continue to manufacture goods and products with outdated technology and machinery due to a lack of awareness about access to capital, quality standards, and modern technology. To facilitate the technological upgradation of SSIs in India, the Ministry of Small Scale Industries operates the Credit Linked Capital Subsidy Scheme (CLCSS). Under the CLCSS, SSI units are provided with a 15% capital subsidy on institutional finance availed by them for the introduction of well-established and improved technology in many of the sub-sectors/products approved under the scheme for a loan of up to Rs. 1 crore.
A strong and dynamic food processing sector plays a vital role in reducing the wastage of perishable agricultural produce, enhancing the shelf life of food products, increasing farmers' income, and creating a surplus for the export of agro and processed foods. To develop a strong food processing industry, the Ministry of Food Processing Industry provides subsidies for establishing cold chains. Under this scheme, financial assistance (grant-in-aid) of up to 50% of the total cost of plant and machinery and technical civil works in general areas, and 75% for the NE region including Sikkim and difficult areas (J&K, Himachal Pradesh, and Uttarakhand) is provided, subject to a maximum of Rs. 10 crore.
The textile sector is the second-largest provider of employment after agriculture. It contributes about 14% to industrial production, 4% to GDP, and 17% to the country’s export earnings. It provides direct employment to over 35 million people. Under the TUFS scheme, 5% interest reimbursement is provided on interest charged by financial institutions or banks for textile technology upgradation projects.
To increase the adoption of quality standards by Indian MSME units, the Government of India provides a subsidy for acquiring ISO certifications like ISO-9000 and ISO-14001. The govt scheme allows all units with an SSI registration to receive a reimbursement of charges for acquiring ISO-9000/ISO-14001 certifications to the extent of 75% of the expenditure, subject to a maximum of Rs. 75,000 per case.
The Gujarat State Government, in an effort to boost industrial investment and make the state more investor-friendly, provides interest subsidies to MSME units making new investments, or existing units investing in capacity addition, diversification, or modernization of machinery to newer technology. Through this scheme, an interest subsidy of up to 7% for micro-enterprises and 5% for small and medium enterprises is provided. An additional 1% interest subsidy is available to youth under 35 years of age for the first project. Women entrepreneurs are also given priority. The maximum amount of interest subsidy provided per annum is Rs. 25 lakhs for up to 5 years.
The Government of India has launched the Jawaharlal Nehru National Solar Mission (JNNSM) to promote sustainable energy generation and support the growing energy needs of India while addressing the country’s energy security challenge. Through the capital subsidy for solar lighting and small capacity PV systems, the JNNSM provides a capital subsidy of up to 40% of the approved unit cost (benchmark cost) for solar lighting systems and small capacity photovoltaic systems. A capital subsidy of 90% of the benchmark cost is available for special category states, such as NE, Sikkim, J&K, Himachal Pradesh, and Uttarakhand.
The Department of Information Technology, MCIT, Government of India, has started a scheme to provide financial support to SMEs and technology start-up units for international patent filing to encourage indigenous innovation and recognize the value and capabilities of global IP, capturing growth opportunities in the area of information technology and electronics. Through this scheme, all patent processing costs, including attorneys' fees, patent office filing fees, examination fees, patent search costs, and additional costs for entering the national phase up to grant/issue, are subsidized. The scheme provides reimbursement of up to 50% of the total patent cost. Support is limited to Rs. 15 lakhs or 50% of the total expenses incurred on filing each invention, whichever is less.
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