MSME incentives
| Incentive | Benefit | Who qualifies |
|---|---|---|
| Capital subsidy | 25% of eligible plant and machinery value | New micro units anywhere; small and medium units in industrially backward blocks, thrust sectors or agro-based; expansion of at least 25% |
| Additional capital subsidy | +10% for micro (max ₹5 lakh); +5% for women, SC/ST, differently abled and transgender entrepreneurs (max ₹5 lakh) | Eligible manufacturing units |
| Payroll subsidy | Employer EPF reimbursed up to ₹24,000 per employee a year, for 3 years | Micro units; small/medium in backward blocks or government estates |
| LT power tariff subsidy | 20% of power charges for 36 months | New micro units on LT tariff |
| Back-ended interest subsidy | 5% for 5 years, up to ₹20–25 lakh | CGTMSE-covered and technology upgradation loans |
| Stamp duty | 50% reimbursement | New micro and small units in backward blocks |
Entrepreneur schemes
| Scheme | Benefit | For |
|---|---|---|
| NEEDS | 25% capital subsidy up to ₹75 lakh (+10% for SC/ST and differently abled), 3% interest subvention | First-generation entrepreneurs, projects ₹10 lakh – ₹5 crore, EDP training required |
| AABCS | 35% capital subsidy up to ₹1.5 crore, 6% interest subvention | Enterprises 100% owned by SC/ST entrepreneurs |
| UYEGP | 25% subsidy on small projects | Unemployed youth starting new units |
| PMEGP | 15–35% margin money | New micro enterprises (central scheme through DICs) |
Large projects – Industrial Policy 2021
Large, mega and ultra-mega manufacturing projects (₹300 crore and above, at least 50 jobs) can opt for 100% SGST reimbursement on final products for 15 years or a capital subsidy on eligible fixed assets graded by district category A, B or C, along with a 5-year electricity tax exemption, stamp duty concessions in SIPCOT parks and a training subsidy. MSMEs use the MSME Policy instead.
Conditions that trip up claims
- Capital subsidy applied for more than one year after commercial production
- Payroll claims not filed within 3 months of each financial year-end
- Ineligible activity or location (e.g. small/medium unit outside a backward block, excluded sectors)
- Online data cannot be edited after submission, and the subsidy is paid only after machinery is verified at site
How we file it
- Eligibility checkBlock, activity and enterprise size against the scheme rules.
- Apply on msmeonlineOnline application on msmeonline.tn.gov.in with all documents.
- DIC inspectionWe prepare you for the physical verification of machinery by the General Manager, DIC.
- Sanction and yearly claimsFollow up to sanction, then payroll and interest claims each year.
Documents required
- Udyam registration and constitution documents
- Land deed or lease (5+ years from production)
- Term loan sanction letter
- TNEB power sanction and meter card
- Machinery invoices and payment proof
- CA certificates of fixed assets and commercial production
- First sale invoice
- Community / women / differently abled certificate if claiming extra subsidy
Sources: msmeonline.tn.gov.in · ICAI – Tamil Nadu State Specific Policies · MSME Department TN – AABCS · Tamil Nadu Industrial Policy 2021
Frequently asked questions
How much capital subsidy can a new micro unit in Tamil Nadu get?
25% of eligible plant and machinery value, plus 10% extra for micro units (up to ₹5 lakh). Women, SC/ST, differently abled and transgender entrepreneurs get a further 5% (up to ₹5 lakh). Apply within one year of commercial production.
Can a small unit in Chennai or Coimbatore get the capital subsidy?
Only if it is in an industrially backward block, is agro-based or is in a notified thrust sector. New micro units qualify anywhere in the state.
What is the payroll subsidy?
Reimbursement of the employer's EPF contribution, up to ₹24,000 per employee a year, for the first three years of production. Claims are due within three months of each financial year-end.
Is a new Tamil Nadu industrial policy coming?
Yes. The government announced in August 2026 that a new industrial policy will be released. Until then the 2021 MSME and industrial policies are being applied; we check the latest position before filing.