MSME capital subsidy (investment promotion assistance)
| Region | Micro | Small | Medium |
|---|---|---|---|
| Bundelkhand and Purvanchal | 25% | 20% | 15% |
| Madhyanchal and Paschimanchal | 20% | 15% | 10% |
SC/ST and women entrepreneurs get 2 percentage points more. Cap ₹4 crore per unit, paid in two instalments. Expansion needs a 25% rise in gross block and capacity.
Other MSME incentives
- Interest subsidy for micro units: 50% of interest for 5 years, up to ₹25 lakh (60% for SC/ST and women)
- Stamp duty: 100% in Bundelkhand and Purvanchal, 75% in Madhyanchal and Paschimanchal, 50% in Gautam Buddh Nagar and Ghaziabad; 100% everywhere for women entrepreneurs
- Industrial parks and flatted factories: infrastructure interest subsidy up to 50% for 7 years
- ODOP margin money: 25% on projects up to ₹25 lakh, sliding scale above
- CM-YUVA: interest-free loans up to ₹5 lakh for young first-time entrepreneurs
Large units – IIEPP 2022 (choose one option)
| Option | Benefit |
|---|---|
| Capital subsidy | 10–30% of eligible capital investment by region and size (Large, Mega, Super Mega, Ultra Mega), paid over 10–20 years, plus boosters |
| Net SGST reimbursement | 100% of net SGST for 6–16 years, within an overall ceiling |
| PLI top-up | 30% of the incentive received under a central PLI scheme |
Conditions that trip up claims
- Large units: Letter of Comfort not applied before commercial operations, or Part-A capital declaration missed within 90 days
- CA certificates without UDIN, or totals not matching the investment break-up
- Ineligible investment mixed in (land above the cap, investment before the policy date)
- Same incentive claimed under two policies, or production starting after the allowed investment period
How we file it
- Region and policy checkMap your district to Bundelkhand, Purvanchal, Madhyanchal or Paschimanchal and pick the right policy.
- Apply onlineMSME application through the DIC / MSME 1 Connect; large units through Nivesh Mitra on the OIMS portal.
- Committee approvalsFollow the case through the divisional and state level committees.
- Claims and releaseInstalment claims with CA certificates until each payment is released.
Documents required
- Udyam, GST and PAN
- KYC of promoters; MoA/AoA and board resolution for companies
- CA-certified project report and investment break-up (with UDIN)
- Bank loan sanction and account details
- Invoices and proof of fixed capital investment
- Land documents and site plan
- Certificate of commercial production
- Caste or category certificate for the SC/ST or women top-up
Sources: Invest UP – MSME Promotion Policy 2022 · Invest UP – IIEPP 2022 · ICAI – UP State MSME Policy 2026 · MSME 1 Connect
Frequently asked questions
How much capital subsidy can a micro unit in Purvanchal or Bundelkhand get?
25% of eligible fixed capital investment, or 27% for SC/ST or women entrepreneurs, capped at ₹4 crore per unit and paid in two equal instalments.
Is there an interest subsidy for MSMEs in UP?
For micro enterprises: 50% of interest for 5 years, up to ₹25 lakh per unit, or 60% for SC/ST and women entrepreneurs.
What stamp duty exemption applies on industrial land?
100% in Bundelkhand and Purvanchal, 75% in Madhyanchal and Paschimanchal and 50% in Gautam Buddh Nagar and Ghaziabad. Women entrepreneurs get 100% anywhere in UP under the MSME policy.
Which option should a large unit choose?
It depends on your investment, location and tax profile. Units with high SGST payments often prefer SGST reimbursement; others gain more from the capital subsidy. We model both before you choose, as the option can be changed only once while approval is pending.