2.            Promotion              of   Micro,   Small   and   Medium   Enterprises (MSMEs)

MSMEs play a vital role in achieving balanced growth and in creating employment opportunities. They also form an integral part of the value chain of the larger industrial ecosystem. As part of this policy, a focused scheme has been developed to further strengthen the MSME ecosystem in the state.

The following initiatives are being taken by the state government to reposition Gujarat’s MSMEs on a global level & enhance competitiveness:

1. Capital and Interest Subsidy: Incentives to MSMEs will be provided in terms of Capital and Interest Subsidy on term loans based on the category of talukas. As per the revised definition of MSMEs by Government of India, enterprises investing upto INR 50 crore in Plant & Machinery and turnover upto INR 250 crore have been categorized as “Medium Enterprises”. Incremental incentives will be provided to these Medium

Taluka   Category	Capital Subsidy	Interest Subsidy
Category 1	@25 % of eligible Term Loan Amount subject to a maximum amount of Rs. 35 lakhs;   If the Eligible FCI is over 10 Crores, additional INR 10 lakhs will be Given	@7% of term loan amount disbursed with the maximum amount of Rs. 35 lakhs per annum for 7 years
Category 2	@20 % of eligible Term Loan Amount subject to a maximum amount of Rs. 30 lakhs;   If the Eligible FCI is over 10 Crores, additional INR 7.5 lakhs will be Given	@6% of term loan amount disbursed with the maximum amount of Rs. 30 lakhs per annum for 6 years
Category     3 (including Municipal Corporation areas)	@10 % of eligible Term Loan Amount subject to a maximum amount of Rs.10 lakhs;   If the Eligible FCI is over 10 Crores, additional INR 5 lakhs will be Given	@5% of term loan amount disbursed with the maximum amount of Rs. 25 lakhs per annum for 5 years
•          1% additional interest subsidy will be given to SC/ST Entrepreneur/ physically challenged entrepreneur/ Women entrepreneur/ Start Up in manufacturing sector.   •          1% additional interest subsidy will be given to young entrepreneur below the age of 35 years on the date of sanction of loan. •          Maximum interest subsidy to be capped at 9% for all the categories. •          The interest subsidy will be so given that in any case, the unit will have to bear minimum 2% of total interest levied on term loan. •          For Existing units, who switch to Solar Power, Interest Subsidy will be provided on term loan as per rates specified above.

1. Quality Certification: 50% of Fees Payable to a Recognised International Certification Authority & 50% Cost of Testing Equipment and Machinery require for that certification Maximum upto 10 Lakhs.
2. ZED certification: MSMEs can avail assistance upto 50% of certification cost maximum upto INR 50,000 after deducting the assistance received from Government of
3. Information & communication Technology adoption: MSME’s can avail an assistance to upto 65% of Capital Cost upto INR 1 Lakh for implementing ERP System. For implementing ICT Facilities, The MSME can obtain assistance upto 65% of Capital Cost upto INR 5 Lakhs.
4. Technology upgradation & Acquisition Support: Assistance upto 65% of the total cost payable to the Technical Institution upto INR 50 Lakhs for acquisition of upgraded Technology.
5. Patent Support: Financial support through partial reimbursement of cost for filing of domestic patent and International Patent upto 75% of the Cost /Expenditure incurred subject to a maximum of INR 25 Lakhs. Maximum fee for attorney for national patent is INR 50,000 and international patent is INR 2,00,000 within the overall cap of 75% of the cost/expenditure.
6. Market Development Assistance: Participation in exhibition within India :  @ 75% of Stall Rent upto Rs. 50,000/- at State Level. @ 75% of Stall Rent upto Rs. 1 Lakh at National Level.and @ 75% of Stall Rent upto Rs. 2 Lakhs at International Level.
7. Participation in exhibition outside India: @ 60% of Stall Rent upto maximum of Rs. 5 Lakhs.
8. Raising Capital through SME Exchange: This is one time basis Assistance. SME can avail 25% of expenditure incurred on raising Equity Fund through SME Exchange maximum upto INR 5 Lakhs.
9. Energy and Water Conservation: The assistance @ 75% limited to INR 50,000 will be provided for conducting audit for energy and water conservation as well as @ 25% of Cost of Equipment recommended by Auditing Authority subject to maximum INR 20 Lakhs.
10. Collateral Free Loan: The Policy will Provide assistance for collateral Free Loans under CGTMSE Scheme of Govt. of India.
11. Service Line & Power Connection Charges: Assistance will be provided for Service Line, Power Connection Charges, Rents etc. @ 35% of charges so paid to distribution Licences for LT/HT Service Line Maximum limited upto INR 5 Lakhs.
12. Use of Rooftop solar power by MSMES: To Encourage MSME for reduction in electricity Cost state had introduce a special Solar Policy under which MSME are eligible to set up Rooftop Solar Power & provision is made to purchase surplus power from them. The Govt has increase power cycle for calculation of consumption of unit from 15 Minutes to 11 hours. i.e. 7 A.M. to 6 P. M. And  has increased the Purchase price of surplus Solar Power from MSMEs from INR 1.75 per Unit to INR 2.25 per Unit.
13. Sustenance Allowance: Startups can avail sustenance of INR 20,000/-per Month for One Year.Startups having atleast One Women Co-Founder will be eligible for sustenance allowance of INR 25,000/- Per month for one year.

3.            Special focus on promotion of Service Sector MSMEs

Service sector is a major contributor to the national GDP. Many services are key inputs for facilitating primary and secondary industries. Thus, the service sector is a critical lever for enhancing productivity, ease of living and livelihood. With the establishment of several SEZs, IT parks and most importantly, GIFT City, a conducive ecosystem exists for the service sector industries to expand operations in the state. Hence, it is decided to extend incentives to Service sector covered in MSME. In view of the potentiality of service sector, it has been decided to widen the scope of service sector. Besides the 22 service categories already defined in the Gujarat Industrial Policy 2015, following champion services are identified to cover them under eligible service sector for incentives:

1. Financial services
2. Health services
3. Transport and logistics services
4. Audio Visual services
5. Construction related engineering services
6. Environmental services

Taluka Category	Interest Subsidy
Category 1	@7%    of    term    loan   amount    disbursed   with    the   maximum amount of Rs. 35 lakhs per annum for 7 years
Category 2	@6%    of    term    loan   amount    disbursed   with    the   maximum amount of Rs. 30 lakhs per annum for 6 years
Category 3 (including Municipal Corporation   areas)	@5%    of    term    loan   amount    disbursed   with    the maximum amount of Rs. 25 lakhs per annum for 5 years
•    Additional 1% subsidy will be given to SC/ST entrepreneurs   •    The interest subsidy will be so given that in any case, the unit will have to bear minimum 2% of total interest levied on term loan.

4.            Attracting Large/Mega and Ultra-Mega Investments

Large industrial enterprises have an important role in development of industrial ecosystem of an area. Besides generating revenue for the state government and creating local employment, large industries are also beneficial in bringing high-end technologies. They also aid in generation of ancillary industry around them thereby having a multiplier effect on employment, revenue and overall growth.

Gujarat has been successful in attracting large sector investments in the states. The state had ~51% share (1st Rank in India) of IEMs filed in India in terms of value with a proposed investment of USD 49 Bn in 2019 as per the data released by DPIIT, Government of India. This can be attributed to the proactive business friendly approach of the Gujarat Government focusing on “Minimum Government – Maximum Governance”.

Since GST has been implemented, companies are being compensated as per “Net SGST” on goods sold within the state under the Industrial Policy-2015. There were several complexities in calculation of the tax of goods consumed within the state and procedure was very cumbersome to claim reimbursement every quarter.

Hence, Gujarat is the first state to undertake a bold decision to de-link incentives from SGST. In order to bring transparency in calculation, it has been decided to extend incentives based on eligible Fixed Capital investment (FCI) to large industries for setting up manufacturing operations in the state in the form of capital subsidy. Therefore, the incentive amount will now be more predictable and transparent and thus it will help industry to estimate their future financial projections.

There is no upper ceiling on the amount of incentive to be given to any particular unit. This will help in grounding major investments in the state.

A graded incentive structure for General Sector and Thrust Sector is defined as per the category of talukas as under:

Taluka Category	General Sectors	Thrust Sectors
Category 1	•          10%      of      eligible      FCI (excluding land)	•          12%      of      FCI      eligible (excluding land)
Category 2	•          8%       of       eligible      FCI (excluding land)	•          10%      of      FCI      eligible (excluding land)
Category 3	•          4%       of       eligible      FCI (excluding land)	•          6%      of      FCI      eligible (excluding land)

• The eligible cash subsidy will be given over a period of 10 years in equal annual instalments subject to annual ceiling of INR 40
• If the total eligible cash subsidy could not be disbursed within period of 10 years due to upper ceiling of INR 40 per annum, the eligible period will be extended further maximum upto 10 years additionally subject to the condition that annual ceiling will remain INR 40 cr. per annum during additional period also.
• In case, if the total eligible cash subsidy is not disbursable within period of 20 years due to upper ceiling of INR 40 cr. per annum, the total entitlement of cash subsidy will be disbursed in equal installments of 20 years without any upper ceiling.
• The SME enterprises are entitled to opt for this scheme subject to condition that it will not be eligible for cash subsidy and interest subsidy under the incentive scheme of MSME under Gujarat Industrial Policy-2020.

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