AI SummaryInvestment Promotion Scheme (IPS) for MSME Sector: Assistance of Interest Subsidy offers financial support to eligible MSME units in Dadra and Nagar Haveli and Daman and Diu. It gives an interest subsidy on term loans taken for machinery, equipment, furniture and fixtures, which reduces the cost of borrowing and helps businesses grow. Costs related to land and buildings are not covered under this support.
The scheme is run by the Department of Industries of the U.T. Administration of Dadra and Nagar Haveli and Daman and Diu. It was launched on 3rd July 2015 for a five year term and was extended from 20th May 2022. It stays open for applications till 19th May 2027. As of August 2026, eligible units can still apply online through the official Single Window Portal.
Investment Promotion Scheme (IPS) for MSME Sector: Assistance of Interest Subsidy - Introduction
The scheme helps MSME units grow by giving financial relief on term loans taken for machinery, equipment, furniture and fixtures. Land and building costs are left out of this relief. It works as a sub scheme under the broader Investment Promotion Scheme (IPS) framework and supports both new and expanding manufacturing or service based enterprises.
Main aims of the scheme are given below:
- Giving useful incentives to help the MSME sector grow.
- Protecting local industries from unstable market conditions.
- Encouraging women to take part in business.
- Creating local jobs by supporting the hiring of resident workers.
- Bringing down local unemployment.
Key Information
| Detail | Information |
|---|---|
| Scheme Name | Investment Promotion Scheme (IPS) for MSME Sector: Assistance of Interest Subsidy |
| Level | State |
| Beneficiary States | Dadra and Nagar Haveli and Daman and Diu |
| Category | Business and Entrepreneurship |
| Target Beneficiaries | Business Entity, Industries |
| Benefit Type | Cash Subsidy |
| Nodal Department | Department of Industries |
| Operative Period | 20th May 2022 to 19th May 2027 |
Benefits
Eligible units can get a 50% subsidy on the interest charged by the bank. The upper limit of this support is ₹30,00,000 per year for up to 5 years, or until the loan is fully repaid, whichever comes first.
Additional incentives are also available. Differently abled entrepreneurs, women entrepreneurs and registered startups in the manufacturing or service sectors can get an extra 10% interest subsidy. Young entrepreneurs below 35 years of age at the time of loan sanction also qualify for an additional 10% subsidy.
Eligibility
To qualify for this support, a unit should operate as a new or existing manufacturing or service unit that is expanding or diversifying within the MSME sector. Commercial production must start between 20th May 2022 and 19th May 2027, and the unit should be physically located within the Union Territory of Dadra and Nagar Haveli and Daman and Diu.
The unit should stay in production for at least 5 years from the date commercial production starts and follow all pollution control rules set by the Pollution Control Committee (PCC). The term loan should be taken from a recognized Bank or Financial Institution as per Reserve Bank of India (RBI) rules. The application must be submitted within one year from the first loan payment, or within one year of starting commercial production.
Exclusions
A unit will not get the interest subsidy if the term loan is sanctioned more than one year after commercial production or service rendering has started.
Application Process
Applications are completed online through the official Single Window Portal. Registration steps are given below.
STEP 1 - Visit the official Registration Page.
STEP 2 - Fill in the required details and click Register.
STEP 3 - Verify the email address using the confirmation link sent to the inbox or spam folder.
STEP 4 - Click the link in the email to verify the account.
STEP 5 - Enter the OTP 111111 when asked to verify the mobile number. Login details are then sent to the email.
Application steps are given below.
STEP 1 - Login at the Login Page using the registered mobile number and PIN.
STEP 2 - Open the Departments and Services tab on the side menu.
STEP 3 - Find the District Industries Centre DD and DNH section.
STEP 4 - Click the button to apply for the Investment Promotion Scheme.
STEP 5 - Complete the Common Application Form with the details and upload the required documents.
STEP 6 - Review all information and click Submit.
For help, contact the District Industries Centre at 0260-2260871 or 0260-2260310, or email dic-dd@nic.in. For technical portal help, call 0260-2231885 or email ddegs-dd@nic.in.
Documents
Keep these documents ready for the application:
- Corporate Identification Number (CIN), Taxpayer Identification Number (TIN) and Permanent Account Number (PAN).
- Goods and Services Tax (GST) registration and relevant industry registration certificates.
- Udyam Registration or Industrial Entrepreneur Memorandum.
- Partnership deed or firm registration, or Memorandum and Articles of Association.
- Land purchase deed or registered lease agreement valid for at least 5 years.
- Electricity sanction order and recent bill.
- Authorization letter, consent to operate from PCC DNH and DD, and factory license.
- Completed undertaking document.
References
For more details, refer to these official resources:
FAQ's
What happens if the enterprise is transferred to a new owner within the first five years?
The new owner becomes eligible for the support for the remaining part of the five year period.
How is Expansion or Diversification defined?
This means an enterprise raising its investment by at least 50% of the original gross fixed capital, with 60% of that new investment in plant and machinery. Only one such expansion claim is allowed per enterprise.
Are there safeguards against misuse?
Yes, officials do strict document checks and verifications to make sure subsidies are used only for genuine business activities.
What is the operative period for this scheme?
The scheme is open from 20th May 2022 through 19th May 2027.
How long can I get the benefits?
The subsidy can be enjoyed for 5 years starting from the production date, even if this timeline goes slightly beyond the official scheme end date.
What is the application deadline?
Application must be made within one year of the first loan payment or within one year of commercial production, whichever is later.
Are second-hand machines covered?
No, only new machinery qualifies for the subsidy, though existing second-hand machines may be counted for expansion calculation.
What if my unit qualifies for multiple schemes?
A unit is free to choose the scheme that gives the best benefits, but the same subsidy cannot be claimed from multiple schemes at the same time.
What happens if I default on loan payments?
If interest or installments are not paid as per RBI norms, the period of default is deducted from the subsidy eligibility.
Is there a minimum interest rate I must pay?
Yes, at least 2% of the interest rate charged by the bank must be borne by the unit, and an affidavit disclosing any other government subsidies received must be submitted.
Who receives the subsidy funds directly?
The subsidy amount is credited directly to the lending Bank or Financial Institution.
Is a term loan mandatory for solar subsidies?
Having one is not strictly required, but it is highly recommended.
Who can certify engineering documentation?
Only members of the Indian Institution of Engineers (IIE) are allowed to give certifications for building, self-fabricated machinery and solar installations.
Which financial institutions are ineligible?
Loans from Non-Banking Financial Companies (NBFCs) are not eligible for this support.
What happens if I stop production before five years?
If the unit fails to operate for the required 5 year period, the government recovers the paid subsidy amount as arrears of land revenue.