Kerala Stressed MSMEs Revival and Rehabilitation Scheme provides financial support and handholding to micro, small, and medium manufacturing enterprises in Kerala that face operational stress. The scheme helps unit owners convert non-productive assets back into productive business operations, with total support for each qualifying unit capped at ₹5 Lakh.
Directorate of Industries and Commerce, Government of Kerala, manages this scheme for sick and closed MSME units. Applications are accepted online through the official industry department portal, and eligible units can apply for the one-time revival package in 2026.
Kerala Stressed MSMEs Revival and Rehabilitation Scheme - Introduction
Kerala Stressed MSMEs Revival and Rehabilitation Scheme aims to offer financial and handholding support to micro, small, and medium manufacturing enterprises across Kerala that show signs of stress. The scheme converts non-productive assets back into productive business operations. The total support available for each qualifying unit, including all reliefs combined, is capped at ₹5 Lakh.
Stressed MSME: As per Reserve Bank of India notifications, an MSME is considered stressed if:
| Condition | Status |
|---|---|
| Payment Status | Principal or interest not overdue for more than 30 days but the account shows stress signs |
| Overdue 31-60 days | Principal or interest payment is delayed |
| Overdue 61-91 days | Principal or interest payment is delayed |
Sick Unit: An MSME may be considered sick if it meets these criteria:
| Criterion | Details |
|---|---|
| Substandard account | Any borrower account remains substandard for over six months, meaning principal or interest remains overdue for one year or more |
| Net worth erosion | Erosion of at least 50% of net worth due to accumulated cash losses during the previous accounting year |
| Commercial production | Unit in commercial production for at least two years (for closed units) or one year (for working units) |
Closed Unit: A unit is classified as closed if it was in commercial production for at least two years before closure and has remained shut continuously for 6 months. For example, if a small manufacturing workshop like 'Rohan Enterprises' stops production due to lack of working capital and its electricity supply is permanently disconnected, it qualifies for this status.
Potentially Viable Sick Unit: A sick unit is deemed potentially viable if it can clear its repayment obligations within five years after implementing a relief package supported by banks or government agencies.
Negative List: Certain industries are not eligible for support under this scheme, including photo studios, breweries, sawmills, soap-grade sodium silicate units, metal crushers, steel re-rolling mills, and power-intensive units exceeding 5000 KVA contract load. This list can change through official notifications.
Key Information
| Scheme Name | Kerala Stressed MSMEs Revival and Rehabilitation Scheme |
|---|---|
| Level | State |
| Scheme For | Infra |
| Beneficiary States | Kerala |
| Category | Business and Entrepreneurship |
| Eligible People | Business Entity, Industries |
| Sub Category | Setting up and entrepreneurship, Loan |
| Benefit Type | Cash |
| DBT Scheme | No |
| Main Department | Industries and Commerce Department |
| Department Running the Scheme | Directorate of Industries And Commerce, Government of Kerala |
| Tags | Stressed, MSME, Revival, Rehabilitation, Sick Unit, Closed Unit |
Benefits
A qualifying unit can receive a one-time support limit of ₹5 Lakh. This support is provided in several forms based on the Revival Project Report recommendations of the Expert Committee.
1. Restructuring Support: If the bank restructures the existing loan and gives additional term loan or working capital loan based on the Expert Committee recommendation, the unit can get Margin Money Grant of 50% of the bank-insisted margin for additional loans, capped at ₹2 Lakh. The unit also gets interest subvention of 6% per annum on a reimbursement basis for the additional loans for the first year, capped at ₹1 Lakh.
2. Restart Expenses: When no term loan is used for new additional or balancing plant and machinery, 50% of the cost is payable as one-time support, limited to ₹1.50 Lakh. Also, 50% of the cost of inevitable repair and maintenance of existing plant, machinery, and building is reimbursed, limited to ₹1 Lakh.
3. Clearance of Statutory Dues: 50% of pending dues with agencies like KSEB, GST or Commercial Tax, Excise, and Pollution Control Board, limited to ₹40,000.
4. Cost of Revival Project Report: 100% of the cost of preparing the RPR is reimbursed, up to ₹10,000 per unit.
Eligibility
To apply, the manufacturing MSME must meet these criteria:
- Location and Registration: The unit must be based in Kerala and hold a valid EM Part-II or UAM registration.
- Sick or Closed Status: The unit must fit the criteria for a sick or closed unit and must not be on the Negative List.
- Potentially Viable: The unit must be proven potentially viable through an approved Revival Project Report.
- Independent Legal Entity: The business must operate as an independent legal entity.
Important Obligations: All submitted data must be true. Once support is received, the unit must restart operations within one month and continue for at least 5 years. Failure to comply leads to recovery under the Kerala Revenue Recovery Act. Units facing sickness due to willful mismanagement or internal partner disputes are not eligible.
Exclusions
Support is not available for government-controlled industries, public sector undertakings, units financed by KVIC or KVIB, and all industries listed in the official Negative List.
Application Process
Applying for Kerala Stressed MSMEs Revival and Rehabilitation Scheme is simple. Follow these steps:
STEP 1 - Visit the official application portal.
STEP 2 - Navigate to the online services section and select the scheme.
STEP 3 - If you are a first-time user, complete the registration process. If you are already registered, log in to your account.
STEP 4 - Select 'New Application' from your dashboard and click 'Proceed'.
STEP 5 - Fill out the required fields accurately, attach your documents, and submit your application online.
Documents Required
Keep these documents ready before starting the online application:
- Registration Proof: Copy of EM Part-II or UAM registration.
- Revival Project Report: Approved RPR for the unit.
- Loan Sanction Letter: Sanction letter for additional loans if applicable.
- Investment Proof: Proof of new investments.
- Identity Proof: Photo identity proof of promoters.
- Legal Documents: Partnership Deed, Articles of Association, or Bylaws.
- Registration Certificate: Certificate from Registrar of Companies or Societies.
- Board Resolution: Formal resolution from the board or partners to apply for this scheme.
- Financial Statements: Audited balance sheet for the last 2 years.
- Additional Documents: Any other documentation requested by the authorities.
References
Official sources for Kerala Stressed MSMEs Revival and Rehabilitation Scheme:
- Official Department Website
- Official Scheme Guidelines
- Online Application Portal
- Kottayam District Official Scheme Page
FAQ's
What is the aim of the scheme?
The aim is to help micro, small, and medium manufacturing enterprises in Kerala revive their business when they face financial stress.
What are the objectives of the scheme?
This scheme provides financial support and expert handholding to restore non-productive assets, helping the business run smoothly once again.
Which department oversees this scheme?
Directorate of Industries and Commerce, Government of Kerala, manages this scheme.
Which units are eligible to apply?
Manufacturing MSMEs in Kerala that are registered with EM Part-II or UAM, are not on the Negative List, and are certified as potentially viable for revival can apply.
Must the MSME be an independent legal entity?
Yes, only independent legal entities are eligible for financial support under this scheme.
What is the total financial benefit provided?
An eligible unit can receive a total, one-time support amount of up to ₹5 Lakh.
Can a unit apply for this support more than once?
No, this is a one-time support provided to a single applicant unit.
What categories fall under the Negative List?
The list includes photo studios, sawmills, breweries, certain metal crushers, and power-intensive units exceeding 5000 KVA as defined in the official scheme rules.
Which types of units are excluded?
Government-controlled industries, public sector undertakings, and units financed by KVIC or KVIB are excluded from applying.
How to apply for the scheme?
Submit the application through the official portal at https://schemes.industry.kerala.gov.in/public/index.php/schemes.