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16 Government Subsidy Schemes for Small Businesses in India

Government subsidy for small businesses is very effective in any small-scale industry. Many incentives are provided both by the Central and State Governments to pro­mote the growth of small-scale industries, especially MSMEs.

Here is a list of the best Government subsidies for small businesses that will help you in getting the subsidy from the Government in different sectors.

List of the 16 Government Subsidy For Small Businesses in India

#1. Micro Units Development and Refinance Agency (MUDRA) Loan

The MUDRA Loan is a government subsidy for small businesses in India. It is aimed at providing finance to micro and small enterprises in the country. This loan scheme was launched by the Indian government in the year 2015.

There are three types of loan subsidies offered in MUDRA depending on the various stages of business growth. They are  Shishu, Kishor, and Tarun. Shishu loans offer up to Rs. 50,000. Kishor loans offer up to Rs 5 lacs, and Tarun loans offer up to 10 lacs.

#2. The Credit Guarantee Fund Scheme for Micro and Small Enterprises

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) was launched by the Government of India to provide collateral-free credit to Indian MSMEs. Both the existing and the new enterprises are eligible for the scheme.

The Ministry of Micro, Small, and Medium Enterprises and Small Industries Development Bank of India (SIDBI) established a trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the scheme.

The scheme provides credit facilities in the form of term loans and working capital facilities of up to Rs. 100 Lacs per borrowing unit. The amount is contributed by the Government and SIDBI in the ratio of 4:1, respectively. The scheme also offers rehabilitation assistance to sick units covered under the guarantee scheme.

#3. Government Subsidy For Small Business – Organic Farming

The Government of India under the National Project on Organic Farming provides a capital investment subsidy for commercial production units manufacturing organic fertilizers / bio-fertilizers.

NABARD/ NCDC will release the eligible subsidy amount by DAC in advance as per the requirement. You will get a 50% advance subsidy to the participating bank for keeping the same in the subsidy reserve fund account of the concerned borrower.

#4. Technology Upgradation Fund Scheme (TUFS) For Textile Industry

Ministry of Textiles introduced the Technology Up-gradation Fund Scheme (TUFS) for the textiles and jute industry in April 1999 to facilitate the induction of state-of-the-art technology by the textile units.

It includes benefits like 5% interest reimbursement of the normal interest charged by the lending agency on RTL, 5% exchange fluctuation (interest & repayment) from the base rate on FCL, or 15% credit linked capital subsidy for the SSI sector, or 20% credit linked capital subsidy for power loom sector, or 5% interest reimbursement plus 10% capital subsidy for specified processing machinery.

#5. Scheme for Technology Upgradation/ Establishment/ Modernization for Food Processing Industries

This Scheme covers the following activities: Setting up/expansion/modernization of food processing industries covering all segments viz fruits & vegetable, milk product, meat, poultry, fishery, oilseeds, and such other agri-horticultural sectors leading to value addition and shelf life enhancement including food flavours and colours, oleoresins, spices, coconut, mushroom, hops.

The assistance is in the form of a grant subject to 25% of the plant & machinery and technical civil work subject to a maximum of Rs. 50 lakh in General Areas and 33.33% up to Rs. 75 Lacs in Difficult Areas.

#6. Integrated Development of Leather Sector – Scheme for Leather Industry

The scheme is aimed at enabling existing tanneries, footwear, footwear components, and leather products units to upgrade leading to productivity gains, right-sizing of capacity, cost-cutting, design, and development simultaneously encouraging entrepreneurs to diversify and set up new units.

Newly eligible units would be approved for assistance under the scheme only on submission of a copy of all the required registration, and NOCs from all concerned Government Departments for setting up the unit, and when the factory building is ready for installation of plant and machinery.

#7. Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)

Upgradation of the process as well as the corresponding plant and machinery is important to help SMEs reduce the cost of production and remain price competitive in the global market. To help SMEs flourish in international trade markets, the Ministry of Small Scale Industries (SSI) runs a scheme for technology upgradation of Small Scale Industries.

Known as the Credit Linked Capital Subsidy Scheme (CLCSS), it aims at facilitating technology upgradation by providing an upfront capital subsidy of 15% (limited to a maximum of Rs.15 lakhs) to SSI units for credit availed by them for the modernization of their plant and machinery. All sole proprietorships, partnership firms, co-operative, private, and public limited companies are eligible for this scheme.

#8. Market Development Assistance Scheme for Micro, Small & Medium Enterprises

The scheme offers to fund participation by manufacturing Small & Micro Enterprises in International Trade Fairs/ Exhibitions under the MSME India stall; sector-specific market studies by Industry Associations/ Export Promotion Councils/ Federation of Indian Export Organisation; initiating/ contesting anti-dumping cases by MSME Associations and reimbursement of 75% of the one-time registration fee; and 75% of annual fees (recurring) paid to GSI (Formerly EAN India) by Small & Micro units for the first three years for bar code.

#9. Technology & Quality Upgradation Support for MSMEs

To increase the adoption of quality standards by the MSME sector of India, the Government provides this subsidy. This is for acquiring ISO certifications like ISO 9000, ISO 14001, and HACCP. The initiative under the NMCP aims to increase productivity, upgrade technology, and conserve energy in the manufacturing process. Also, it aims to expand the domestic and global market share of Indian MSME products.

#10. Mini Tools Room and Training Centre Scheme

To assist the state, the government set up Mini Tool Rooms and Training Centres, the Government of India provides financial assistance in the form of a one-time grant-in-aid. The financial aid equals 90% of the cost of machinery/equipment (maximum to Rs. 9 crores) in case a new Mini Tool Room has to be created and 75% of the cost (maximum to Rs. 7.50 crore) in case an existing room has to be upgraded.

The main objective of this scheme is to develop more tool room facilities. The Govt. wants to provide technical support to the MSMEs and training facilities in tool manufacturing and tool design to create a workforce of skilled workers, supervisors, engineers/designers, etc.

#11. Government Subsidy for Small Business from NSIC

NSIC provides two basic subsidies. Such as raw material assistance and marketing assistance. Raw Material Assistance Scheme aims at helping Small Scale Industries/Enterprises by way of financing the purchase of Raw Materials (both indigenous & imported).

This allows SSI to focus better on manufacturing quality products. Under the Scheme, marketing support is provided to Micro, Small & Medium Enterprises through the National Small Industries Corporation (NSIC) to enhance the competitiveness and marketability of their products.

Related: Best SBI SME Loan Schemes Every Entrepreneur Must Know

#12. Government Subsidy for Small Business for Cold Chain

The objective of the scheme of Cold Chain, Value Addition, and Preservation Infrastructure is to provide integrated cold chain and preservation infrastructure facilities without any break from the farm gate to the consumer. It covers pre-cooling facilities at production sites, reefer vans, mobile cooling units as well as value-addition centers.

The centers include infrastructural facilities like Processing/Multi-line Processing/ Collection Centres, etc. for horticulture, organic produce, marine, dairy, meat, and poultry, etc. Individuals, Groups of Entrepreneurs, Cooperative Societies, Self Help Groups(SHGs), Farmer’s Producer Organizations (FPOs), NGOs, Central/State PSUs, etc. with a business interest in Cold Chain solutions are eligible to set up an integrated cold chain and preservation infrastructure and avail grant under the Scheme.

#13. Under Technology Mission on Coconut (TMOC) For Coconut Producing Units

Do you want to start a coconut-based business? Do you know there is a Government subsidy scheme for innovative and value-added coconut-producing units in India? Under the Technology Mission on Coconut (TMOC), the Coconut Development Board is assisting. Any individual can avail assistance for setting up of coconut-based industry other than the husk.

Technology for the different products is available with the board on payment of the technology transfer fee. The product list includes virgin coconut oil and dietary fibre, packing of tender coconut water, spray-dried milk powder, vinegar, and other convenience foods

#14. SAMPADA Scheme for Agro-Marine Produce Processing

SAMPADA stands for Scheme for Agro-Marine Produce Processing and Development of Agro-Processing Clusters. With a budget of Rs. 6000 Crores, the SAMPADA scheme is aimed to integrate current and new schemes in the food processing sector. The main objective is reducing food wastage and doubling farmers’ income.

#15. Government Subsidy for Small Business – Dairy Farming

To further strengthen the dairy farming industry in India, the NABARD dairy farming subsidy was launched.

In addition to milk, the manure from animals provides a good source of organic matter for improving soil fertility and crop yields. The gobar gas from the dung is used as fuel for domestic purposes as well as for running engines for drawing water from the well. The surplus fodder and agricultural by-products are gainfully utilized for feeding the animals. Read More…

#16. Government Subsidy for Small Business for Horticulture

The National Horticulture Board (NHB) was set up by the Government of India in 1984. It is an autonomous society under the Societies Registration Act 1860.

The objectives of the National Horticulture Board are the development of hi-tech commercial horticulture, the development of modern post-harvest management infrastructure, promotion, market development of fresh horticulture produce, and more.

In this article, we have compiled 15 Government subsidies for small businesses to help the small-scale industry sectors. Identifying the right project and applying for the subsidy will boost your small business.

About Next What Business Research Team

The Editorial Staffs at NextWhatBusiness is a team of Business Consultants with years of experience in small and medium-scale manufacturing and service-based businesses.