Decarbonization Subsidy (IDP 4.0)

The Decarbonization Subsidy sits within the Andhra Pradesh Industrial Development Policy (IDP 4.0) and is run by the Government of Andhra Pradesh to support industrial growth that is environmentally sustainable. Under it, industries placed in the 'Red category' are given an incentive to move towards cleaner technologies and processes, which lowers their carbon footprint.

Assistance is directed at industries setting up new projects, expanding, or diversifying where substantial investment goes into climate-friendly plant, machinery, and equipment. Since green technologies usually demand higher capital expenditure, the policy uses financial assistance to ease that load. The state's objectives in pushing decarbonisation are threefold: an industrial ecosystem that is more ecologically responsible, greater inflows of green investment, and industries that can compete better in a global market where sustainability increasingly matters.

The subsidy is structured in tiers, so industries of differing scales—Sub-Large through to Ultra-Mega—get support suited to their size, capacity, and potential impact. This approach reflects Andhra Pradesh's effort to keep industrial development and environmental stewardship in balance.

Applications for the Decarbonization Subsidy are handled within the application framework of the wider IDP 4.0 policy. Red category industries that wish to apply should take the following steps:

- **Review the Policy Document**: Read the "OG-For-AP-IDP-MSME-EDP-FPP-(4.0)-2024-29.pdf" document (linked) in full to understand the detailed guidelines, eligibility criteria and required formats for this incentive (Section 7.4). - **Prepare Project Proposal**: Draw up a detailed project proposal setting out the new, expansion or diversification plans, specifying the climate-friendly plant, machinery and equipment investments together with projected costs and environmental benefits. - **Gather Supporting Documents**: Assemble all supporting documents required, such as incorporation certificates, project reports, financial statements and any certifications relating to climate-friendly technology. - **Submit Application**: Fill in the prescribed application form for IDP 4.0 incentives (available online or at the Department of Industries) and submit it, along with the project proposal and supporting documents, to the designated authority within the Government of Andhra Pradesh Department of Industries. - **Follow-up**: Stay in touch with the department regarding any queries or requests for additional information arising during the scrutiny process.

The Department of Industries, Government of Andhra Pradesh, evaluates each application for the Decarbonization Subsidy. Screening checks whether the applicant meets the criteria set out in Section 7.4 of the IDP 4.0 policy: the industry must fall under the 'Red category,' the investment must concern a 'climate-friendly plant, machinery and equipment,' and the unit must be classified as Sub-Large, Large, Mega, or Ultra-Mega.

Proposals then undergo assessment on feasibility, environmental impact, and how far they advance the policy's objectives. The eligible Fixed Capital Investment (FCI) is examined to fix the maximum subsidy payable. Approval follows only after a full appraisal of the application and confirmation that every stated policy term has been met.