Karnataka Industrial Policy (2020–25) — MSME & Large Incentives
Government of Karnataka · Central government
Karnataka MSME investment subsidy: 10%–30% plus stamp and electricity duty exemptions.
Open, rolling. Applications are accepted continuously — there is no deadline.
Key facts
- Subsidy amount
- Not specified
- Instrument
- Subsidy
- Deadline
- Rolling
About this scheme
Incentives are structured by taluk zone, with Zone-1 being the most backward and Zone-4 the most developed. The investment promotion subsidy covers 20%–30% of Fixed Capital Investment (FCI) for Micro units, 15%–25% for Small units, and 10%–20% for Medium units, with higher rates applicable in more backward zones. An interest subsidy of 3%–5% is available to MSMEs on term loans for a period of 5 years.
Additional benefits include a 100% exemption on stamp duty and registration in Zones 1 and 2, and a 50% exemption in Zone 3. Electricity-duty exemption is provided at 100% for 5 years in Zones 1 and 2. Priority sectors for these incentives are aerospace & defence, electric vehicles (EV), pharmaceuticals, IT hardware, food processing, and technical textiles.
Who can apply
- Eligible business forms
- Not specified
- Udyam registration
- Not specified
- MSME registration
- Required
- DPIIT startup recognition
- Not specified
- GST registration
- Not specified
- Where the business may be based
- Karnataka
- Manufacturing MSMEs and large units in Karnataka. - New units, and those undertaking eligible expansion and diversification.
How to apply
- Begin by creating an account on the Udyog Mitra portal, accessible at udyogmitra.karnataka.gov.in. - Determine your taluk zone (Zone-1 through Zone-4) by consulting the zone classification list provided on the portal. - Submit the required project documentation, which includes Udyam Registration, a CA-certified FCI statement, GSTIN, a project report, and land documents. - Secure the Provisional Eligibility Certificate from the Department of Industries and Commerce. - Start production, ensuring that the minimum investment and employment thresholds are satisfied. - After commercial production has begun, apply for the Final Eligibility Certificate. - Submit annual claims for both investment subsidy and interest subsidy via the designated offline or online channel.
Frequently asked questions
Who can apply for Karnataka Industrial Policy 2020–25 incentives?
Eligibility covers new manufacturing MSMEs and large industrial units in Karnataka, as well as eligible expansion and diversification of existing units. The incentive quantum depends on the taluk zone, ranging from Zone-1 (most backward) to Zone-4 (most developed).
What investment promotion subsidy is available?
Micro enterprises receive 20%–30% of Fixed Capital Investment, small enterprises 15%–25%, and medium enterprises 10%–20%, with higher rates in backward zones (Zone-1 and Zone-2). The precise rate depends on your taluk classification.
Is this scheme equity-free?
Yes. The investment promotion subsidy, interest subsidy, stamp duty exemption, and electricity duty exemption are all non-dilutive and non-repayable incentives.
Which sectors are prioritised?
Units in aerospace and defence, electric vehicles, pharmaceuticals, IT hardware manufacturing, food processing, and technical textiles may be eligible for enhanced rates.
How does the stamp duty exemption work?
Units in Zone-1 and Zone-2 are fully exempt from stamp duty and registration charges, while Zone-3 units receive a 50% exemption. Zone-4 units are not eligible for any stamp duty concession under the standard policy.
How do I apply?
Applications are submitted via the Udyog Mitra portal (udyogmitra.karnataka.gov.in). MSMEs may also apply through the Department of Industries and Commerce or Karnataka Udyog Mitra single-window centres.
Details last verified on 3 August 2026. Source: the issuer's published information.