Karnataka Industrial Policy (2020–25) — MSME & Large Incentives
Government of Karnataka · Central government
Karnataka offers MSMEs a 10%–30% investment subsidy plus stamp duty and electricity duty exemption.
Open, rolling. Applications are accepted continuously — there is no deadline.
Key facts
- Subsidy amount
- Not specified
- Instrument
- Subsidy
- Deadline
- Rolling
About this scheme
Karnataka classifies its taluks into four zones, with Zone-1 covering the most backward areas and Zone-4 the most developed. Incentive rates rise as the zone becomes more backward.
- **Investment promotion subsidy**: Micro enterprises receive 20%–30% of fixed capital investment (FCI); Small enterprises 15%–25%; Medium enterprises 10%–20%. The higher end of each band applies in backward zones. - **Interest subsidy**: MSMEs can claim 3%–5% on term loans, applicable for 5 years. - **Stamp duty and registration exemption**: 100% in Zones 1 and 2; 50% in Zone 3. - **Electricity-duty exemption**: 100% for 5 years in Zones 1 and 2.
Aerospace and defence, electric vehicles, pharmaceuticals, IT hardware, food processing, and technical textiles are treated as priority sectors.
Who can apply
- Eligible business forms
- Not specified
- Udyam registration
- Not specified
- MSME registration
- Not specified
- DPIIT startup recognition
- Not specified
- GST registration
- Not specified
- Where the business may be based
- Karnataka
- New manufacturing MSMEs in Karnataka - New manufacturing large units in Karnataka - Eligible expansion and diversification
How to apply
1. Sign up on the Udyog Mitra portal (udyogmitra.karnataka.gov.in). 2. Determine which taluk zone applies to you — Zone-1 through Zone-4 — by consulting the zone classification list posted on the portal. 3. Provide the project documents: Udyam Registration, a CA-certified FCI statement, GSTIN, the project report, and land documents. 4. Secure the Provisional Eligibility Certificate issued by the Department of Industries and Commerce. 5. Begin production and satisfy the minimum investment and employment thresholds. 6. Once commercial production has commenced, submit an application for the Final Eligibility Certificate. 7. Lodge annual claims for the investment subsidy and the interest subsidy via the prescribed offline or online channel.
Frequently asked questions
Who can apply for Karnataka Industrial Policy 2020–25 incentives?
Karnataka's scheme covers new manufacturing MSMEs and large industrial units, as well as eligible expansion and diversification of existing units. The incentive amount depends on the taluk zone, ranging from Zone-1 (most backward) to Zone-4 (most developed).
What investment promotion subsidy is available?
Micro enterprises can claim 20%–30% of Fixed Capital Investment, small enterprises 15%–25%, and medium enterprises 10%–20%, with the higher rates applying in backward zones (Zone-1 and Zone-2). Your exact rate depends on your taluk classification.
Is this scheme equity-free?
Yes. Every benefit under this scheme — investment promotion subsidy, interest subsidy, stamp duty exemption and electricity duty exemption — is a non-dilutive, non-repayable incentive.
Which sectors are prioritised?
Aerospace and defence, electric vehicles, pharmaceuticals, IT hardware manufacturing, food processing, and technical textiles are among the priority sectors, and units operating in these areas may be eligible for enhanced rates.
How does the stamp duty exemption work?
Units in Zone-1 and Zone-2 qualify for a full waiver of stamp duty and registration charges, while those in Zone-3 get a 50% exemption. Units in Zone-4 are not granted any stamp duty concession under the standard policy.
How do I apply?
Apply via the Udyog Mitra portal at udyogmitra.karnataka.gov.in, or submit through the Department of Industries and Commerce or a Karnataka Udyog Mitra single-window centre.
Details last verified on 10 September 2026. Source: the issuer's published information.