Telangana Pavala Vaddi Interest Subsidy
Commissionerate of Industries, Government of Telangana · Central government
Telangana scheme reimburses interest above 3% p.a. on term loans for new micro and small enterprises, capped at 9% p.a. for five years.
Open, rolling. Applications are accepted continuously — there is no deadline.
Key facts
- Subsidy amount
- Not specified
- Instrument
- Subsidy
- Deadline
- Rolling
- Disbursement
- Reimbursed after spend
About this scheme
Under the MSME Policy 2024, Telangana offers interest reimbursement on term loans for new micro and small enterprises. The scheme, Pavala Vaddi, reduces the effective annual cost of a term loan to approximately 3% for eligible businesses. The state repays the interest component that exceeds 3% per annum, with a ceiling of 9% per annum, on loans taken against qualifying fixed capital investment.
The benefit is available for five years from the start of commercial production. It operates as a reimbursement of interest actually paid, not as a subsidised loan. The enterprise borrows from its bank at standard terms, services the loan, and subsequently claims the differential amount from the department.
Who can apply
- Eligible business forms
- Not specified
- Udyam registration
- Not specified
- MSME registration
- Required
- DPIIT startup recognition
- Not required
- GST registration
- Not specified
- Where the business may be based
- Telangana
- New Micro and Small Enterprises in Telangana are eligible. - A term loan must be taken on eligible Fixed Capital Investment. - Only interest in excess of 3% per annum is reimbursed. - Reimbursement is capped at 9% per annum. - The benefit is available for 5 years from the date of commencement of commercial production.
How to apply
- Obtain a term loan from a bank or financial institution for qualifying fixed capital investment. - Start commercial operations and file the claim through the Telangana TS-iPASS portal. - Furnish bank interest certificates annually to receive the reimbursement.
Frequently asked questions
How does Pavala Vaddi work?
You continue to repay your term loan as usual, and the state refunds the interest exceeding 3% per annum, capped at 9% per annum.
How long does the benefit last?
Five years from the date commercial production begins.
Which loans qualify?
Term loans for eligible Fixed Capital Investment taken by new micro and small enterprises are covered under this scheme.
Is this a cheaper loan from the government?
No. The loan is provided by your bank on its own terms; the state only reimburses a portion of the interest you have already paid.
Sectors
- Telangana
- Pavalavaddi
- Interestsubsidy
- Termloan
- Msme
Details last verified on 9 September 2026. Source: the issuer's published information.