Pavala Vaddi Scheme Telangana
Commissionerate of Industries, Government of Telangana · Central government
Telangana 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 Telangana's MSME Policy 2024, a new micro or small enterprise can reduce the effective annual cost of a term loan to approximately 3%. The state reimburses interest paid on a loan taken for eligible fixed capital investment, covering the portion that exceeds 3% per annum, up to a ceiling of 9% per annum.
This interest reimbursement is available for five years, counted from the date commercial production begins. The scheme operates as a refund of interest actually disbursed, rather than a subsidised loan. The enterprise borrows from its bank at standard terms, repays the loan, and subsequently claims the excess interest 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 expenditure. - Start commercial operations and file the claim through the Telangana TS-iPASS portal. - Furnish annual bank interest certificates to receive the reimbursement.
Frequently asked questions
How does Pavala Vaddi work?
You continue paying your term loan as usual, and the state refunds the interest charged above 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 extended by your bank on its own terms, and the state 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.