§1Who it is for

  • New micro and small manufacturing enterprises, and existing ones investing at least 25% more in fixed assets

Useful if

Micro/small manufacturers outside Bengaluru

Do not spend time on it if

Bengaluru Urban units (no zone 3 benefit outside Bengaluru Rural district)

§2Eligibility

  1. Micro: P&M < Rs.1 crore; small: Rs.1-10 crore (policy's own definition for incentives, turnover not counted)
  2. Special category = units owned exclusively by SC/ST, women, minorities, physically challenged, ex-servicemen
  3. Manufacturing (and listed service enterprises); Annexure 2 negative list excluded
  4. Expansion/diversification/modernisation needs additional investment of at least 25% of original (not depreciated) fixed assets
  5. Commercial production within 3 years of DLSWCC/SLSWCC approval or land possession
  6. Minimum 70% Kannadigas overall and 100% in Group D; shortfall reduces subsidy proportionately
  7. Only differential amount if any other GoK/GoI capital subsidy taken
  8. Available to self-financed and bank-financed units

§3Benefits

  • Micro, Zone 1: 30% of VFA max Rs.30 lakh (special category 35%, max Rs.35 lakh)
  • Micro, Zone 2: 25% max Rs.25 lakh (special 30%, max Rs.30 lakh)
  • Micro, Zone 3 (only Bengaluru Rural district): 10% max Rs.10 lakh (special 15%, max Rs.15 lakh)
  • Small, Zone 1: 25% max Rs.200 lakh (special 30%, max Rs.225 lakh)
  • Small, Zone 2: 20% max Rs.150 lakh (special 25%, max Rs.175 lakh)
  • Small, Zone 3: 10% max Rs.50 lakh (special 15%, max Rs.75 lakh)
  • Extra in Nanjundappa taluks: micro +5% (max Rs.5 lakh) most backward / +3% (max Rs.3 lakh) more backward; small +5% (max Rs.10 lakh) / +3% (max Rs.5 lakh)

§4Norms — pattern of assistance

  1. Paid in 2 instalments
  2. Apply within 12 months of commercial production - failing which ineligible

Released by seniority subject to funds

  1. Leased premises: 10+ year lease - P&M only; 20+ year lease - P&M and building
  2. Cash payments for fixed assets only up to Rs.2,00,000; rest by RTGS/NEFT

§5Documents

Tick each one as you get it ready.

First sale invoice

Power service letter

§6How to apply

  1. 1

    Apply via portal/online/physically to Joint Director, DIC within 12 months of commercial production

  2. 2

    Physical verification by DIC; decision by District Level Committee; sanction order Annexure-12.8; undertaking Annexure-12.9

§7Pros and cons

Merits

  • Higher rates in Zone 1 (199 of 240 taluks) push units away from Bengaluru (Annexure 3 zones)
  • Self-financed units also eligible

Demerits

  • Released 'on seniority subject to availability of funds' (operative guidelines)
  • 70% Kannadiga hiring condition with recovery/reduction on shortfall
  • Name board must be 60% Kannada to claim

→Related schemes

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Sources

  1. Karnataka Operative Guidelines, Package of Incentives and Concessions under Industrial Policy 2025-30 (CI 123 SPI 2024, 10.04.2026), Invest Karnataka
  2. ICAI MSME & Startup Committee - Karnataka State MSME Policy 2026 (secondary)

Checked on 18 October 2026. For information only — confirm with the department or bank. Spotted a mistake? Report it.