MSME Incentives under Karnataka Industrial Policy 2025-30
Micro, Small, and Medium Enterprises (MSMEs) are the backbone of Karnataka's industrial landscape. Recognizing this, the Karnataka Industrial Policy 2025–30 offers a comprehensive and zone-based incentive package to empower these enterprises.
These benefits include capital investment subsidies, interest subsidies, stamp duty exemptions, and more—designed to make Karnataka the most MSME-friendly state in India.
Incentives for MSMEs
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Capital Subsidy |
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Category |
Zone |
General |
Special Category |
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Micro |
Zone 1 |
30% of VFA upto Rs. 30 lakhs |
35% of VFA upto Rs. 35 lakhs |
|
Zone 2 |
25% of VFA upto Rs. 25 lakhs |
30% of VFA upto Rs. 30 lakhs |
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Zone 3 |
10% of VFA upto Rs. 30 lakhs |
15% of VFA upto Rs. 15 lakhs |
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Small |
Zone 1 |
25% of VFA upto Rs. 200 lakhs |
30% of VFA upto Rs. 225 lakhs |
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Zone 2 |
20% of VFA upto Rs. 150 lakhs |
25% of VFA upto Rs. 175 lakhs |
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Zone 3 |
10% of VFA upto Rs. 50 lakhs |
15% of VFA upto Rs. 75 lakhs |
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Medium |
Zone 1 |
25% of VFA upto Rs. 10 Cr |
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Zone 2 |
20% of VFA upto Rs. 8 Cr |
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Zone 3 |
10% of VFA upto Rs. 4 Cr |
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PLI Subsidy |
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Category |
Zone |
General |
Special Category |
|
Medium |
Zone 1 |
2.5% of net sales turnover (capped at 60% of VFA) |
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Zone 2 |
2.0% of net sales turnover (capped at 60% of VFA) |
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Zone 3 |
1.0% of net sales turnover (capped at 30% ofVFA) |
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Additional Subsidy for Backward Taluks |
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|
Category |
Most Backward |
More backward |
|
Micro |
5% of VFA upto Rs. 5 Lakhs |
3% of VFA upto Rs. 3 Lakhs |
|
Small |
5% of VFA upto Rs. 10 Lakhs |
3% of VFA upto Rs. 5 Lakhs |
|
Medium |
5% of VFA upto Rs. 50 Lakhs |
3% of VFA upto Rs. 25 Lakhs |
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Additional Subsidies (All MSMEs) |
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Incentive |
Zone |
General |
Special Category |
|
Exemption of Stamp Duty for MSMEs |
Zone 1 |
100% |
100% |
|
Zone 2 |
100% |
100% |
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|
Zone 3 |
NA |
75% |
|
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Exemption of Stamp Duty for MSMEs |
Zone 1 |
Rs. 1 per 1000 |
Rs. 1 per 1000 |
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Zone 2 |
Rs. 1 per 1000 |
Rs. 1 per 1000 |
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|
Zone 3 |
NA |
Rs. 1 per 1000 |
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Reimbursement of Land Conversion Fee after commercial production for MSMEs |
Zone 1 |
100% |
100% |
|
Zone 2 |
100% |
100% |
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Zone 3 |
NA |
75% |
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Reimbursement of Land Conversion Fee after commercial production for MSMEs |
Zone 1 |
100% |
100% |
|
Zone 2 |
100% |
100% |
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Zone 3 |
NA |
75% |
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Exemption from Tax on |
Zone 1 |
100% for 7 years |
100% for 8 years |
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Zone 2 |
100% |
100% |
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Zone 3 |
NA |
75% |
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Power Subsidy |
Zone 1 |
Reimbursement of cost of power paid at INR 1.00/- per unit |
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Zone 2 |
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Zone 3 |
NA |
NA |
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Quality certification |
Zone 1,2,3 |
50% upto Rs. 5,00,000 |
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Export certification |
Zone 1,2,3 |
50% upto Rs. 5,00,000 |
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How to Apply for MSME Incentives
- Register on Udyog Mitra Portal: https://kum.karnataka.gov.in
- Submit documents: DPR, EM/Udyam certificate, land proof, etc.
- Route application through District Industries Centre (DIC).
- Monitor status online via portal.
Common Mistakes to Avoid
- Delayed application post-commissioning
- Missing zone-based eligibility
- Unverified plant & machinery invoices
- Applying without valid registrations
Summary and Download Link
MSMEs have a golden opportunity under this policy to scale operations with strong financial backing. From capital support to tax benefits, Karnataka’s incentives are both generous and structured.
Our Unique Services
- Preparation of Detailed Project Reports (DPR)
- Layout Drawings
- Facilitating various permissions required from various Govt. Departments
- Error free application processing for various subsidies and incentives
- Facilitating the arrangement of subsidies and incentives from Govt. Departments
- Advisory on Purchase of Machinery / Technology and Civil works