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| Scheme Policy | Details |
|---|---|
| State | Karnataka |
| Policy | Karnataka Industrial Policy 2025–30 |
| Implementing Department | Department of Industries & Commerce, Government of Karnataka |
| District Agency | District Industries Centre (DIC) |
| DIC Committee | District Level Committee (DLC) |
| Current operative guidelines | Approved 10-Apr-2026 |
| Policy effective from | 08-Feb-2025 |
| Policy period | 5 years / until new policy |
| Main beneficiaries | Micro, Small & Medium Enterprises |
| Special categories | SC/ST, Women, Minorities, PwD and Ex-Servicemen |
| Application route | Invest Karnataka / online or prescribed DIC process |
| Major benefits | Capital subsidy, electricity-tax exemption, power subsidy, stamp-duty benefit, land-conversion reimbursement, sustainability incentives, quality/export support |
The Karnataka Industrial Policy 2025–30 defines MSMEs for incentive purposes as follows:
| Enterprise | Investment in Plant & Machinery / Equipment |
|---|---|
| Micro | Less than ₹1 crore |
| Small | ₹1 crore to ₹10 crore |
| Medium | ₹10 crore to ₹50 crore |
These are the policy-specific investment definitions for calculating Karnataka incentives, irrespective of later changes in Government of India MSME classification.
The policy covers:
The Karnataka DIC incentive framework primarily covers:
Manufacturing
Eligible services
Specified industrial-support services can also qualify.
The official incentive calculator specifically lists eligible services such as:
There is also a specific negative list. Examples include breweries/distilleries (with specified exceptions), tobacco products, firecracker manufacturing, ozone-depleting-substance industries and certain other activities.
General category
| Zone | Subsidy | Maximum |
|---|---|---|
| Zone 1 | 30% of VFA | ₹30 lakh |
| Zone 2 | 25% of VFA | ₹25 lakh |
| Zone 3 | 10% of VFA | ₹10 lakh |
VFA = Value of Fixed Assets.
Special category
Special category means:
| Zone | Subsidy | Maximum |
|---|---|---|
| Zone 1 | 35% of VFA | ₹35 lakh |
| Zone 2 | 30% of VFA | ₹30 lakh |
| Zone 3 | 15% of VFA | ₹15 lakh |
The guidelines identify Zone 3 as only Bengaluru Rural District for this MSME table.
General category
| Zone | Subsidy | Maximum |
|---|---|---|
| Zone 1 | 25% of VFA | ₹2 crore |
| Zone 2 | 20% of VFA | ₹1.50 crore |
| Zone 3 | 10% of VFA | ₹50 lakh |
Special category
| Zone | Subsidy | Maximum |
|---|---|---|
| Zone 1 | 30% of VFA | ₹2.25 crore |
| Zone 2 | 25% of VFA | ₹1.75 crore |
| Zone 3 | 15% of VFA | ₹75 lakh |
The subsidy is disbursed in two instalments.
Medium enterprises have a choice between:
The choice must be notified to the Government when filing the subsidy claim and remains applicable to the approved investment.
Capital subsidy
| Zone | Subsidy | Maximum |
|---|---|---|
| Zone 1 | 25% of VFA | ₹10 crore |
| Zone 2 | 20% of VFA | ₹8 crore |
| Zone 3 | 10% of VFA | ₹4 crore |
Capital subsidy is released in 4 equal annual instalments after commercial production.
Medium enterprises can alternatively select PLI.
| Zone | PLI on Net Sales Turnover | Maximum VFA-linked limit |
|---|---|---|
| Zone 1 | 2.5% | 60% of VFA |
| Zone 2 | 2.0% | 60% of VFA |
| Zone 3 | 1.0% | 30% of VFA |
Period
Up to 7 years from commencement of commercial production.
The cumulative PLI is restricted by the applicable period/VFA limit, whichever is reached earlier, and there is no carry-forward.
Karnataka provides additional incentives for taluks classified as Most Backward and More Backward under the Dr. D.M. Nanjundappa Committee classification.
Micro
Small
Medium
For Medium enterprises using PLI, additional 5% / 3% of the applicable PLI, subject to the prescribed cap, is available.
For eligible MSMEs:
General
100% stamp-duty exemption/reimbursement
in:
Zone 3: Nil for general MSMEs.
Special category
| Zone | Stamp Duty |
|---|---|
| Zone 1 | 100% |
| Zone 2 | 100% |
| Zone 3 | 75% |
Special category includes SC/ST, Women, Minorities, PwD and Ex-Servicemen.
Registration charge
Concessional registration charge:
₹1 per ₹1,000
for eligible transactions.
The benefit applies to eligible industrial land, sheds and specified industrial property transactions and also certain loan documents.
Important current-status note: the 2025–30 guidelines say that the 100% stamp-duty benefit is to be implemented through the required amendment/notification; until then, eligible enterprises may continue to use the applicable 2020–25 stamp-duty mechanism.
After commercial production:
| Category | Zone 1 | Zone 2 | Zone 3 |
|---|---|---|---|
| General MSME | 100% | 100% | Nil |
| Special category | 100% | 100% | 75% |
The reimbursement is released after implementation of the project and commencement of commercial production, subject to sanction and availability of funds.
For MSMEs:
| Entrepreneur | Zone 1 | Zone 2 | Zone 3 |
|---|---|---|---|
| General | 100% for 7 years | 100% for 6 years | Nil |
| Special | 100% for 8 years | 100% for 7 years | 100% for 4 years |
Special category includes:
Current implementation caveat: the guidelines state that the electricity-tax exemption cannot be certified under the 2025–30 policy until the Energy Department issues the required concurrence notification.
Eligible Micro and Small Enterprises receive:
| Zone | Power Subsidy |
|---|---|
| Zone 1 | ₹1/unit for 3 years |
| Zone 2 | ₹1/unit for 3 years |
| Zone 3 | Nil |
The claim is to be submitted once every six months, during June and December.
Karnataka 2025–30 introduces sustainability-linked incentives.
Examples include:
Environmental infrastructure
50% of equipment cost, maximum ₹50 lakh.
Zero Liquid Discharge
50% of equipment cost, maximum ₹50 lakh.
Air-pollution control
For equipment such as:
50% of equipment cost, maximum ₹50 lakh.
Energy-efficiency measures
50% of certification costs, maximum ₹50 lakh under the specified category.
Electrification
For low-temperature thermal processes and energy backup conversion to Li-ion BESS:
50% of equipment cost, maximum ₹50 lakh.
Conversion of vehicles to EV
10% of cost, maximum ₹10 lakh.
The combined sustainability-linked incentives are capped at 10% of VFA for the listed MSME incentives.
For Small and above investments:
Rainwater harvesting
Mandatory for building structures.
For Medium and above, water-body restoration is also prescribed wherever possible within the industrial plot/area.
For Karnataka policy incentive purposes:
| Category | Investment |
|---|---|
| Micro | < ₹1 crore |
| Small | ₹1 crore–₹10 crore |
| Medium | ₹10 crore–₹50 crore |
| Large | Above Medium up to ₹300 crore |
| Mega | >₹300 crore to ₹1,000 crore |
| Ultra Mega | >₹1,000 crore |
The policy-specific definitions are important when calculating incentives.
Key conditions include:
| Your Required Point | Karnataka DIC |
|---|---|
| Scheme Policy | Karnataka Industrial Policy 2025–30 |
| Eligibility | Micro, Small, Medium + eligible manufacturing/specified services |
| Applicable Industries | Manufacturing + specified industrial services |
| Subsidy/Incentive | Capital subsidy, PLI, power subsidy, electricity-tax exemption, stamp duty, land conversion, green incentives |
| Investment Limits | Micro <₹1Cr; Small ₹1–10Cr; Medium ₹10–50Cr |
| Financial Benefits | Capital subsidy up to ₹10Cr for Medium; up to ₹2.25Cr for Small; up to ₹35L for Micro |
| Special Category | SC/ST, Women, Minorities, PwD, Ex-Servicemen |
| Backward Area Benefit | Additional 3%/5% subject to caps |
| Power Subsidy | ₹1/unit for 3 years, Zone 1 & 2, Micro/Small |
| Electricity Tax | Up to 100% exemption depending on zone/category |
| Land Conversion | Up to 100% reimbursement |
| Stamp Duty | Up to 100% |
| Application | Online/portal → DIC → DLC |
| Claim deadline | Generally within 12 months of commercial production for MSME subsidy |
| Commercial production deadline | Generally within 3 years of approval |
| Required Documents | CAF, incorporation/partnership, Udyam, land, investment, bank/CA certificates, first invoice, approvals, etc. |
| Validity | 08-Feb-2025 for 5 years / until new policy |
| Nodal Agency | District Industries Centre |
| Sanctioning Authority | District Level Committee |
| Official Portal | Invest Karnataka / Karnataka Single Window System |