INTEREST SUBSIDY SCHEME

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INTEREST SUBSIDY SCHEME

Interest Subsidy Scheme – Boosting Financial Support for Haryana's MSMEs

Introduction

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India’s economy. They generate employment, drive innovation, and help local communities prosper. However, one of the key hurdles faced by MSMEs, especially in their early stages or while expanding operations, is access to affordable finance. Recognizing this critical challenge, the Government of Haryana launched the Interest Subsidy Scheme under the Haryana Enterprises and Employment Policy (HEEP) 2020 to reduce the interest burden on enterprises and promote inclusive industrial growth.

This scheme is a flagship initiative by the Department of Industries and Commerce, Haryana, to provide interest subsidies on term loans availed by eligible enterprises for new units or for expansion and diversification of existing ones. Whether you are launching a startup, setting up a manufacturing unit, or investing in new machinery, this scheme can substantially reduce your financial load by covering a significant portion of your interest payments.

At Advice Consultant, we help entrepreneurs and businesses unlock the full potential of government schemes. Our expert team simplifies the subsidy application process and maximizes your benefits under the Interest Subsidy Scheme.

Why Interest Subsidy?

An interest subsidy is a direct financial benefit in which a part of the interest on your loan is reimbursed by the government. This eases the repayment pressure, boosts cash flow, and encourages capital investment. The Haryana Interest Subsidy Scheme is structured to incentivize entrepreneurs, women-led units, startups in thrust sectors, and businesses investing in rural and underdeveloped areas.

Key Features of the Interest Subsidy Scheme

1. Wide Eligibility

The scheme covers:

  • New Micro and Small Enterprises (MSEs) in manufacturing or service sectors
  • Existing MSEs expanding or diversifying operations
  • Startups in thrust sectors and import substitution
  • Enterprises in agro-based, food processing, and allied sectors
  • Units set up by Women/SC/ST entrepreneurs

Enterprises must have obtained their term loan on or after January 1, 2021, and must apply for the subsidy within three months from the close of the financial year in which interest payment is made.

2. Area-Based Incentives

The scheme gives special preference to units located in backward regions, as categorized into Blocks B, C, and D. Subsidy rates and duration differ based on block classification to promote balanced regional development.

Interest Subsidy Structure

Let’s break down the benefits offered under the scheme based on the enterprise type and area of operation:

A. New Micro and Small Enterprises

  • C & D Blocks: 5% interest subsidy on term loans, subject to a maximum of ₹20 lakh/year, for 5 years
  • B Block: 5% subsidy up to ₹20 lakh/year for 3 years

B. Women/SC/ST Led Micro Enterprises

  • B, C & D Blocks: 6% interest subsidy up to ₹20 lakh/year for 5 years

C. New MSEs in Thrust Sectors or Import Substitution

  • C & D Blocks: 6% subsidy up to ₹20 lakh/year for 7 years
  • B Block: 6% subsidy up to ₹20 lakh/year for 5 years

D. Existing Enterprises (Expansion or Diversification)

  • Subsidy applies only if additional investment is at least 50% of the existing plant and machinery cost.
  • One-time benefit during the scheme period.
  • Subsidy rate and duration depend on enterprise category and block location (5%-7%).

E. Agro-Based, Food Processing, Bio-Energy Enterprises

  • C & D Blocks: 7% interest subsidy up to ₹20 lakh/year for 7 years
  • B Block: 7% interest subsidy for 5 years

Thrust Sectors – A High-Priority Category

The Haryana government identifies eight strategic thrust sectors that are considered critical for sustainable economic development and import reduction. Enterprises in these sectors receive higher subsidies and longer durations under the Interest Subsidy Scheme:

  1. Auto & Auto Components
  2. Agro-based, Food Processing & Allied Industries
  3. Textiles & Apparels
  4. Electronics System Design & Manufacturing (ESDM)
  5. Defense & Aerospace Manufacturing
  6. Pharmaceuticals & Medical Devices
  7. Chemicals & Petrochemicals
  8. Large-Scale Energy & Data Storage

Eligibility Conditions

To benefit from the scheme, an enterprise must fulfill the following conditions:

  • Be located in Haryana and registered under Udyam or any other applicable regulatory body
  • Avail a term loan from a recognized financial institution or bank after 01.01.2021
  • Submit a duly filled application along with supporting documents within 3 months from the end of the relevant financial year
  • Not be in default of repayment at the time of claiming the subsidy
  • Comply with environmental and statutory regulations

Documents Required

A comprehensive list of documents must be submitted with the application:

  • Copy of Udyam Registration Certificate
  • Term loan sanction letter and loan disbursement proof
  • Interest payment certificate from the lending institution
  • Audited balance sheet and profit & loss account
  • Bank statement showing interest deduction
  • Expansion/Diversification project plan (if applicable)
  • CA-certified statement of investment in plant & machinery
  • Rent/lease documents or ownership proof of premises
  • Proof of unit location (B/C/D category certificate if required)

Advice Consultant offers complete handholding to prepare and compile all required documents accurately and within deadlines.

How Advice Consultant Assists You

Government incentive schemes can be highly beneficial but navigating the application process can be complex. Advice Consultant bridges the gap between policy and practice with services that include:

  • Eligibility assessment and initial consultation
  • Guidance on financial structuring and documentation
  • Preparation of interest subsidy claim files
  • Interaction with industry department and follow-up
  • Timely submission to avoid disqualification

We have helped over 500 MSMEs across Haryana claim benefits under various industrial schemes. Let us help your enterprise grow smarter and faster.

Benefits of Availing Interest Subsidy

  • Lower Cost of Capital: Reduce your effective interest burden and increase profit margins
  • Boost to Expansion Plans: Use savings to invest in new machinery, land, or human resources
  • Encouragement for New Entrepreneurs: Reduced risk allows startups to innovate and scale
  • Promotes Inclusive Growth: Special support for women, SC/ST entrepreneurs, and backward blocks
  • Ecosystem Development: Supports clusters, local supply chains, and employment generation

Frequently Asked Questions (FAQs)

Q. Can I apply for this scheme if I am already receiving another subsidy?
Yes, but cross-check with scheme guidelines to avoid duplication of benefits.

Q. What happens if I miss the 3-month deadline for application?
Your claim may be rejected. Early consultation with us ensures you stay on track.

Q. Can service sector units apply?
Yes, if they are registered as Micro or Small Enterprises and have availed a term loan.

Q. What is the definition of Expansion or Diversification?
It includes setting up new product lines, capacity enhancement, or technological upgrades with at least 50% new investment in plant and machinery.

Conclusion

The Interest Subsidy Scheme of Haryana is a game-changer for MSMEs aiming to reduce their capital cost and improve financial viability. Whether you're starting a new venture, upgrading technology, or setting up a unit in rural Haryana, this scheme offers you a robust financial cushion.

Partner with Advice Consultant to leverage this opportunity and secure government assistance with expert guidance and timely documentation.

 


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