Gujarat Industrial Policy 2020 – Scheme for Capital Subsidy to Large Industries and Thrust Sectors

Gujarat Industrial Policy 2020 – Scheme for Capital Subsidy to Large Industries and Thrust Sectors

Goverment of Gujarat has issued Gujarat Industrial Policy 2020 for industrial development in the state. In this article we will discuss about the Scheme for Capital Subsidy to Large Industries and Thrust Sector


Operative Period of the Scheme

This scheme will remain in force from 07-08-2020 to 06-08-2025 (for 5 years)


Quantum of Capital Subsidy or Incentive 

The industrial undertaking is eligible for Capital Subsidy according to classification of Talukas in the Gujarat State. To see the classification of Talukas you can follow this link. (Click Here) 

The rate of capital subsidy shall be as below.

Taluka CategoryGeneral SectorsThrust Sectors
Category I10% of eligible fixed capital investment (excluding land)12% of eligible fixed capital investment (excluding land)
Category II8% of eligible fixed capital investment (excluding land)10% of eligible fixed capital investment (excluding land)
Category III4% of eligible fixed capital investment (excluding land)6% of eligible fixed capital investment (excluding land)


Eligible Undertakings 

A new industrial unit or an existing industrial unit doing expansion or diversification and who commences the commercial production during the operative period of 5 years of the scheme.

Any industrial undertaking that has availed any incentive for the same assets under any other scheme of state government will not be eligible.


Meaning of Expansion 

Expansion means where any existing industrial unit increases its investment in gross fixed capital by at least 50% of its existing project in the same premises, of which at least 60% of investment is made in plant and machinery and also increases its installed capacity by at least 50% of existing products for which expansion is carried out.

Such expansion will be eligible only if the existing industrial unit has reached the utilisation of existing installed capacity at least to the extent of 75% in any one of the preceding 3 financial years. Capacity utilisation of year 2020-21 (COVID -19) will not be considered at the option of the unit.


Thrust Sectors

Following manufacturing sectors have been identified as thrust sector


Electrical machinery and equipment

Industrial machinery and equipment

Auto and auto components


Technical Textiles

Agro and Food processing

Pharmaceuticals and medical devices

Gems and jewellery

Chemicals (in designated area)

Industry 4.0 manufacturing

Electric Vehicle and its components

Waste management projects

Green energy (solar & wind equipment)

Eco friendly compostable material

100% export oriented units irrespective of sector


Eligible Fixed Capital Investment

Eligible fixed capital investment means investment made on or after 07-08-2020 upto the date of completion of the investment period and includes following items (subject to certain terms and conditions)


New Building

Other Constructions

Plant and Machinery

Technology, designs, drawings and patents

Project related infrastructure


Ineligible Fixed Capital Investment

Following expenditures will not form part of eligible fixed capital investment.


Land and land development

Working capital



Preliminary and pre operative expenses

Indigenious second hand plant and machinery

Interest capitalised

Power generation except for captive use

Rented or leased property


Can MSMEs apply under this scheme

The MSME enterprises are entitled to opt for this scheme subject to condition that it will not be eligible for capital subsidy and interest subsidy under the incentive scheme of MSME under Gujarat Industrial Policy 2020.


Investment period for calculation of eligible fixed capital investment

In order to be eligible for the incentive under this scheme, the industrial unit must have commenced production during the operative period of the scheme.

The investment made in assets upto the following extended period of time will also be included in the eligible fixed capital investment.

1MSME Project12 months from DOCP
2Gross capital investment upto 1000 crores18 months from DOCP
3Gross capital investment upto 5000 crores24 months from DOCP
4Gross capital investment upto 10000 crores30 months from DOCP
5Gross capital investment above 10000 crores36 months from DOCP

DOCP = Date of commercial production


Disbursement of Incentive 

The eligible capital subsidy will be given over a period of 10 years from the date of commercial production (DOCP) in equal annual instalments subject to annual ceiling of INR 40 crores.


Time limit for application under the scheme 

The industrial unit shall apply for registration under the scheme within a period of one year from the date of commercial production.


Other Conditions

The unit shall ensure employment of Gujarat domiciled persons to the extent of at least 85% of its total employees in all categories.

The Gujarat domiciled persons employed in managerial and supervisory roles shall not be less than 60% of the total persons employed in this category.


Download Government Notification

To download the government notification of Scheme of Capital Subsidy to Large Industries and Thrust Sectors, you can (Click Here) 


Compilation by : Amit Mundhra FCA

The author is a member of ICAI. He can be reached at

Author: Amit Mundhra CA
Amit Mundhra FCA is a Fellow member of the Institute of Chartered Accountant of India. He is senior partner in Karnani & Co., Chartered Accountants. He is having 20+ years of experience in Income Tax, GST, VAT, Accounting, Audit and Assurance field.

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