Capital subsidy, stamp duty and power support for MSMEs in Karnataka
Karnataka Industrial Policy 2025-30: MSME incentives
The Department of Industries and Commerce lists the Industrial Policy 2025-30 and its operative guidelines on its site. According to the guidelines, approved on 10 April 2026, the policy is valid for five years or until a new policy is announced. The amount depends on the size of the unit (by plant and machinery: micro up to ₹1 crore, small above ₹1 crore up to ₹10 crore, medium above ₹10 crore up to ₹50 crore) and on the zone of the taluk. The rates below are for the general category. Units owned by SC/ST, women, minorities, physically challenged people and ex-servicemen get higher rates.
Micro, small and medium units investing in Karnataka
- Capital subsidy for micro units on the value of fixed assets: 30% up to ₹30 lakh in Zone 1, 25% up to ₹25 lakh in Zone 2, 10% up to ₹10 lakh in Zone 3 (Bengaluru Rural only)
- Capital subsidy for small units: 25% up to ₹200 lakh in Zone 1, 20% up to ₹150 lakh in Zone 2, 10% up to ₹50 lakh in Zone 3
- Medium units choose one: a capital subsidy (25% up to ₹10 crore in Zone 1, in four yearly instalments) or an incentive of 2.5% of net sales for seven years in Zone 1
- Stamp duty exemption of 100% in Zones 1 and 2 on loan documents and on leases and sales of plots and sheds
- Reimbursement of ₹1 per unit of power for three years for micro and small units in Zones 1 and 2
- Exemption from the tax on electricity tariff: 100% for 7 years in Zone 1 and 6 years in Zone 2
- Approval of the project by the district or state single window committee
- Production to start within three years of that approval
- An application for the subsidy within one year of starting commercial production
- For an existing unit, new investment of at least 25% of its existing fixed assets
Through the Single Window System on the Invest Karnataka portal (investkarnataka.co.in) and the District Industries Centre. The policy and operative guidelines can be downloaded there and from the department site.