Capital subsidy, cheaper loans and duty relief for MSMEs in Kerala
Kerala Industrial Policy 2023: MSME incentives
The Kerala Industrial Policy 2023 lists 18 incentives for units in its 22 priority sectors, and the Directorate of Industries and Commerce and KSIDC run them as the Kerala Responsible Industry Incentive Scheme (K-RIIS) on an online portal. According to the scheme guidelines (version 2.0), units that started commercial operation on or after 1 April 2023 can apply. The policy text gives no end date, the Directorate's policy page still lists it as the current policy, and the state's Revised Budget speech of 19 June 2026 only announces a new MSME Growth Scheme that is yet to be formulated. A summary on the KSIDC policy page shows a capital subsidy of 15% up to ₹25 lakh, but the policy text, KSIDC's incentives page and the K-RIIS capital subsidy scheme all say up to 45%, so the figures below follow those. In the policy, micro means plant and machinery up to ₹1 crore and turnover up to ₹5 crore, small up to ₹10 crore and ₹50 crore, medium up to ₹50 crore and ₹250 crore.
Micro, small and medium units in Kerala, in the priority sectors the policy names
- Capital subsidy of up to 45% on new fixed capital investment, with a limit of ₹40 lakh for micro, ₹100 lakh for small and ₹200 lakh for medium units, released in one go or over up to 5 years
- A loan at 4% interest, up to ₹10 lakh, through an interest subvention of up to 6% (as the policy lists it)
- 100% exemption from electricity duty for 5 years
- Waiver of stamp duty and registration charges on land or buildings for manufacturing units: up to 100% in government and notified private industrial parks, and anywhere in the state for women, SC/ST, persons with disabilities and transgender entrepreneurs
- 50% of the cost of compulsory marks such as CE, FDA, ISO and BIS, up to ₹25 lakh per unit a year
- 20% of the cost of software and machinery for Industry 4.0 upgrades, up to ₹25 lakh per unit during the policy period
- 50% of the cost of listing on the SME platform of NSE or BSE, up to ₹1 crore
- A manufacturing or service unit (trading is excluded) in one of the 22 priority sectors, with Udyam registration
- Commercial operation started on or after 1 April 2023; for an expansion, new investment that adds at least 25% to the existing plant, machinery and equipment
- An application within 2 years of starting commercial operation (up to 1 more year for reasons such as court orders or emergencies)
- The unit must keep working for 5 years after the assistance; government-controlled units and activities on the negative list are not eligible
Online through the K-RIIS portal (kriis.kerala.gov.in) after the unit has started operating. The General Manager of your District Industries Centre checks and recommends the application. Claims up to ₹200 lakh are sanctioned by a district committee and larger ones by a state committee. The total fee is 1% of the sanctioned amount, at least ₹20,000 per claim.