Capital subsidy and interest support for MSMEs in Tamil Nadu
Tamil Nadu MSME Policy 2021 incentives
The MSME Policy 2021 was approved by G.O.(Ms) No.11 of 16 February 2021, and the MSME Department issued its incentive guidelines in G.O.(Ms) No.37 of 6 July 2021. According to the policy document, it is valid from the date the government notified it and gives no end date. The Revised Budget Speech for 2026-27 (5 August 2026) says the state will release a new Tamil Nadu Industrial Policy, but the Guidance Tamil Nadu policy page lists no such policy and no later MSME policy, and the department's incentives portal still carries the 2021 guidelines, so we found no order that replaces them. The same speech sets aside ₹352 crore for the Capital Subsidy Scheme this year. The rates below are from the policy and its guidelines, so check the incentives page on the department portal for later orders before you plan around a number.
New and expanding micro, small and medium units in Tamil Nadu
- Capital subsidy for micro units: 25% of plant and machinery value, up to ₹25 lakh, plus a further 10%, up to ₹5 lakh (according to the policy document)
- Capital subsidy for small and medium units: 25% of plant and machinery value, up to ₹150 lakh in three instalments, in 254 industrially backward blocks and in government industrial estates (all 388 blocks for agro-based units)
- Special capital subsidy for listed thrust sectors: 25%, up to ₹150 lakh
- Interest subsidy of 5% on a technology upgradation term loan, up to ₹25 lakh per unit over five years
- Interest subsidy of 5% on a CGTMSE-covered term loan, up to ₹20 lakh per unit over five years
- Payroll subsidy, generator subsidy and stamp duty exemption on mortgage documents for micro units
- New unit, or expansion or diversification of an existing one
- An activity not on the policy's ineligible list
- A claim made within one year of starting production
Through your District Industries Centre. The MSME Department portal (msmeonline.tn.gov.in) has an Entrepreneur Login and the incentives page with the guidelines order.