Andhra Pradesh MSME & Entrepreneur Development Policy (4.0) 2024-29
Up to 45%
Capital Subsidy of FCI (Special Category, Micro & Small)
75% FCI
Overall Cap on Combined Incentives
100% SGST
Reimbursed 5 Years, Annual Cap 5% of Turnover
₹500 Cr
Dedicated Corpus During Policy Period
Why the policy exists
A five-year MSME-dedicated policy — capital subsidy up to 45% of FCI, technology upgradation subsidy up to 40% for expansion units, 100% net SGST reimbursement for 5 years, power/skill/audit reimbursements, a ₹100 Cr state credit-guarantee corpus with CGTMSE, and a 500 MSME Champions programme — under the motto “One Family, One Entrepreneur by 2030”
The AP MSME & Entrepreneur Development Policy (4.0) 2024-29 is the State's first dedicated MSME policy under the IDP 4.0 framework, launched to transform 'Made in Andhra Pradesh' into a competitive, inclusive and preferred global brand, supporting MSMEs across their full life cycle with special emphasis on entrepreneurship. It converges with MoMSME programmes (RAMP, MSECDP, CHAMPIONS) under the 'Viksit Bharat' priorities.
Vision: To spur the growth of MSMEs in the State and transform Andhra Pradesh into a state with “One Family, One Entrepreneur” by 2030.
Guiding principles
- •Formalization of the sector — bring new and existing entrepreneurs into the organized fold.
- •Lean & clean production; ESG-aligned, sustainable and circular growth.
- •Integration in global supply chains; product competitiveness through cost reduction.
- •Infrastructural support — 175+ MSME parks (GoI assistance + GoAP + PPP, including Developer model).
- •Capacity building; digitalization & marketing (AI-enabled MSME One platform, ONDC promotion).
- •Decentralization of energy generation (rooftop solar); inclusion, equity and diversity across women, BC/SC/ST, start-ups, sick units and backward regions.
Quantified targets for the policy period
| Parameter | Target |
|---|---|
| Investment | Additional INR 50,000 Cr in manufacturing from MSMEs |
| Formalization | 22 lakh MSMEs (manufacturing + services) formalized by 2029 |
| Employment | More than 5 lakh direct and indirect jobs |
| Exports | Double MSME exports to USD 12 Bn (INR 99,600 Cr) by 2029 |
| Global Value Chains | 500+ MSME Champions integrated into GVCs |
| Technology support | 5 sector-specific Centres of Excellence / Technology / Extension centres |
| Corpus | INR 500 Cr set aside during the policy period, with maximum utilization ensured |
Valid for 5 years from the date of policy notification, or till a new Policy | Applicable to the entire State — new units and expansions | Administered by the Commissionerate of Industries with APMSMEDC as implementing agency
What qualifies, and under whose decision
Key Definitions — MSMED Act, 2006 (Udyam registration mandatory)
| Class | Investment in Plant & Machinery / Equipment | Turnover |
|---|---|---|
| Micro Enterprise | Does not exceed INR 1 Crore | Does not exceed INR 5 Crore |
| Small Enterprise | Does not exceed INR 10 Crore | Does not exceed INR 50 Crore |
| Medium Enterprise | Does not exceed INR 50 Crore | Does not exceed INR 250 Crore |
Classification follows Gazette Notification S.O. 2119(E) dated 26.06.2020 under the MSMED Act, 2006, as amended by GoI from time to time. The entity must be registered on the Udyam portal.
Startup definition (G.S.R. 127(E) dated 19.02.2019, as amended)
- •Up to 10 years from incorporation/registration, as a private limited company, registered partnership firm (Sec. 59, Partnership Act 1932) or LLP.
- •Turnover in any financial year since incorporation has not exceeded INR 100 Crore.
- •Working towards innovation/development/improvement of products, processes or services, or a scalable business model with high employment/wealth-creation potential.
- •An entity formed by splitting up or reconstruction of an existing business is not a Startup.
Categories Covered
| Category | Covers |
|---|---|
| New enterprises | New and existing enterprises investing in and establishing new units — eligible for Capital Subsidy stream |
| Expansion/diversification units | Existing enterprises investing in expansion — eligible for Technology Upgradation stream |
| Special Category | Enterprises wholly owned by women / BC / SC / ST / minority / specially-abled / transgender entrepreneurs having domicile in the State — enhanced subsidy rates |
| SC/ST enterprises (Transport Service Activities) | Separate capital-subsidy slab under the Capital Subsidy table |
Two threshold conditions: (1) Incentives are applicable only for enterprises involved in Manufacturing activity during the policy period (except where the tables expressly cover service activities); (2) the overall incentive an MSME can claim through combinations under this policy shall not exceed 75% of FCI.
Subsidy quantum — exact figures
A. Capital Subsidy (new enterprises only)
| Category | Micro | Small | Medium |
|---|---|---|---|
| General (Manufacturing & Service activities) | 25% of FCI, cap INR 25 Lakh — on CoD/1st invoice, 2 annual installments | 25% of FCI, cap INR 1.5 Cr — 3 annual installments | 25% of FCI, cap INR 7 Cr — 4 annual installments |
| Special Category (Manufacturing & Service activities) | 45% of FCI, cap INR 45 Lakh — 2 annual installments | 45% of FCI, cap INR 4.5 Cr — 3 annual installments | 35% of FCI, cap INR 7 Cr — 4 annual installments |
| SC/ST enterprises (Transport Service Activities) | 45% of FCI, cap INR 45 Lakh — 2 annual installments | 45% of FCI, cap INR 75 Lakh — 2 annual installments | 35% of FCI, cap INR 75 Lakh — 2 annual installments |
B. Technology Upgradation / Modernization (expansion & diversification units only)
| Category | Micro | Small | Medium |
|---|---|---|---|
| General | 20% of FCI, cap INR 20 Lakh — 2 annual installments | 20% of FCI, cap INR 2 Cr — 3 annual installments | 20% of FCI, cap INR 5 Cr — 4 annual installments |
| Special Category | 40% of FCI, cap INR 40 Lakh — 2 annual installments | 40% of FCI, cap INR 4 Cr — 3 annual installments | 30% of FCI, cap INR 5 Cr — 4 annual installments |
C. Power Cost Reimbursement (5 years from DCP)
| Category | Micro | Small | Medium |
|---|---|---|---|
| General | INR 1/unit, cap INR 1 Lakh p.a. | INR 1/unit, cap INR 5 Lakh p.a. | INR 1/unit, cap INR 15 Lakh p.a. |
| Special Category | INR 1.5/unit, cap INR 1 Lakh p.a. | INR 1.5/unit, cap INR 5 Lakh p.a. | INR 1/unit, cap INR 15 Lakh p.a. |
D. Net SGST Reimbursement
| Support | Micro / Small / Medium |
|---|---|
| Net SGST Reimbursement | 100% for 5 years, with an annual cap of 5% of annual turnover; total SGST incentive shall not exceed 100% of FCI |
E. Skill Upgradation Cost
| Micro | Small | Medium |
|---|---|---|
| INR 5,000 per person, max 10 persons | INR 10,000 per person, max 20 persons | 100% of Employer contribution to EPF, capped at INR 1 Lakh per annum, for 3 years (not eligible if availing GoI EPFO-scheme assistance) |
F. Energy & Water Audit Cost
| Support | Micro | Small | Medium |
|---|---|---|---|
| Water audit | 75% of cost, capped at INR 1 Lakh (one-time, approved agencies/consultants) | 75% of cost, capped at INR 1 Lakh (one-time, approved agencies/consultants) | 75% of cost, capped at INR 1 Lakh (one-time, approved agencies/consultants) |
| Energy audit | 75% of cost, capped at INR 2 Lakh (one-time, during policy period) | 75% of cost, capped at INR 2 Lakh (one-time, during policy period) | 75% of cost, capped at INR 2 Lakh (one-time, during policy period) |
| Equipment implementing audit recommendations | 25% of cost, cap INR 20 Lakh | 25% of cost, cap INR 40 Lakh | 25% of cost, cap INR 50 Lakh |
Equipment assistance is conditional on a minimum 10% saving in energy/water versus the average monthly consumption of the 2 years preceding the audit.
G. Local Procurement Subsidy (exporting units, select sectors)
| Micro | Small | Medium |
|---|---|---|
| 1% of annual export turnover for 3 years, overall cap INR 15 Lakh | 1% of annual export turnover for 3 years, overall cap INR 1.5 Cr | 1% of annual export turnover for 3 years, annual cap INR 7 Cr |
H. Quality Certification Cost Top-Up
| Support | Micro / Small / Medium |
|---|---|
| Quality Certification Cost Top-Up | Balance of GoI subsidy reimbursed by GoAP so that 100% of certification + consultancy cost is covered — for ISO 9000/9001, ISO 14001, HACCP, ISO 22000 GHP/GMP, BIS, ZED, and other internationally recognized certifications |
I. Stamp Duty, Land Conversion & Land Cost Rebate
- •Stamp duty: 100% stamp duty and transfer duty on purchase of land for industrial use reimbursed; 100% stamp duty on lease of land/shed/buildings, mortgages and hypothecations reimbursed — one-time only per land, not on subsequent transactions.
- •Land conversion: 100% of land conversion fee reimbursed.
- •Rebate on land cost: 75% rebate, capped at INR 25 Lakh, for SC/ST-led Micro & Small Enterprises set up in APIIC-developed Industrial Estates/Parks — new units only, once per land.
J. Support Package for Sick / Distressed MSMEs
| Relief | Quantum |
|---|---|
| Interest rebate | 6% interest subsidy to identified/eligible sick units, max INR 2 Lakh per year, for up to 3 years |
| Deferment of CT arrears | Purchase tax, sales tax and interest arrears deferred 3 years from grant of the revival package |
| Relief in energy charges | APTRANSCO/DISCOM interest on CC-charge arrears subsidized to 15% of interest charged — max INR 5 Lakh (lump-sum option) or INR 3 Lakh/year for 3 years (installment option) |
K. Growth Incentives for Medium Enterprises & Innovation
- •Business Development Credits (BDCs): 2% of growth in turnover (per tax records) over a 5-year period, availed with a matching 50% project-cost contribution — usable for consultants, marketing, quality, export promotion, technology acquisition, patents, credit rating etc. from empaneled providers.
- •SME Exchange listing: 25% assistance for listing & raising money, capped at INR 5 Lakh.
- •Innovation Networks: 75% assistance up to INR 5 Lakh per project for joint industry-academia/R&D projects cleared by the State-level expert committee.
- •Inclusion top-up: 10% additional capital subsidy for women/BC/SC/ST/specially-abled MSMEs domiciled in the State undergoing expansion/diversification/new investment.
- •CFC top-up: 20% grant over and above MoMSME's MSECDP grant, for CFC projects costing INR 5–20 Cr.
Overall cap: combined incentives under this policy shall not exceed 75% of FCI — note this is tighter than the 100%-of-FCI cap under the parent Industrial Development Policy 4.0, so the subsidy stack for an MSME must be modelled against the 75% ceiling.
Beyond direct subsidy
Policy support is structured across eight pillars: MSME Facilitation · Incubation & Mentoring · Unit-level Competitiveness · Access to Finance · Sustainability & Circularity · Import Substitution/Export Promotion · Cluster Infra Development · Special Assistance for Inclusion.
Facilitation & Capability Network
- •CM Udyami helpline — exclusive helpline for information, guidance and linkage to service portals.
- •Entrepreneur Capability Centres: hub-and-spoke — one District Entrepreneur Capability Centre in each of the 25 districts + a State Centre at Amaravati, integrated with all line departments.
- •Industry 4.0 Technology Centre at Amaravati in PPP mode + 5 sector-specific extension centres; 2 Technology Centres (Vizag | Amaravati) with tool room and prototyping workshops.
- •'Ratan Tata Innovation Hubs': Central hub at Amaravati linked to 5 zonal hubs (Uttar Andhra, Godavari, Central, South, Rayalaseema), mentored by reputed business groups across 10 thrust sectors — export guides with DGFT, BDS repository, trade-fair participation support.
- •RAMP: INR 121 Cr outlay — 7,000+ district workshops over 4 years covering ~3 lakh MSMEs on market/finance access, technology, quality, skilling, innovation and greening.
Incubation & Start-ups
- •Virtual Incubation Platform integrating all MSME incubators; mentorship connect; 3-month thematic acceleration programs at IIT Tirupati and IIM Visakhapatnam incubation centres.
- •Preferential access of ~30% of cohort seats for women-led and disadvantaged-section MSMEs; a Rural-Technology Business Incubator (R-TBI) in each district.
Access to Finance
- •TReDS: all SPSUs and companies with turnover ≥ INR 250 Cr to be directed onboard; framework with Invoicemart, RXIL and M1xchange.
- •AP Credit Guarantee Scheme: INR 100 Cr corpus with CGTMSE for additional guarantee cover — estimated to support 70,000+ MSME borrowers, 2 lakh jobs and 35,000+ greenfield projects.
- •Digital lending platforms promoted through AP MSME One; distressed-asset support via DIEPC (District Collector), SLIIC sub-committee (Director of Industries) and the GoI Distressed Asset Fund.
Market Access, Clusters & Inclusion
- •500 MSME 'Export Champions' for GVC integration; e-commerce exports and ONDC onboarding; reverse buyer-seller meets under APTPC; import-substitution roadmap disseminated through the Global Trade & Innovation Hub.
- •Nano parks (<10 acres) and MSME parks (10–100 acres): plug-and-play, minimum 20 acres each, across 175 constituencies / 77 divisions / 26 districts in PPP (“Public-Private-People”) mode; 2 anchor-buyer-led ancillary parks; cluster mapping on PM Gati Shakti with a cluster competitiveness index.
- •Procurement: 25% public procurement from State-registered MSEs, within which minimum 4% from BC/SC/ST-owned and 3% from women-owned MSEs; 358 GoI-notified items for exclusive MSME purchase; insurance surety bonds encouraged in lieu of bank guarantees for EMD/Performance Guarantee.
- •Reservation: 20% of land/factories in MSME parks and flatted factory complexes reserved for women/BC/SC-ST/specially-abled MSEs; working-women hostels and crèches with project promoters.
- •Sustainability: cluster energy-intensity mapping; cluster-based rooftop solar programme (OPEX/Green Open Access models); circular-economy mechanisms in APIIC parks.
What is needed, and the strings attached
| Condition / Evidence | Notes |
|---|---|
| Udyam registration | Mandatory — MSMED Act 2006 classification (S.O. 2119(E) dt. 26.06.2020) is the eligibility gateway |
| Manufacturing activity during the policy period | Incentives apply only to manufacturing enterprises, except where a table expressly covers service activities (e.g., Capital Subsidy “Manufacturing & Service activities” rows, SC/ST transport services) |
| CoD / 1st invoice | Trigger for Capital Subsidy and Technology Upgradation installments (2/3/4 annual installments by enterprise size) |
| DCP | Start point for the 5-year power cost reimbursement window |
| New vs. expansion status | Capital Subsidy — new enterprises only; Technology Upgradation — expansion/diversification units only; land cost rebate — new units only |
| Special Category proof | Wholly-owned by women/BC/SC/ST/minority/specially-abled/transgender entrepreneurs with State domicile, for the enhanced 45%/40% slabs |
| Energy/water audit by approved agency + 10% saving evidence | Pre-condition for the 25% equipment reimbursement; baseline is average monthly consumption of the prior 2 years |
| Export turnover records (select sectors) | Basis of the 1% Local Procurement Subsidy with size-wise caps |
| GoI certification-subsidy sanction | Quality Certification Top-Up pays only the balance over GoI support, up to 100% of cost |
| Tax-record turnover growth + 50% matching contribution | Basis of the Business Development Credits for medium enterprises |
| EPF records (medium units) | For 100% employer-EPF reimbursement (cap INR 1 Lakh p.a. × 3 years); not combinable with GoI EPFO-scheme assistance |
Gap / to confirm: This brief is prepared from the official policy brochure, which does not carry the G.O. number and notification date — confirm these from the notified G.O. before citing in any application. Detailed claim procedures, application formats and the eligible-sector list for the Local Procurement Subsidy will be governed by the Operating Guidelines, to be issued separately (Clause 7.5). Note also the printed inconsistency in the Local Procurement caps — “overall cap” for micro/small vs. “annual cap” INR 7 Cr for medium — verify treatment in the guidelines before benefit modelling.
How approvals and claims flow
- •Step 1 — Udyam + State portal registration: Enterprise registers on the Udyam portal (GoI) and accesses State services through the AP Single Desk and Industries incentive portals, being unified via the dedicated AP MSME portal / MSME One platform.
- •Step 2 — Establishment approvals: New micro enterprises, including start-ups, obtain establishment and operation approvals on self-certification in all notified industrial areas and parks.
- •Step 3 — Set-up and CoD/DCP: Unit commences operations; CoD/1st invoice and DCP trigger the respective incentive clocks.
- •Step 4 — Incentive claims: Claims routed through the Single Desk / Industries incentive portals per the Operating Guidelines; the State Level Empowered Committee's mechanism governs speed and transparency of disbursal.
- •Step 5 — Grievances & disputes: DIC General Managers hold monthly facilitation meetings in each estate/cluster; unresolved issues go to DIEPC (District Collector) and onward to the Director of Industries; payment disputes go to the strengthened MSEFCs (4 new councils added) with the MoMSME Online Dispute Resolution mechanism and empaneled lawyers/arbitrators/mediators.
Sick-unit pathway: SMA-marked units are referred to the District Entrepreneur Knowledge Center for specialized BDS diagnosis; the SLIIC sub-committee (chaired by the Director of Industries, per RBI instructions) recommends revival and rehabilitation, unlocking the Section 3-J relief package.
Bodies governing the policy
| Body | Role |
|---|---|
| Commissionerate of Industries | Overarching implementing and monitoring agency; coordinates line departments (Textiles & Handlooms, Handicrafts, Food Processing, Agriculture, SERP, MEPMA, Social & Tribal Welfare, KVIC etc.) and GoI schemes (PM Vishwakarma, RAMP); manages approvals and incentives through the AP Single Desk and Industries incentive portals; District Industrial Officers (DIOs) facilitate at district level. |
| AP MSME Development Corporation (APMSMEDC) | Agency in charge of implementing the policy's schemes, the Cluster Development Programme (CFCs), RAMP, and infrastructure development, supported by APIIC, APTPC and other corporations. |
| State Level Empowered Committee | Chaired by Secretary to Government, Industries & Commerce, with ACS/Principal Secretaries/Secretaries of line departments; monitors implementation, ensures speedy and transparent disbursal, recommends mid-course corrections. Assisted by a Policy Implementation Cell headed by the Commissioner/Director of Industries with industry-association representatives. |
| State Level Review & Monitoring Committee | Chaired by Secretary to Government, Industries & Commerce; resolves policy ambiguity and strengthens inter-departmental coordination. It is the final authority to interpret the policy's measures, incentives and concessions (including those in previous policies wherever applicable). |
Signatories to the policy document: Dr. N. Yuvaraj, IAS, Secretary to Govt & Commissioner of Industrial Promotion, Industries, Commerce & Food Processing Department; Sri M. Abhishikth Kishore, IAS, Commissioner of Industries & Commerce & Export Promotion, Government of Andhra Pradesh.
Key dates and durations
| When | What |
|---|---|
| Policy notification | Policy takes effect for 5 years from the date of notification, or till a new Policy is announced; extendable by the Government. Amendments apply prospectively and cannot curtail benefits already granted. |
| CoD / 1st invoice | Capital Subsidy (new units) and Technology Upgradation (expansion units) installments begin — 2 annual installments (Micro), 3 (Small), 4 (Medium). |
| DCP + 5 years | Power cost reimbursement window (INR 1–1.5/unit with size-wise annual caps) and Net SGST reimbursement window (100%, annual cap 5% of turnover, total ≤ 100% of FCI). |
| 3-year windows | Local Procurement Subsidy (1% of export turnover); medium-unit EPF reimbursement (cap INR 1 Lakh p.a.); sick-unit interest rebate (6%, max INR 2 Lakh/yr); CT-arrears deferment from grant of revival package; DISCOM installment-option relief (INR 3 Lakh/yr). |
| 5-year horizon (by 2029) | Targets mature — INR 50,000 Cr investment, 22 lakh formalizations, 5 lakh+ jobs, USD 12 Bn MSME exports, 500+ Champions in GVCs; BDC entitlement accrues on 5-year turnover growth for medium enterprises. |
| 2030 | Vision milestone — “One Family, One Entrepreneur” across Andhra Pradesh. |