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MSME schemes by state: state government loans and subsidies for small businesses

Every state runs its own MSME schemes on top of the central ones. Most are a subsidy or an interest subvention on a bank loan, not a loan from the state, and each has its own age, residence and project-cost rules. This hub covers five states with the most registered MSMEs, from each state government's own scheme pages.

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How state MSME schemes work

A state MSME scheme is run by the state government, usually through its industries department and the District Industries Centre in each district. Most of the schemes on these pages work in one of two ways: the state pays a subsidy on the project cost or the bank loan, or it pays part of the interest. A bank or another lender still gives the loan and decides it. Central schemes such as Mudra, PMEGP and CGTMSE run alongside them.

The five states on these pages

We started with the states that have the most MSMEs on the Ministry of MSME's Udyam dashboard (Ministry of MSME Udyam dashboard). Each state page carries only facts we could read on that state government's own pages.

State MSMEs on the Udyam dashboard Main schemes covered What they offer, in short Source
Maharashtra 1,22,02,361 CMEGP Margin money of 15% to 35% on projects up to ₹1,00,00,000 in manufacturing Ministry of MSME Udyam dashboard, Maharashtra CMEGP resolution, 21-May-2025
Uttar Pradesh 1,12,90,789 CM-YUVA, ODOP margin money Loans up to ₹5,00,000 with full interest subsidy for four years; ODOP margin money from 25% Ministry of MSME Udyam dashboard, UP MSME 1-Connect, ODOP Uttar Pradesh
Tamil Nadu 74,13,245 NEEDS, UYEGP, AABCS 25% capital subsidy up to ₹75,00,000 under NEEDS Ministry of MSME Udyam dashboard, Tamil Nadu MSME Department, NEEDS, Tamil Nadu MSME Department, UYEGP
Karnataka 60,26,589 Industrial Policy 2025-30 Capital subsidy for micro and small units, by zone Ministry of MSME Udyam dashboard, Karnataka Industrial Policy 2025-30 guidelines
Gujarat 52,45,215 Aatmanirbhar Gujarat Schemes for MSMEs Capital subsidy for micro units and interest subsidy for MSMEs, by taluka Ministry of MSME Udyam dashboard, Gujarat MSME scheme resolution, 05-Oct-2022

The dashboard counts include enterprises on the Udyam Assist Platform, which records informal micro enterprises. Counts change daily, so these are as of 03-Oct-2026 (Ministry of MSME Udyam dashboard). West Bengal, Madhya Pradesh, Rajasthan and Bihar also have more registered MSMEs than Gujarat on the same dashboard. We will add their pages when we have read enough of their own scheme rules.

What to check before you apply to a state scheme

  1. Residence and age. Most state schemes are for the state's residents and set an age band.
  2. New unit or expansion. Some schemes cover only new units; others also cover expansion.
  3. Project cost and the subsidy cap. The subsidy is a percentage with a rupee ceiling.
  4. Whether you can combine it. Several states bar a unit that has already had a subsidy under another government scheme.
  5. The official route. Apply on the portal or office named on the state page. Maharashtra's scheme portal warns that its agencies have engaged no middlemen or franchise to promote or sanction projects (Maharashtra CMEGP portal).

Each state page lists these points with the source for each.

Your next step

A state subsidy still needs a bank to sanction the loan. Run the free loan readiness check to see how a lender may read your business. Then read the central government schemes hub.

In this section

Gujarat MSME scheme Gujarat's main MSME scheme is the Aatmanirbhar Gujarat Scheme for assistance to MSMEs, operative from 05-Oct-2022 to 04-Oct-2027. Micro manufacturing units can get a capital subsidy of 10% to 25% of the term loan, up to ₹35,00,000, and manufacturing MSMEs can get an interest subsidy of 5% to 7% for five to seven years. The rate depends on the taluka where the unit is. Karnataka MSME scheme Karnataka's MSME incentives come from the Industrial Policy 2025-30, whose operative guidelines the state approved on 10-Apr-2026. Micro enterprises can get a capital subsidy of 10% to 35% of the value of fixed assets, up to ₹35,00,000, and small enterprises 10% to 30%, up to ₹2,25,00,000. The rate depends on the zone and on the entrepreneur's category. Maharashtra MSME loan scheme CMEGP, the Chief Minister Employment Generation Programme, is Maharashtra's credit-linked subsidy for new micro and small units. Since the Government Resolution of 21-May-2025, projects can cost up to ₹1,00,00,000 in manufacturing and ₹50,00,000 in services and agri-allied work, and the margin money subsidy is 15% to 35% of the project cost, with rupee caps. A bank gives the loan. Tamil Nadu MSME loan schemes Tamil Nadu's MSME Department runs three main subsidy schemes on bank loans. NEEDS gives first-generation entrepreneurs a 25% capital subsidy up to ₹75,00,000 and a 3% interest subvention. UYEGP gives a 25% subsidy up to ₹3,75,000 on trading and business projects up to ₹15,00,000. AABCS gives SC and ST entrepreneurs a 35% subsidy up to ₹1,50,00,000. All three take applications online only. Uttar Pradesh MSME loan schemes Uttar Pradesh runs two main loan-linked schemes for small businesses. CM-YUVA (Mukhyamantri Yuva Udyami Vikas Abhiyan) gives youth aged 21 to 40 loans up to ₹5,00,000 with a 100% interest subsidy for four years. The ODOP Margin Money Scheme pays a subsidy of up to 25% of project cost for businesses in their district's One District One Product line. Banks give the loans.

Frequently asked questions

In the schemes on these pages, no. The state pays a subsidy or part of the interest, and a bank gives the loan (Maharashtra CMEGP resolution, 21-May-2025, UP MSME 1-Connect, Tamil Nadu MSME Department, NEEDS).

It depends on the scheme. Some state schemes exclude units that have had another government subsidy. Read the state page and the scheme's own rules.

On the Ministry of MSME's Udyam dashboard, Maharashtra, then Uttar Pradesh, as of 03-Oct-2026 (Ministry of MSME Udyam dashboard).

Sources

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