Madhya Pradesh has identified few key sectors that can capitalize on its strategic location, abundant resources, skilled workforce, and strong manufacturing base. Under the Industrial Promotion Policy 2025, these sectors are designated as focus sectors, with select industries receiving targeted incentives, while others benefit from the general incentive framework.
The Focus Sectors Include
- Aerospace and Defence
- Agri, Dairy and Food Processing
- Automobile and auto components
- Biotechnology v. Engineering
- EV Manufacturing vii. Garment and Apparel, Footwear, Toys, and accessories
- High-Value Add Manufacturing
- Logistics and Warehousing
- Medical Devices
- Pharmaceuticals
- Renewable Energy Equipment Manufacturing
- Textiles
Eligible Fixed Capital Investment (EFCI)
- Plant and Machinery as defined in the MSMED Act, 2006 excluding: » a) Old Machinery » b) Investments made in ETP, STP, ZLD and other pollution control equipment, Waste Heat Recovery System (WHRS) & Co-generation systems, and renewable & non-renewable energy devices.
- Factory sheds and Buildings excluding compound wall, internal roads and dwelling units.
- In-house R&D (capped at 40% of Plant & Machinery with Factory sheds and Buildings) registered under Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. In-house R&D for pharmaceuticals and biotechnology sector (capped at 50% of the Plant & Machinery with Factory sheds and Buildings). 13
- 50% cost of captive power based on renewable energy (Maximum limit 20% of Plant & Machinery with Factory sheds and Buildings), provided that not less than 50% of power so generated is for consumption at the plant site.
- 20% cost of the energy saving devices like WHRS, Co-generation systems (Maximum upto a limit of 20% of Plant & Machinery with Factory sheds and Buildings)
- Imported Second hand or refurbished machinery with an expected machinery life of 10 years.
Technological Upgradation
Technological upgradation refers to units upgrading their technology (only related to production) and investing at least 30% of existing investment (with a minimum of ₹20 Crore) or ₹100 Crore in Plant & Machinery, whichever is lower. The unit should be in commercial production for last 7 years for claiming technological upgradation incentive (without the change of product). Any type of unit undergoing technological upgradation shall only be eligible for the following incentives:
1.The units undergoing technological upgradation shall be eligible for the IPA at the rate of 10% of the investment made in EFCI, capped at maximum of ₹20 Crore in 7 equal instalments.
2.Investment made by the unit during last 2 years and next 1 year from the date of production shall be eligible for incentives in Technological Upgradation.
Financial Incentives
Investment Promotion Assistance
Basic Investment Promotion Assistance (BIPA): Basic Investment Promotion Assistance for large units shall vary between 40% to 10% based on the below
formula: BIPA=IF(EFCI>2000, 200,IF(EFCI<=50, 0.4*EFCI,MIN(15 + 0.08*(EFCI-50) + (EFCI/12) * ((1/(1+EXP(-5.9*(1 – EFCI/2490))))(1 – EFCI/2490)) + 9.3(1 – EFCI/2500),0.4*EFCI,200)))
- BIPA shall be limited to maximum ₹200 Crore.
- BIPA shall be provided in 7 equal annual instalments defined as Yearly BIPA.
For Investment up to Rs. 10 crores in plant and machinery
- 40% on the eligible investment made by them in Plant & Machinery and Building.
- Disbursed in 4 equal annual installments.
- The cost of building shall not be more than 100% of the cost of Plant and machinery for the purpose of calculating the assistance.
- Additional 2% per year (for 4 years) for unit set up by women/SC/ST entrepreneur
- Additional 2% per year (for 4 years) for units exporting more than 25% and upto 50%
& 3% for more than 50%
For Investment Above Rs. 10 crores in plant and machinery
- 40% on the eligible investment made by them in Plant & Machinery and Building.
- Disbursed in 7 equal annual installments.
- Gross Sale Multiple –Minimum 50% Mutilation of Capacity otherwise proportionate
- Export Multiple – 1.3 time for units exporting more than 25%
- Employment Multiple – 1 to 1.5 Proportionate from 100 to 2500
- FDI Multiple – 1 to 1.2 for Investment above 26%
Additional Incentive
- large scale Food Processing units
- 60% of Plant & Machinery & Building
- Mandi Fee reimbursement for 5 years upto 50% of Investment in P&M
- Tariff Rebate at INR 1/- per unit for 5 years
- PLI- 1% of sales for 5 years up to 5 Cr
- Pharmaceuticals & Medical Device Manufacturing Units-
- 52% of Plant & Machinery & Building
- 5% Interest Subsidy for 5 yr Max 1 Cr per yr
- cost of building 200% of the cost of Plant and machinery
- Lab Setup- 50% upto 1 Cr
- Export Certification Assistance- 50% upto 1 Cr
Large scale Garment (Upto 200% of Investment)
- Interest subsidy of 5% for 7 years
- Employment Generation Subsidy- Rs. 5000/- Per Employee Per Month for 5 Yrs
- Stamp Duty & Regn fees Reimbursement
- Electricity Duty Exemption for 7 Yrs
- Tariff Rebate at INR 1/- per unit for 7 years.
Textile – Interest subsidy of 5% on Standalone to 7% for Composite for 5 years
Footwear –
- Employment Generation Subsidy- Rs. 5000/- Per Employee Per Month for 5 Yrs
- Interest subsidy of 5% for 5 years
- Electricity Duty Exemption for 5 Yrs
Tariff Rebate at INR 1/- per unit for 5 years.
Incentive Multipliers
MULTIPLIER | DESCRIPTION | |
1 | Gross Supply Multiple (GSM) | For 1st year, GSM shall be 1, provided utilization of the total installed capacity is 40%. |
2 | Export Multiple (EM) | 1.0 to 1.3 for exports ranging from 25% to 75% as per Annexure III. |
3 | Employment Multiple | 1.0 to 1.5 for employment over 100 employees to 2,500 employees as per Annexure IV. |
4 | Geographical Multiple | Multiple of 1.3 for setting up units in Priority Blocks. |
Green Industrialization
Assistance Units shall be provided a capital subsidy of 50% subject to a maximum of ₹5 Crore for setting up of waste management systems (such as Effluent Treatment Plant, Sewage Treatment Plant, pollution control devices etc.) and maximum of ₹10 Crore for setting up Effluent Treatment Plant with Zero Liquid Discharge in the unit premises.
Infrastructure Development
Assistance Units shall be eligible for 50% assistance, subject to a maximum of ₹5 Crore, for developing power, water, gas pipeline, road, drainage and sewage infrastructure upto the factory gate if the investor acquires private land or gets undeveloped Government land for setting up of the unit.
Assistance for IPR and Organic Certification
To promote research, development, and sustainable practices in the State, Madhya Pradesh will provide the following reimbursements for units established within the State during the policy period: i.IPR Assistance: 100% reimbursement of expenses incurred for filing patents, copyrights, trademarks, and geographical indications (GI), subject to a maximum of ₹10 Lakh per unit in first 5 years.
ii.Organic Certification Assistance: 100% reimbursement of expenses incurred for obtaining organic certifications from APEDA-accredited agencies, subject to a maximum of ₹5 Lakh per unit in first 5 years.
Incentives to Provide Employment to Differently Abled Persons
Units providing employment to persons with disabilities (minimum 5% of total workforce) will be eligible for following incentives:
- Skill Development: 100% reimbursement of expenses incurred on skill development training for persons with disabilities in government ITIs.
- Employees’ Provident Fund (EPF) and Employee State Insurance (ESI) Assistance: Reimbursement of employees’ contribution being deposited by the employer for differently abled employees, with a maximum of ₹6,000/month or the actual amount deposited (whichever is less), for a period of 5 years.
Fiscal Incentives
- Reimbursement of Cost of Transfer of International Technology: Units shall be reimbursed 50% of the cost of international technology transfer up to ₹1 Crore if they develop local units as their vendor through technology transfer.
- FDI Multiple: The FDI Multiple will be applied to BIPA based on the percentage of FDI equity in the unit. For FDI equity from 26% to 50%
Export Freight Subsidy for Transportation of Goods
Export units shall be eligible for reimbursement of 50% of the transportation costs incurred for moving finished goods from the factory premises to the seaport or to the air cargo facility. This subsidy is available for a period of 5 years upto ₹40 Lakh per unit, per year, maximum upto ₹ 2 Crore.
Basic Investment Promotion Assistance
Basic Investment Promotion Assistance for large units shall vary between 40% to 10% based on the below formula:
BIPA=IF(EFCI>2000, 200,IF(EFCI<=50, 0.4*EFCI,MIN(15 + 0.08*(EFCI-50) + (EFCI/12) * ((1/ (1+EXP(-5.9*(1 – EFCI/2490))))(1 – EFCI/2490)) + 9.3(1 – EFCI/2500),0.4*EFCI,200)))
Sample Values of BIPA are as follows:
Investment (in ₹ Crore) | Percentage | Amount (in ₹ Crore) |
50-85 | 40% | 20-33.6 |
100 | 36% | 35.9 |
125 | 32% | 39.7 |
150 | 29% | 43.4 |
175 | 27% | 47.2 |
200 | 25% | 50.8 |
225 | 24% | 54.4 |
250 | 23% | 58 |
300 | 22% | 65.1 |
350 | 21% | 71.9 |
400 | 20% | 78.6 |
500 | 18% | 91.4 |
600 | 17% | 103.6 |
700 | 16% | 115 |
1500 | 12% | 180.1 |
2000 | 10% | 200 |
Export Multiple
The Export Multiple shall vary from 1.0 to 1.3 for exports ranging from 25% to 75% of the total production.
ExportMultiple(EM)=IF(ExportPercentage<25%,1,IF(ExportPercentage)
Export % | Multiple |
25 | 1.00 |
30 | 1.03 |
35 | 1.06 |
40 | 1.09 |
45 | 1.12 |
50 | 1.15 |
55 | 1.18 |
60 | 1.21 |
65 | 1.24 |
70 | 1.27 |
75 | 1.30 |
FDI Multiple
The FDI Multiple will be applied to BIPA based on the percentage of FDI equity in the unit. For FDI equity between 26% and 50%, the multiple will range from 1.1 to 1.2, while units with more than 50% FDI equity will receive a fixed multiple of 1.2.
FDI Multiple =IF(FDI<=51, 1.1 + (FDI-26)*(0.1/(51-26)), 1.2))
FDI Equity % | Multiple |
20 | 1.000 |
25 | 1.000 |
30 | 1.116 |
35 | 1.136 |
40 | 1.156 |
45 | 1.176 |
50 | 1.196 |
51 | 1.200 |
