Date: 21-08-2025
To
Hon’ble Chief Minister,
Government of Uttar Pradesh,
Lucknow, Uttar Pradesh
Subject: Representation for Strengthening MSME Incentives in Uttar Pradesh to Ensure Parity with Rajasthan
Respected Sir,
We, the undersigned stakeholders from the Micro, Small and Medium Enterprises (MSME) sector in Uttar Pradesh, humbly submit this representation to request enhancement and harmonization of MSME incentives in Uttar Pradesh in line with benefits presently available to manufacturers in the State of Rajasthan. Our intent is to ensure that MSMEs in Uttar Pradesh remain competitive, attract new investments, scale employment, and accelerate exports while contributing robustly to the State’s inclusive growth vision.
Context and submission
1• Policy operation period
Rajasthan’s MSME Policy 2024 is operative till March 31, 2029, offering investors long-term certainty and planning comfort.
• Uttar Pradesh MSME Promotion Policy, 2022 is operative till October 03, 2027.
Request: Extend the policy validity to at least March 31, 2029 (or beyond), providing policy horizon parity and predictability to investors and lenders.
2• Asset creation and capital support
Rajasthan offers a 75% investment subsidy on SGST for 10 years from commercial production, alongside targeted capital subsidies (e.g., up to 50% for alternatives to plastic capped at ₹40 lakh; up to 50% for agro & food processing capped at ₹1.5 crore; with an additional 5% for SC/ST/Women/FPOs in Tribal Sub-Plan areas)
• Uttar Pradesh provides regional capital subsidies (Bundelkhand/Purvanchal: Micro 25%, Small 20%, Medium 15%; Madhyanchal/Paschimanchal: Micro 20%, Small 15%, Medium 10%) with a cap of ₹4 crore per unit and 2% additional for SC/ST and women entrepreneurs.
Gap observed: UP manufacturers do not currently receive an SGST-linked investment subsidy comparable to Rajasthan’s 75% over 10 years, and targeted high-value sectoral capital support could be expanded.
Request:
• Introduce an SGST reimbursement mechanism for 10 years (on lines of Rajasthan) for MSMEs commencing commercial production.
• Augment sector-specific capital subsidies (e.g., alternatives to plastics, agro & food processing) with higher caps and additional support for SC/ST/Women/FPOs in designated areas.
3• Interest subvention
Rajasthan provides graded interest subvention under RIPS 2024: 6% up to ₹5 crore, 4% between ₹5–10 crore, 3% between ₹10–50 crore, plus additional subvention of 2% (≤₹5 crore), 1% (₹5–10 crore), and 0.5% (₹10–50 crore).
• Uttar Pradesh currently offers interest subsidy primarily for Micro units: 50% for 5 years up to ₹25 lakh (general), and 60% for 5 years up to ₹25 lakh (SC/ST & Women).
Gap observed: Broader eligibility and higher ticket-size interest subvention in Rajasthan materially lowers borrowing costs across the MSME spectrum.
Request:
• Expand interest subvention coverage beyond Micro to Small and Medium units, with higher ceilings aligned to investment sizes.
• Introduce graded slabs similar to Rajasthan to catalyze technology upgradation and capacity expansion.
4. Green growth and sustainability incentives
• Rajasthan extends: 50% reimbursement for environmental infrastructure (up to ₹1 crore), 10% subsidy on clean production machinery, 100% electricity duty exemption for 7 years, 50% waiver on consent fees under the State’s Green Rating, and strong solar/Renewable Energy policy linkages including exemptions/waivers and SGST reimbursements under RIPS.
• Uttar Pradesh supports CETPs (50% up to ₹10 crore), ZLD (50% up to ₹75 lakh), common boiler projects (35–50% up to ₹50 lakh), reimbursements for energy/water efficiency equipment (40% up to ₹20 lakh), audit reimbursement (75% up to ₹50,000), and IGBC/environment systems reimbursements.
Gap observed: While UP’s environmental infrastructure support is appreciable, Rajasthan’s comprehensive package (electricity duty exemptions, consent fee waivers, and integrated solar/captive provisions under RIPS and Renewable Energy policies) provides stronger long-term operating cost relief.
Request:
• Provide 100% electricity duty exemption for at least 7 years for MSMEs adopting green technologies and captive renewable power.
• Introduce consent fee waivers/discounts for high-performing green-rated units.
• Recognize captive solar investment as Eligible Fixed Capital Investment with proportionate SGST reimbursement linkage to incentivize decarbonization.
5. Exemptions and reimbursements (transaction costs and land)
• Rajasthan allows 100% stamp duty benefit in notified stages, 100% mandi fee reimbursement for 7 years, 100% conversion charge waiver with facilitation (including no conversion application for micro/small industry up to 1 acre on khatedari land and food processing up to 10 hectares).
• Uttar Pradesh provides 100% stamp duty exemption in Purvanchal/Bundelkhand; 75% in Madhyanchal/Paschimanchal (50% in Gautam Budh Nagar and Ghaziabad); 100% for women entrepreneurs across the State; and 100% stamp duty exemption for MSME industrial park/estate/flatted factory complex developers.
Gap observed: Rajasthan’s comprehensive and streamlined conversion and mandi fee benefits reduce upfront and recurring costs and speed land access.
Request:
• Introduce mandi fee reimbursement for new MSME units for at least 7 years.
• Provide broader conversion charge waivers and simplified conversion procedures statewide for micro/small footprints and designated food processing projects.
6. Collateral-free loans and guarantee fee support
• Rajasthan: CGTMSE-linked loans with 100% guarantee fee reimbursement by the State for up to 7 years.
• Uttar Pradesh: CM Yuva Scheme offers interest-free, collateral-free loans up to ₹5 lakh for first-generation youth entrepreneurs; CGTMSE supported with 100% guarantee fee reimbursement for up to 7 years.
Observation: UP’s youth entrepreneurship thrust is excellent; parity with Rajasthan on sustained, automatic guarantee fee reimbursement and streamlined workflows will further boost formalization and credit access.
Request:
• Ensure time-bound, automatic guarantee fee reimbursement and consider scaling loan ticket sizes for growth-stage MSMEs, especially manufacturing.
7• Skill development and technology upgradation
Rajasthan: 50% cost reimbursement for employee training up to 6 months (caps: Micro ₹20,000; Small ₹30,000; Medium ₹40,000), and 50% reimbursement on eligible technology acquisition (up to ₹5 lakh) from premier institutions. Also, strong support for e-commerce digitization (75% up to ₹50,000) and platform fee reimbursement.
• Uttar Pradesh: A wide array of schemes (e.g., Vishwakarma Shram Samman, ODOP training and toolkit, SC/ST/OBC training, Handicrafts Skill Development, ESDP), plus ERP/ICT support (75% up to ₹1 lakh ERP; up to ₹5 lakh ICT), 50% subsidy on advanced machinery (up to ₹5 lakh), 50% interest subsidy on machinery loans (up to ₹1 lakh per year for 5 years), ERP installation support (50% up to ₹1 lakh), consultancy and branding assistance.
Gap observed: Rajasthan’s direct training cost reimbursements and e-commerce adoption subsidies are targeted and simple, while UP’s support is broad but could further incentivize factory-floor skilling and digital market access for manufacturers.
Request:
• Introduce a straightforward training reimbursement model with clear per-unit caps for Micro, Small, and Medium manufacturers.
• Expand e-commerce digitization support with higher platform fee coverage and tools (POS, barcode, inventory) reimbursements parallel to Rajasthan.
• Market development and mandi fee relief for food processing
Rajasthan: Trade fair reimbursements (₹37,500–₹1,50,000), travel for up to 2 persons, and digital commerce support.
• Uttar Pradesh: 60% stall subsidy up to ₹2 lakh; 50% travel reimbursement up to ₹1 lakh; assistance for virtual fairs and certifications; and 5-year mandi fee waiver for new food processing units investing over ₹5 crore in P&M.
Observation: Both states support market access, but Rajasthan’s stack is integrated with digitization incentives.
Request:
• Maintain and expand export-market grant ceilings and simplify claim processes; pair with digitization incentives for faster onboarding to marketplaces and global B2B platforms.
8• Solar and renewable energy adoption
Rajasthan provides strong cross-policy alignment: concessional land for EV charging, electricity duty waiver for 7 years, transmission/wheeling exemptions, RIPS recognition of captive solar as EFCI with SGST reimbursement, and exemptions/waivers under Renewable Energy Policy.
• Uttar Pradesh offers rooftop solar incentives (e.g., ₹15,000 per kW capped at ₹30,000), and food processing sector solar subsidy up to 50% (90% for women-led units) up to 75 kVA.
Gap observed: Rajasthan’s integrated fiscal and regulatory relief significantly lowers lifecycle energy costs for MSMEs.
Request:
• Provide electricity duty exemptions and transmission/wheeling charge waivers for MSME captive renewable projects for a defined period.
• Recognize renewable investments as eligible capital for incentives to accelerate adoption and reduce operating costs.
Why parity matters
Competitiveness and investment attraction: Comparable incentives prevent flight of capital and talent to neighboring states and encourage domestic and export-oriented manufacturing growth.
• Employment and inclusive growth: Enhanced support directly expands job creation, especially for youth, women, and marginalized communities.
• Formalization and productivity: Lower cost of capital, simpler land access, and green incentives spur technology adoption, quality certification, and compliance.
• Climate and resilience: Renewable and clean production incentives reduce emissions and energy risk for MSMEs while aligning with national targets.
Prayers
In light of the above, we respectfully pray that the Government of Uttar Pradesh may kindly consider:
1. Extending the Uttar Pradesh MSME Promotion Policy, 2022 through March 31, 2029 (or longer).
2. Introducing a 10-year SGST reimbursement for new MSME units, and augmenting sector-specific capital subsidies with higher caps and inclusivity add-ons.
3. Expanding interest subvention to Small and Medium units with graded slabs and higher ceilings.
4. Providing 100% electricity duty exemption for 7 years for MSMEs adopting green/captive renewable power, alongside consent fee waivers/discounts.
5. Introducing mandi fee reimbursement for new MSMEs and broad conversion charge waivers with simplified processes statewide.
6. Ensuring automatic, time-bound CGTMSE guarantee fee reimbursement and considering higher loan ticket sizes for growth-stage MSMEs.
7. Launching a simple, direct training reimbursement framework and scaling e-commerce digitization assistance for manufacturers.
8. Maintaining strong market development support while simplifying claims and enhancing export-readiness.
9. Extending renewable energy incentives to recognize captive investments as eligible capital for incentive computation, with waivers on transmission/wheeling charges.
We remain committed partners in Uttar Pradesh’s industrial growth story and are confident that the above parity measures will catalyze investment, employment, and exports while bolstering the State’s position as a premier destination for manufacturing.
We would be grateful for an opportunity to present these suggestions in person and support the Department in designing the operational guidelines.
With sincere regards,
CS CMA Lekhak Agarwal
S/o Shri Lalit Kumar ji Agarwal
(M.Com- Bus.Adm., M.Com- A.B.S.T., B. Com)
(CIPFA-Affl.UK)(CSCE UK) (DIGG, DIPM & DIFM DIIM-Germany)
National Co- In charge, Corporate Affairs, Professional Wing
Bhartiya Vaishaya Global Foundation
+91-94686-97222
Rajasthan MSME POLICY
Uttar Pradesh MSME Policy
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