India runs one of the more generous industrial incentive regimes among comparable economies. Central ministries operate production-linked schemes, every state publishes an industrial policy with capital subsidy and tax concessions, and the Foreign Trade Policy carries a further layer for exporters.
Despite this, a substantial share of eligible projects claim little or nothing. The reasons are consistent, and almost none of them are about eligibility itself.
Reason one: the decision was made before the assessment
This is the expensive one. Eligibility for many schemes is determined by decisions taken before capital is committed — where you locate, when you file the initial intimation, how the entity is constituted, and whether commercial production has already started.
A promoter who selects a site, commits capex and commences production, and then asks what incentives are available, has already foreclosed several of the larger ones. Nothing can be done retrospectively about a scheme that required intimation before commencement.
Reason two: sanction was mistaken for disbursement
A sanction letter is the midpoint, not the finish line. Claims require periodic filings, compliance certificates and sustained follow-up with the disbursing authority. Where the post-sanction process is not maintained, sanctioned amounts simply never arrive.
This is particularly common where the consulting engagement ended at sanction. The party who understood the file is gone, and the internal team does not know what filings keep the entitlement alive.
Reason three: only the obvious scheme was claimed
Benefits frequently stack. A project may simultaneously qualify for state capital subsidy, interest subvention, SGST reimbursement, stamp duty exemption, electricity duty exemption and, separately, export benefits under the Foreign Trade Policy.
Not everything can be combined — some schemes explicitly foreclose others — but the analysis of which combination is optimal is rarely done. Most claimants apply for the one scheme they happened to hear about.
- Production Linked Incentive: must be secured BEFORE capex commitment — the window closes at commitment.
- State capital subsidy: must be secured BEFORE capex commitment — the window closes at commitment.
- Interest subvention: must be secured BEFORE capex commitment — the window closes at commitment.
- Stamp duty / electricity duty exemption: must be secured BEFORE capex commitment — the window closes at commitment.
- SGST reimbursement: remains available after capex commitment.
- EPCG / Advance Authorisation: remains available after capex commitment.
- RoDTEP / Duty drawback: remains available after capex commitment.
- Employment-linked support: remains available after capex commitment.
What a proper assessment covers
| Variable | Why it determines eligibility |
|---|---|
| Location and district category | State policies differentiate benefit rates by district development classification. The same project can attract materially different support a hundred kilometres away. |
| Timing of intimation | Several schemes require filing before commencement of commercial production or before capex commitment. Miss it and the scheme closes to you. |
| Investment quantum and phasing | Thresholds gate scheme access, and how capex is phased across financial years can affect which year and which policy applies. |
| Entity constitution | MSME classification, new versus existing unit status, and entity type each affect eligibility and benefit rates. |
| Employment profile | Several state policies and central schemes carry employment-linked components with defined thresholds. |
When to run the assessment
Before capital is committed, and ideally at the point location and configuration are still being decided. That is the window in which the assessment can actually change the outcome rather than simply describe it.
If commercial production has already begun, some schemes are closed but not all. Ongoing operational benefits, export incentives, employment-linked support and certain state reimbursements may remain accessible. The honest answer is worth more than an application that cannot succeed.
Sanction is not money. A significant share of sanctioned industrial subsidy in India is never disbursed, because the post-sanction compliance that keeps the entitlement alive was nobody’s job.