Gujarat Unveils Incentive Framework to Support Manufacturing Investment Across Key Sectors
Incentives target semiconductors, renewable energy, chemicals, pharmaceuticals and textiles to deepen supply chains and encourage fresh investments.
The newly announced industrial policy seeks to reinforce Gujarat's position as one of India's leading manufacturing hubs by supporting investment across strategic sectors. Introduced at a time when businesses continue to navigate global supply chain shifts and rising production costs, the policy focuses on reducing project costs through a combination of capital subsidies, interest support, power tariff incentives and reimbursement-linked benefits.
The incentive structure is expected to benefit industries including semiconductors, renewable energy, chemicals, pharmaceuticals and textiles while encouraging the development of domestic supply chains and new manufacturing capacities.
Semiconductor ecosystem receives policy support
The policy introduces dedicated incentives to encourage investments in semiconductor manufacturing and related industries. Support extends to semiconductor fabrication, ancillary manufacturing, industrial gases, equipment suppliers and other components required for the electronics value chain.
Industry representatives noted that the policy could help expand Gujarat's semiconductor ecosystem by attracting investments across supporting industries and creating opportunities for MSMEs engaged in the supply chain.
Renewable energy among key focus sectors
Renewable energy has been identified as another priority sector under the policy. Incentives are available for green hydrogen, battery energy storage systems, renewable energy equipment manufacturing and related infrastructure.
The policy also supports grid modernisation and transmission infrastructure, with the objective of strengthening Gujarat's renewable energy value chain.
Pharmaceuticals and chemicals to benefit
The policy identifies pharmaceuticals as a priority sector to support research and development, innovation and large-scale manufacturing. It includes provisions for R&D assistance, infrastructure support and incentives designed to encourage pharmaceutical manufacturing and exports.
Chemical manufacturers are also expected to benefit from the incentive framework, with industry participants awaiting additional implementation guidelines to understand sector-specific provisions.
Textile sector included under revised incentive framework
The textile industry has also been included in the revised policy framework. Textile stakeholders stated that the policy introduces incentives across different textile segments, including technical textiles, while supporting investments in manufacturing and modernisation.
Industry representatives said the revised framework could encourage capacity expansion and investment across the textile value chain.
Incentive structure
Under the policy, eligible projects can receive support through capital subsidy, interest subsidy and power tariff assistance, subject to category-specific investment thresholds.
According to the published subsidy structure:
- Micro enterprises (up to ₹25 crore investment):
- Capital subsidy: 35–45%
- Interest subsidy: 7%
- Total EFCI support: up to ₹250 lakh
- Small enterprises (up to ₹250 crore investment):
- Capital subsidy: 35–45%
- Interest subsidy: 7%
- Total EFCI support: up to ₹2,500 lakh
- Medium enterprises (up to ₹1,250 crore investment):
- Capital subsidy: 25–35%
- Interest subsidy: 7%
- Total EFCI support: up to ₹12,500 lakh
The policy also provides electricity duty exemption as per actual consumption and power tariff support of ₹2 per unit for five years, subject to prescribed conditions.
In addition, a 100% EPF reimbursement is available for eligible projects.
Industry observers said the policy is expected to support new investments across manufacturing while strengthening Gujarat's industrial ecosystem in strategic sectors.