IPS Cottage Industry Subsidy — Up to ₹5 Lakh in DNH & Daman and Diu — Frequently Asked Questions

There are two parts to it. First, a capital subsidy equal to 25% of your term loan, capped at ₹5,00,000, which is intended for setting up a new unit. Second, an interest subsidy under which 50% of the interest your bank or NBFC charges is reimbursed, for up to five years starting from the date production begins.

Yes. Applicants belonging to the Scheduled Castes or Scheduled Tribes, women, and differently-abled persons with a disability of 30% or more receive an extra 10% capital subsidy over the base 25%. For them the capital subsidy can go up to 35% of the term loan.

The term loan that qualifies for the benefits is limited to ₹20,00,000. Any amount borrowed above that ceiling does not carry the subsidy.

Loans from nationalised banks, cooperative banks, public sector banks and private banks are all covered. Banks and NBFCs also feature in the interest subsidy, which reimburses half of the interest they charge.

You need to be above 18 years of age and to have passed at least standard IV. On the skill side, any one of three things works: at least one month of training in the proposed line of business from an institute recognised by the Government of India, or at least one year of experience in the same activity, or being a hereditary craftsperson. The unit itself must be a cottage industry.

The scheme remains operative until 19 May 2027, and the application window currently in use is described as the Investment Promotion Scheme 2022 to 2027, covering 20 May 2022 to 19 May 2027. So 19 May 2027 is the closing date for this window.

No. This is a subsidy scheme, not an equity investment. You raise a term loan from a lender and the administration pays a capital subsidy on that loan and reimburses part of the interest. No stake is taken in your unit, so there is no dilution for the promoter.

The interest reimbursement runs for a maximum of five years, counted from the date your unit commences production.

The whole process is online. Register at https://swp.dddgov.in/registration, verify your email through the link sent to you, and verify your mobile number using 111111 as the OTP — your mobile number and PIN then reach you by email. Log in at https://swp.dddgov.in/login, open Departments & Services from the left menu, scroll to District Industries Centre DD & DNH and select the Investment Promotion Scheme 2022 to 2027 application. Complete the Common Application Form, upload the mandatory documents, re-check the details and submit. The notification itself is at https://swp.dddgov.in/assets/pdf/Notification_IPS_2022_DNH_DD.pdf.

The District Industries Centre, DNH & D&D takes it up for review, checking compliance with the stated eligibility conditions and whether the documents are complete. If it clears that stage, the application proceeds to sanction and the capital and interest subsidies are then disbursed.

The capital subsidy is specified for setting up new units. The interest subsidy, on the other hand, is tied to production and is reimbursed for up to five years from the date production commences.

No. DPIIT (Startup India) recognition is not listed as a mandatory requirement for IPS Cottage Industry Subsidy — Up to ₹5 Lakh in DNH & Daman and Diu, though having it can strengthen your application and unlock other benefits.

IPS Cottage Industry Subsidy — Up to ₹5 Lakh in DNH & Daman and Diu is open to startups at any stage. It is open to startups registered anywhere in India.

IPS Cottage Industry Subsidy — Up to ₹5 Lakh in DNH & Daman and Diu is offered by Department of Industries, UT Administration of Dadra and Nagar Haveli and Daman and Diu, a government body. It is provided as non-dilutive funding.