Kerala Stressed MSMEs Revival & Rehabilitation Scheme — Up to ₹5 Lakh Grant

The Kerala Stressed MSMEs Revival & Rehabilitation Scheme is administered by the state's Directorate of Industries and Commerce. Its purpose is to pull small manufacturing businesses in Kerala out of financial distress and put idle capacity back to work.

Many MSME units in the state reach a point where machinery sits unused, production has slowed and dues keep building. This programme intervenes there, combining grant money with handholding support so that a viable unit can be restored to health rather than shut down.

It is not open to everyone in trouble. A unit has to be classified as stressed or sick under RBI norms and must be able to present a definite Revival Project Report. Applications are accepted on a rolling basis — there is no closing date — so a unit can apply as soon as it satisfies the conditions.

• Up to ₹5 lakh in total assistance per manufacturing MSME unit in Kerala
• Applications accepted on a rolling basis with no fixed deadline
• Open to units classified as sick under RBI norms and found potentially viable
• Includes margin money grant, 6% interest subvention, restart expenses and statutory dues relief
• Recipients must restart within one month and operate for five years

The scheme is meant for manufacturing micro, small and medium enterprises established in Kerala. It is not open to non-manufacturing businesses or to units set up outside the state.

Beyond that, an applicant unit must meet the following conditions:

• It must be an independent legal entity.
• It must have filed EM Part-II or hold Udyam Registration (UAM).
• It must qualify as a sick unit under RBI guidelines.
• An Expert Committee must judge it potentially viable for revival or restructuring.
• It must have been in commercial production for at least two years if it has closed, or at least one year if it is still working.
• It must not appear on the scheme's Negative List of ineligible units.

The Negative List covers photo studios, breweries, sawmills, metal crushers, steel re-rolling mills, calcium carbide units, cashew industrial units, certain asbestos processing units and certain power-intensive units, among others.

Kerala Stressed MSMEs Revival & Rehabilitation Scheme — Up to ₹5 Lakh Grant is open to startups at any stage. It is open to startups registered anywhere in India.

Kerala Stressed MSMEs Revival & Rehabilitation Scheme — Up to ₹5 Lakh Grant accepts applications on a rolling basis — there is no fixed cut-off date, so eligible startups can apply at any time. Because rolling programmes can pause without notice, confirm the window is still open on the official site before you start.

Assistance is capped at ₹5 lakh per unit across all heads combined, and it is given as a one-time package.

• Margin Money Grant — up to ₹2 lakh, meeting 50% of the margin that a bank or financial institution insists on for additional working capital and term loans.
• Interest Subvention — 6% per annum on additional term and working capital loans for the first year, limited to ₹1 lakh and released on a reimbursement basis.
• Restart Expenses — up to ₹1.50 lakh towards new additional or balancing plant and machinery where no term loan has been availed, plus up to ₹1 lakh for essential repair and maintenance.
• Clearance of Statutory Dues — 50% of outstanding dues, up to ₹40,000, for agencies such as KSEB, GST and the Pollution Control Board.
• Cost of the Revival Project Report — fully reimbursed, up to ₹10,000.

Along with the financial support, the scheme provides handholding and help with regulatory requirements.

Units that accept assistance must restart within one month of receiving it and then operate continuously for five years. If they fail to do so, the assistance can be recovered, including under the Kerala Revenue Recovery Act.

Kerala Stressed MSMEs Revival & Rehabilitation Scheme — Up to ₹5 Lakh Grant is offered by Directorate of Industries and Commerce, Government of Kerala, a government body. As a government-backed grant, it is publicly funded and open to eligible startups across India.

Every application is first scrutinised to establish that the unit genuinely fits the RBI description of a sick unit and that it has a realistic chance of being revived.

From there, the decision sits with an Expert Committee. The committee examines the Revival Project Report filed with the application — whether the plan is feasible, whether the promoters are committed to executing it, and whether the financial assistance sought would actually be used well.

On the strength of that review, the committee recommends the relief package, which can include loan restructuring, margin money grant, interest subvention and the scheme's other benefits. Support is directed towards the units with the best prospects of a successful turnaround.

Before you apply to Kerala Stressed MSMEs Revival & Rehabilitation Scheme — Up to ₹5 Lakh Grant, keep the following documents ready:

• A pitch deck or short business plan describing the problem, product and traction
• Company registration documents and PAN
• Founder identification (PAN / Aadhaar) and brief profiles
• Recent financial statements or projections
• Product details — a demo, prototype or working link if available

Exact requirements are confirmed on the official application portal — treat this as a preparation checklist.

Kerala Stressed MSMEs Revival & Rehabilitation Scheme — Up to ₹5 Lakh Grant is best suited for startups in India seeking non-dilutive funding of ₹5L. If that describes your startup, review the eligibility criteria above before applying.