Andhra Pradesh Industrial Development Policy 4.0 (2024-29): MSME Incentives Explained#
Searching for Andhra Pradesh's 2024-29 industrial policy brings up several documents. For an MSME owner the first question is not "how much subsidy" but "which policy applies to me". This article explains how the two main documents fit together and summarises the MSME incentives, based on the text of each as published on the Andhra Pradesh Industries Department portal.
Two policies, two audiences#
- Andhra Pradesh Industrial Development Policy (4.0) 2024-29 was issued under G.O.Ms.No.68 dated 26 October 2024. Its incentive bands start at projects with fixed capital investment (FCI) above INR 50 crore. Its own MSME section says the state will introduce a dedicated MSME and Entrepreneur Development Policy, and mentions a corpus of INR 500 crore for items such as CGTMSE support, technology transfer and revival of sick units.
- Andhra Pradesh MSME and Entrepreneur Development Policy (4.0) 2024-29 was issued under G.O.Ms.No.69 of the same date. This is the document that sets out incentives for micro, small and medium units.
Both policies are valid for five years from notification, or until a new policy replaces them. Amendments apply prospectively and do not curtail benefits already granted.
The Industrial Development Policy also says it replaces IDP 2023-27 from its notification date, while enterprises already availing benefits under the older policy continue under it until its operative period ends.
Who is eligible under the MSME policy#
- The unit must meet the MSMED Act, 2006 definition, as amended by the Government of India, and must be registered on the Udyam portal (Section 5.1).
- The policy covers new enterprises and existing enterprises expanding. Some incentives are limited to one of these groups, as shown below.
- The policy was first framed for manufacturing activity. G.O.Ms.No.22 dated 17 February 2025 amended Section 5.1 so that incentives apply to eligible manufacturing and services activity. The guidelines list qualifying services in Annexure 2 (see below).
- The overall incentive an MSME can claim across the policy's packages shall not exceed 75% of FCI.
Incentives in the MSME policy#
The policy sets values by enterprise size. Amounts below are as printed in the policy and the February 2025 amendment.
| Incentive | Micro | Small | Medium |
|---|---|---|---|
| Capital subsidy, new enterprises (general): % of FCI, cap | 25%, INR 25 lakh | 25%, INR 1.5 crore | 25%, INR 7 crore |
| Capital subsidy, special category | 45%, INR 45 lakh | 45%, INR 4.5 crore | 35%, INR 7 crore |
| Technology upgradation, expansion units only (general) | 20%, INR 20 lakh | 20%, INR 2 crore | 20%, INR 5 crore |
| Net SGST reimbursement | 100% for 5 years, annual cap 5% of annual turnover | Same | Same |
| Power cost (general) | INR 1 per unit consumed; capped at INR 1 lakh per annum; paid half-yearly for 5 years | INR 1 per unit; cap INR 5 lakh per annum | INR 1 per unit; cap INR 15 lakh per annum |
Capital subsidy is paid on commercial operation date or first invoice, in 2, 3 or 4 annual instalments for micro, small and medium units respectively. "Special category" means enterprises wholly owned by women, BC, SC, ST, minority, specially abled or transgender entrepreneurs with domicile in the state. Total SGST incentive cannot exceed 100% of FCI.
On power cost, the operational guidelines (Section 9) read as follows: the reimbursement is INR 1 per unit, limited to INR 1 lakh, 5 lakh or 15 lakh per annum by size, disbursed half-yearly for 5 years. It covers energy consumption charges for units in kVAh only, not contract maximum demand or other DISCOM charges, and not residential, colony or open-access power. The connection must be in the enterprise's name. For expansion units only consumption above a certified base is reimbursed. The guidelines separately give special-category micro and small units INR 1.5 per unit (Section 15.12), with the same annual caps.
Other items in the policy include:
- Stamp duty and land conversion. 100% reimbursement of stamp and transfer duty on industrial land purchase and on leases, mortgages and hypothecations, once on the land; 100% of land conversion fees.
- Skill upgradation, energy and water audit costs, local procurement subsidy for exporters in select sectors, and quality certification top-up. Each has size-wise caps in Section 6.
- Land cost rebate. The amendment adds a 75% rebate on land cost, limited to INR 25 lakh, for SC/ST-led micro and small enterprises in APIIC industrial estates and parks. It applies to new units and once per land.
How to apply#
The Operational Guidelines for the three 4.0 policies were issued on 25 February 2025 (G.O.Ms.No.28, as reported by a secondary source; the guidelines PDF itself is on apindustries.gov.in). Their Section 6 and 7 set out the steps.
- Approvals. Industrial approvals are filed under "Apply for approvals" on www.apindustries.gov.in. Green and white category MSMEs in notified industrial parks can start operating after an online "declaration of intent" and must formalise approvals within three years; orange and red category units are excluded.
- Incentive claims. A separate online claim is filed for each incentive under "Apply for Industrial Incentives" on the same website, with the Common Application Form (Annexure 5) and the incentive-specific form. Claims go to the General Manager, District Industries Centre. Special-category applicants must state their category on the portal.
- Time limits. Capital and technology upgradation subsidy claims are due within six months of the date of commercial production, which for an MSME is the first sale invoice. Net SGST claims are due within six months after the financial year (by 30 September) with GSTR-3B and GSTR-2A. Power cost claims are half-yearly, by 31 March and 30 September.
- Inspection. The first claim triggers an inspection: an Industrial Promotion Officer for micro units, an Assistant or Deputy Director with the IPO for small units, and the General Manager for medium units. Reports are due within 48 hours, and an entrepreneur who disagrees can appeal within three months.
- Committees. For micro and small units a district scrutiny committee recommends and the District Industries and Export Promotion Committee (DIEPC) sanctions or rejects. For medium units the state scrutiny committee and State Level Committee do so. The guidelines set 100 working days for processing.
Professional tax registration and payment are mandatory for incentives. The guidelines list no separate rejection grounds, but they allow recovery of incentives where facts are misrepresented or the unit stops production within six years (micro and small) or eight years (medium and above), with some exemptions.
Documents to have ready#
Annexure 16 lists: a financing institution certificate, or a machinery list with bills and payment proof for self-financed units; caste certificates where relevant; a CA certificate on equity holding; and partnership deed or incorporation documents. Originals to show the inspector include professional tax registration, pollution Consent for Operation, power release certificate, Udyam registration, project report, land sale or lease deed, GST certificate and other applicable statutory approvals.
Which policy applies, and what stays unclear#
The guidelines define micro, small and medium units by the Government of India MSME definition, and sub-large units under IDP 4.0 by fixed capital investment above INR 50 crore up to INR 500 crore. They cap MSME packages at 75% of FCI and IDP packages at 100%. They do not state a rule for a unit that fits both descriptions. For food processing, a unit claiming under the Food Processing Policy cannot also claim MSME quality certification incentives. Ask the Industries Department in writing.
What we could not confirm#
We did not find an official amendment after 17 February 2025 for these policies, but that is not proof none exists. The guidelines' own service list (Annexure 2) says listed service activities get investment subsidy and power cost subsidy only, which reads narrower than the February amendment's wording; the two texts are not reconciled here.
Where to read the official text#
Both policies and the amendment are published by the Government of Andhra Pradesh. Look for the policy PDFs on the Industries Department portal (apindustries.gov.in) and G.O.Ms.No.22 dated 17 February 2025 for the amendment. Later amendments are possible, so check the current notification before relying on any figure here.
Before you decide#
Which policy applies, whether you are new or expansion, and whether you fall in the special category all change the numbers. Have a chartered accountant or your advisor review the current text and guidelines against your project before you commit funds. See also our comparison of state industrial subsidies and MSME capital subsidy.
Comparing states? See the state-wise industrial subsidy comparison, and the guides for Tamil Nadu 24 thrust sectors, Odisha Industrial Policy Resolution 2022, Uttar Pradesh IIEPP 2022.