Power Tariff Subsidy in Gujarat under the Viksit Gujarat Industrial Policy 2026

Power tariff subsidy under VGIP 2026, in brief

The power tariff subsidy under the Viksit Gujarat Industrial Policy 2026 reimburses ₹2 for every unit of electricity a Category-A unit consumes and ₹1 per unit in Category B, for 5 years (MSMEs) to 8–12 years (Large, Mega and Ultra Mega), up to 10%–25% of EFCI. It applies to power bought from a DISCOM or renewable power through open access — never to your own captive generation.

What is a power tariff subsidy? A per-unit reimbursement of part of your electricity cost, claimed against the bills your distribution company raises. In VGIP 2026 it is Component-3 of the package — alongside capital subsidy and interest subsidy, within one combined ceiling — and it needs no term loan: what you earn depends only on the units billed by your DISCOM or open-access supplier and your taluka category, and what is paid is then limited by ceilings set as a share of your EFCI.

Rate

₹2 per unit (kWh) in Category-A talukas · ₹1 per unit in Category B — the same for MSMEs and Large units

Period

MSMEs 5 years · Large 10 years (general) or 8 years (thrust and selected thrust) · Mega 10 years · Ultra Mega 12 years, from the date of commercial production

Cap

MSMEs 25% of EFCI (20% in selected thrust sectors) · Large 10–20% · Mega and Ultra Mega 20–25%

Eligible power

Supply from your distribution licensee — UGVCL, MGVCL, PGVCL, DGVCL, Torrent Power or another licensed distributor (SEZ, GIFT City or port) — or renewable power bought through open access. Captive generation is excluded.

Expansion or diversification

Only the additional consumption of the new project counts, measured on a sub-meter

Claimed

After the Provisional or Final Eligibility Certificate, on electricity bills or invoices in the unit’s name

Sanctioned by

GM, District Industries Centre (micro & small); MSME Commissioner (medium); for Large and above, an investment-linked committee, with claims filed with the Industries Commissioner every three months

MSME power tariff subsidy rates

Eligible MSMEs can claim ₹2 per unit in a Category-A taluka or ₹1 per unit in Category B, for five years from the date of commercial production, up to 25% of EFCI — 20% in the five selected thrust sectors, where the combined ceiling is higher.

Selected thrust sectors: sports goods, toys, footwear, robots and drones, plus any sector notified later. Other thrust sectors use the general-sector rates for MSMEs. Micro, small and medium enterprises all receive the same per-unit rate; size affects only the annual ceilings.

The annual ceilings that ration it

Across all three components, small and medium enterprises can be paid at most 9% of EFCI a year in Category A and 7% in Category B (10% and 9% in selected thrust sectors); micro units 37% / 27% in Year 1 (38% / 33% in selected thrust sectors), then 2% a year (3% in selected thrust sectors). Take the full capital subsidy and about 2% of EFCI a year is left for power tariff and interest subsidy together (3% in selected thrust sectors) — nothing unused carries forward.

Large, Mega and Ultra Mega power tariff subsidy

Large, Mega and Ultra Mega units get the same ₹2 or ₹1 per unit for longer — 8 to 12 years — with caps from 10% to 25% of EFCI. For big consumers the annual ceiling, not the per-unit rate, is what limits the payout.

Large units must apply for registration with the Industries Commissionerate before production starts (or by 8 December 2026, if later). Mega means a thrust-sector project with at least ₹1,000 crore of gross fixed capital investment and 250 direct jobs, plus 50 jobs for every further ₹200 crore; Ultra Mega, at least ₹10,000 crore and 3,000 jobs, plus 500 for every further ₹5,000 crore. Absolute annual ceilings of ₹150 crore (Large, general), ₹300 crore (Large, thrust and selected thrust), ₹750 crore (Mega) and ₹1,250 crore (Ultra Mega) apply to all components together.

Units × rate, within three limits

Your subsidy in any year is the units you consumed multiplied by ₹2 or ₹1 — then cut to the annual ceiling, the lifetime cap of 10–25% of EFCI, and the combined ceiling you share with capital and interest subsidy. For an MSME taking the full capital subsidy, the annual room of about 2% of EFCI is the first limit it can hit — above roughly 10 lakh units a year for every ₹10 crore of EFCI in Category A (20 lakh in Category B; 15 and 30 lakh in selected thrust sectors), extra consumption earns nothing.

1. Earned: units billed by your DISCOM or open-access supplier in the year × ₹2 (Category A) or ₹1 (Category B).
2. Annual ceiling: every year the three components together cannot exceed a set share of EFCI — 9% / 7% for small and medium enterprises, 2% / 1.5% for general-sector Large units — and unused room does not carry forward.
3. Lifetime cap: the power tariff subsidy on its own stops at 25% of EFCI for MSMEs (20% in selected thrust sectors) and 10–25% for Large units and above.
4. Combined ceiling: capital, interest and power tariff subsidy together stop at 35–50% of EFCI for MSMEs and 15–50% for Large units and above.

Consumption above these figures earns nothing extra in any of the five years. Leaving capital subsidy unclaimed only swaps it for power tariff subsidy under the same combined ceiling, so it never raises the total. A Category-B unit needs twice the units to earn the same rupees.

Which power qualifies for the subsidy

Power bought from a distribution company or renewable power bought through open access qualifies. Power from your own captive plant does not, and an expanding unit is paid only on the additional consumption of the new project, measured on a sub-meter.

A unit is one kilowatt-hour (kWh) as billed by your supplier. The GRs set the subsidy per unit, so demand charges, fixed charges, fuel surcharge and electricity duty do not change it. The electricity duty exemption under the Gujarat Electricity Duty Act, 1958 is a separate benefit that both GRs provide for, as applicable under the Act; on our reading it sits outside these ceilings.

Power tariff subsidy calculator

Enter your EFCI and your monthly consumption — or, if you don’t have the units, your monthly bill or your contract demand in kVA, and the calculator estimates the units and says what it assumed. It applies the per-unit rate, the annual room after capital subsidy, the lifetime cap and the combined ceiling, year by year.

Worked examples

Three round-figure illustrations. The same 50,000 units a month earns twice as much in a Category-A taluka as in Category B, and a large consumer runs into the annual ceiling long before the per-unit rate matters.

Power tariff, interest and capital subsidy together

Power tariff and interest subsidy share whatever the capital subsidy leaves under the combined ceiling: 10% of EFCI for MSMEs in general sectors (15% in selected thrust sectors), 5% for general-sector Large units — released at about 2% or 3% of EFCI a year for MSMEs.

Power tariff subsidy is usually the simpler of the two to claim — no lender, no default periods, no 2% floor — and for a power-intensive unit without much debt it can be the larger. For a unit with a big term loan, the interest subsidy may absorb the room first. Because unused room does not carry forward, the split between the two should be planned before the eligibility certificate is issued, not after.

How to claim power tariff subsidy in Gujarat

Power tariff subsidy is claimed after the eligibility certificate, against your electricity bills — so the connection, the metering and the paperwork have to be right from the first month of production.

1. Get the connection in the enterprise’s name

   The DISCOM connection, or the open-access agreement, must be in the name of the enterprise that will claim. Bills in a promoter’s, landlord’s or group company’s name are not accepted.

   Before production starts

2. Register — Large, Mega and Ultra Mega units

   Registration with the Industries Commissionerate is mandatory, with the IEM, proof of land possession, GPCB consent to establish where applicable, the detailed project report and any term-loan sanction.

   Before production starts, or by 8 Dec 2026 if later

3. Install a sub-meter for an expansion

   If you are expanding or diversifying an existing unit, only the additional consumption of the new project is eligible, and the GRs require a sub-meter to measure it. Micro units without one are assessed against their past three-year average.

   Before the new project starts drawing power

4. Apply for PEC or FEC

   MSMEs apply within six months of the date of commercial production, or of 25 September 2026 if later; Large units within three months of production, the registration certificate or 8 September 2026, whichever is latest. If the investment finishes after production starts, the Final Eligibility Certificate is due within six months (MSMEs) or three months (Large) of completion or of the end of the eligible investment period.

   Claims start after the certificate

5. File claims with your bills

   Submit copies of the electricity bills or open-access invoices for the period, in the format the Commissionerate prescribes. Micro and small units are sanctioned by the GM, District Industries Centre and medium units by the MSME Commissioner; Large units file every three months with the Industries Commissioner.

6. Stay in production and keep the records

   The unit must stay in continuous production for the incentive period, keep at least 85% of all employees and 60% of managerial and supervisory staff Gujarat-domiciled, and hold the applicable GPCB consent. On breach, disbursed subsidy is recoverable with 18% interest a year from the date of first availment.

Old scheme or new? Your six-month option window

If your unit had not started commercial production before 1 June 2026, you can opt for the Aatmanirbhar Gujarat Scheme instead of VGIP 2026 by applying within six months of the relevant GR — by 25 March 2027 for MSMEs, 8 March 2027 for Large units; the choice is final. Of the two, only VGIP 2026 has a per-unit power tariff subsidy; choosing the old scheme means giving it up.

• Started production before 1 June 2026: you stay on the Aatmanirbhar Gujarat Scheme, which, as we read it, has no per-unit power tariff subsidy.
• Not in production before then: you may opt for the old scheme by applying within six months — by 25 March 2027 for MSMEs, 8 March 2027 for Large units — and only if commercial production starts by 4 October 2027. After that, VGIP 2026 applies.

See the capital subsidy comparison for the rest of the package.

Where power tariff subsidy claims get cut

Power tariff subsidy is lost to metering and paperwork more often than to the rules — the wrong name on the bill, no sub-meter, or captive power counted as eligible.

1. Bills in the wrong name.Claims are accepted only on electricity bills or invoices in the enterprise’s own name.
2. Counting captive power.Units from your own captive plant — including a captive solar plant — are excluded. Renewable power qualifies only when bought through open access.
3. No sub-meter on an expansion.Small, medium and Large units cannot claim without one; micro units without one are measured against their past three-year average instead.
4. Claiming the same benefit twice.A unit that has taken incentives for the same investment under another State scheme is not eligible here unless the GR provides otherwise; Large units also cannot claim the same component under another State scheme. Across all state and central schemes, total incentives cannot exceed EFCI.
5. Ignoring the annual room.With the full capital subsidy, MSMEs have about 2% of EFCI a year (3% in selected thrust sectors) for power tariff and interest subsidy together; nothing carries forward.
6. Choosing a site without checking the category.₹1 versus ₹2 per unit doubles the subsidy on the same consumption. Newly created talukas can differ from their neighbours.
7. Filing the eligibility certificate late.Late FECs lose incentive period and amount in proportion — and no power tariff claim can start before the certificate.

How we help with power tariff subsidy

Power tariff subsidy in Gujarat: frequently asked questions

Download the Government Resolutions

Every VGIP 2026 figure on this page comes from three Government Resolutions of the Industries & Mines Department. Read them yourself — or send us your project and we will read them for you.