If you are setting up or expanding a manufacturing unit in Maharashtra, there is one policy you need to understand before you finalise your location, your investment plan, or your project cost — the Maharashtra Industries, Investment & Services Policy 2025, commonly called MIISP 2025.
Issued on 31 December 2025, it replaces the earlier Package Scheme of Incentives 2019 (PSI-2019) and is valid until 30 December 2030. It is the most comprehensive industrial incentive framework Maharashtra has introduced — and if you plan correctly, it can return a significant portion of your capital investment back to you through state subsidies.
This article explains the policy in plain language: who is eligible, what you get, how the incentives work, and what you need to do to claim them.
First, Understand the Two Key Incentives
Before anything else, you need to understand two incentives that form the backbone of this policy. Most confusion about MIISP 2025 arises from mixing these two up.
Incentive 1 — IPS (Industrial Promotion Subsidy)
IPS is a reimbursement of the SGST — the State’s 9% share of GST — that you have already deposited to the government on sales of your eligible products within Maharashtra.
Here is how it works:
You manufacture a product and sell it within Maharashtra. You collect 18% GST from your buyer and deposit both components to the government — CGST 9% and SGST 9%. At the end of the financial year, you file a claim with the implementing agency (your District Industries Centre or MIDC). The government then refunds 100% of the SGST you deposited — subject to a lifetime cap linked to your Fixed Capital Investment (FCI).
Example: You sell ₹5 crore worth of goods in Maharashtra at 18% GST. You pay ₹45 lakh as SGST to the government. The government refunds ₹45 lakh back to you as IPS.
IPS is available to virtually every eligible manufacturing unit in every zone across Maharashtra. This is the single most important incentive for most manufacturers.
Incentive 2 — Capital Subsidy
Capital Subsidy is a direct grant on your capital investment in land, building, and plant & machinery. The government gives you back a percentage of what you spent setting up the factory.
Example: You invest ₹10 crore in plant and machinery. The government gives you ₹2 crore back as a direct grant.
The rate is 20% of eligible FCI, with an overall cap of ₹25 crore per unit and an annual disbursement cap of ₹5 crore per year.
However — and this is critical — Capital Subsidy is available only to units in thrust and priority sectors such as pharmaceuticals, EV manufacturing, aerospace, food processing, electronics, and similar industries. A general manufacturer — furniture, fabrication, garments, packaging — gets zero capital subsidy regardless of which zone they are located in.
The Single Most Important Distinction
IPS is a reward for manufacturing and selling in Maharashtra — available to virtually every eligible manufacturer, regardless of sector or zone.
Capital Subsidy is a reward for investing capital — but only if you are in a thrust or priority sector.
For most general manufacturers in Pune, Mumbai, or Nashik, IPS is the only meaningful state incentive they will get. Capital subsidy simply does not apply to them. The good news is that IPS alone — structured correctly — can return 30% to 100% of your entire capital investment over the eligibility period.
How Maharashtra Classifies Its Zones
Maharashtra divides all its talukas into categories based on the level of industrial development. The less developed the area, the higher the incentive. The categories are:
Group A — Highly industrialised metros: Mumbai, Pune city/PCMC, Nashik city, Nagpur city, Aurangabad city.
Group B — Developed but not top-tier: Parts of Pune (Haveli, Mulshi, Khed), Thane (Bhiwandi, Kalyan), Nashik (Sinnar, Dindori), Raigad (Pen, Uran).
Group C — Intermediate: Satara, Kolhapur outer talukas, Solapur outer, outer Pune talukas like Junnar and Ambegaon.
Group D — Backward regions: Wardha, Bhandara, Nanded, Latur, Nagpur outer talukas, Ratnagiri belt.
Group D+ — Very backward: Yavatmal, Amravati outer, Jalna, Parbhani, Hingoli, Beed, Buldhana, Dhule outer.
Special Belt — Certain talukas in Vidarbha, Marathwada, Ratnagiri, Sindhudurg, Jalgaon, and Dhule that receive a higher incentive tier than their base group.
NID / Naxalism Affected / Aspirational Districts — Maximum incentive zones: Gadchiroli, Washim, Osmanabad (Dharashiv), Nandurbar, Sindhudurg NID talukas.
Your taluka’s zone classification is the single most important factor in determining your incentive basket. Moving just one taluka outward from a city boundary can jump you from Group A to Group B or C — and increase your subsidy entitlement by ₹1 crore to ₹4 crore on the same investment. Always verify the exact taluka classification in the official MIISP 2025 Annexure-I before finalising your location.
The Full Benefits — What You Get in Each Zone
IPS (SGST Reimbursement) — Available to All Units
| Zone | IPS Cap | Eligibility Period |
|---|---|---|
| Group A | 30% of FCI | 5 years |
| Group B | 40% of FCI | 7 years |
| Group C | 50% of FCI | 7 years |
| Group D | 60% of FCI | 10 years |
| Group D+ | 70% of FCI | 10 years |
| Vidarbha / Marathwada / Ratnagiri / Sindhudurg / Jalgaon / Dhule | 80% of FCI | 10 years |
| NID / Naxal / Aspirational Districts | 100% of FCI | 10 years |
Food processing, green energy, and Industry 4.0 units get a 20% higher cap and 2 additional years of eligibility on top of the above.
Stamp Duty
Group A and B units get a 50% waiver on the first land/building deed. From Group C onwards, stamp duty is 100% exempt — a saving of anywhere between ₹30 lakh and several crores depending on land value.
Electricity Duty Exemption
Group A and B units get 3 years of exemption (7 years for EOU, IT, and BT units). From Group C onwards, electricity duty is exempt for the entire eligibility period.
Power Tariff Subsidy
Not available in Group A and B for general manufacturing. From Group C onwards, eligible units receive ₹1 per unit of electricity consumed for 5 years, capped at ₹1 crore for MSMEs and ₹1.5 crore for LSIs.
Interest Subsidy
Not available in Group A and B unless you maintain over 1,000 permanent employees. From Group C onwards, eligible MSMEs receive up to 5% per annum interest support on term loans, capped at ₹1 crore per year.
Capital Subsidy (Thrust Sectors Only)
Rate is 20% of eligible FCI in all zones. What changes by zone is the asset base:
- Group A and B: Only 50% of machinery cost is eligible (land and building excluded)
- Group C: 80% of machinery cost
- Group D, D+, NID, Aspirational: 100% of land + building + machinery
Overall cap: ₹25 crore. Annual cap: ₹5 crore.
EPF Reimbursement
50% of the employer’s EPF contribution is reimbursed for 5 years for units in Group D, D+, and below. This can be meaningful for labour-intensive manufacturing operations.
How IPS Actually Works — A Practical Example
Let us say you set up a small auto components manufacturing unit in Nashik (Group B) with a Fixed Capital Investment of ₹5 crore.
Your IPS cap is 40% of FCI = ₹2 crore (this is the maximum you will ever receive, spread over up to 7 years).
Now assume your annual Maharashtra sales are ₹4 crore and your GST rate is 18%. Your annual SGST deposited = ₹36 lakh.
Each year you file a claim and receive ₹36 lakh back. At this rate, you exhaust the ₹2 crore cap in approximately 5.6 years. After that, no further IPS is payable even if the 7-year eligibility period has not ended.
Total benefit: ₹2 crore received back — effectively reducing your ₹5 crore capital investment to ₹3 crore net.
And this is in Group B, at the lower end. A similar unit in Group D+ (say, Yavatmal) with the same FCI would have a cap of ₹3.5 crore over 10 years, plus stamp duty exemption, interest subsidy, electricity duty exemption, and power tariff subsidy — making the total state support significantly higher.
Who Is Eligible?
Any of the following can apply under MIISP 2025:
- Manufacturing enterprises as defined under the MSMED Act 2006
- Industries listed in the First Schedule of the Industries (Development & Regulation) Act 1951
- IT and BT manufacturing units registered with DIC, MIDC, SEEPZ, or STPI
- Food and agro processing units (dairy, grain, packaged foods, beverages, etc.)
- Units in priority and thrust sectors
Both new units and expansion or diversification units are covered. For expansion units, incentives are 75% of the above and the eligibility period is reduced by one year.
Who is not eligible: Alcohol, tobacco, and cigarette manufacturers; textile units covered under the separate Textile Policy; units that do not obtain an Eligibility Certificate; units selling primarily outside Maharashtra.
Priority and Thrust Sectors — Where the Additional Benefits Are
If your business falls in any of the following sectors, you qualify for capital subsidy in addition to IPS and the other incentives:
Priority Manufacturing Sectors (highest incentive tier): Aerospace and Defence, Agro and Food Processing, Automotive and Auto Components (EV/Hybrid/Hydrogen), Battery and Energy Storage, Chemicals and Petrochemicals, Machinery and Equipment, Pharmaceuticals and Med-tech, Mineral-based Industries.
Thrust Sectors: Electronics and ESDM, IT Manufacturing (hardware), Bio-technology, Green and Renewable Energy, EV ecosystem components, Gems and Jewellery.
Frontier and Emerging Sectors: Optics and Sensors, Bio-based Polymers, Autonomous Vehicle Components, Quantum Computing Hardware, Drone Logistics Infrastructure, Telecom Infrastructure for 6G.
Units in these sectors also receive differentiated incentives based on investment size, employment potential, and strategic relevance — in addition to the standard zone-based incentives above.
The Application Process — Steps to apply for Subsidy in Maharashtra
Step 1: Confirm your taluka’s zone classification against the MIISP 2025 Annexure-I.
Step 2: Calculate your FCI and determine your unit category (Micro, Small, Medium, LSI, Special LSI, Mega, or Ultra-Mega).
Step 3: Complete at least one effective step — purchase land, register your company, obtain MPCB Consent to Establish — to establish your eligibility date.
Step 4: Apply for an Eligibility Certificate (EC) on the Invest Maharashtra portal at invest.maharashtra.gov.in before you commence commercial production. This is your gateway document.
Step 5: Implement the project as per the EC and commence production.
Step 6: File annual IPS claims with supporting GSTR returns and a CA certificate confirming SGST deposited.
For MSMEs, the implementing agency is the District Industries Centre (DIC) of your district. For LSI and larger units, it is MIDC.
Three Things to Watch Before You Claim IPS
One — SGST must actually be deposited. IPS reimburses SGST that has been deposited to the government. If your GST returns have pending dues, reversals, or mismatches, your claim will be rejected. Ensure your GSTR-1, GSTR-3B, and annual return are all reconciled and clean before filing.
Two — Only Maharashtra sales count. IPS is available only on SGST from intra-state sales within Maharashtra. IGST on inter-state sales does not qualify. If you supply to customers in other states, only the Maharashtra portion of your turnover generates IPS.
Three — IPS is taxable income. The reimbursement received is taxable under the Income Tax Act as business income. Factor this into your net benefit calculations and advance tax planning.
A Final Word on Location Planning
MIISP 2025 has introduced one significant change from the earlier PSI-2019 that many manufacturers are not yet aware of: Group A zones now receive IPS for the first time. Under PSI-2019, a manufacturing unit in Pune city or PCMC received no IPS at all. Under MIISP 2025, they get 30% of FCI over 5 years.
This is meaningful, but the differential between Group A and Group B/C remains large. A unit in PCMC gets a maximum of 30% of FCI over 5 years with limited other benefits. The same unit, 20 kilometres away in Chakan or Talegaon (Group B/C), gets 40–50% of FCI over 7–10 years plus stamp duty exemption, interest subsidy, and power tariff support.
Before finalising any industrial property in the Pune Metropolitan Region, it is worth spending an hour mapping the exact taluka classification of your shortlisted sites. That one hour can be worth ₹1 crore to ₹4 crore in subsidy differential on a modest ₹5–10 crore investment.
KRPR & Associates is a Pune-based CA and corporate law firm specialising in India-entry advisory, GST and direct tax compliance, FEMA, company secretarial services, and industrial incentive planning for manufacturing and service companies. For a project-specific analysis of your MIISP 2025 eligibility and incentive quantum, write to us at [your email].
Disclaimer: This article is based on publicly available information about MIISP 2025 as of March 2026. Detailed implementing GRs and circulars are still being issued by the Government of Maharashtra. All figures should be verified against the latest GRs before investment decisions. This does not constitute legal or financial advice.