Top Government Funding Schemes for Manufacturing Businesses in India

India offers over 15 government schemes that provide funding, subsidies, and loans to MSMEs and manufacturing startups. Here's a breakdown of the best ones for 2024–25.

Manufacturing is the backbone of India’s economy. From small workshops to large factories, every business needs financial support to start and grow. To help entrepreneurs, the Government of India has launched many government funding schemes in India for the manufacturing sector. These schemes provide loans, subsidies, and grants to reduce financial pressure and promote growth for MSMEs and startups.

What is Government Grants?

Government grants for the manufacturing sector are financial benefits provided by the central or state government. These include loan subsidies, capital support, interest subvention, or raw material assistance. Unlike loans, some grants don’t need to be repaid, making them ideal for new businesses and startups.

Government grants help reduce business risk and allow MSMEs to scale without high debt burden.

Eligibility Criteria for Manufacturing Funding

Eligibility varies by scheme, but common conditions include:

Why Funding Schemes Are Important for MSMEs and Startups?

MSMEs and startups are India’s growth engines, but often face capital shortages, raw material issues, and limited tech access. Funding schemes for new business and MSME manufacturing schemes 2025 help bridge these gaps by offering:

• Low-cost finance
• Capital subsidies
• Raw material and technology assistance

These schemes help India become self-reliant, create jobs, and boost local manufacturing.

Updated Statistics on Funding Schemes (FY 2024–25)

• Over 1.2 lakh MSME units benefitted from government funding schemes in India last year
• ₹21,000 crore+ disbursed in subsidies and loans
• PMEGP supported 42,000+ businesses; subsidies worth ₹1,440 crore
• CGTMSE offered ₹9,215 crore in collateral-free loans to 80,000+ MSMEs

Top Funding Schemes for New Manufacturing Businesses (2024–25)

1. Prime Minister’s Employment Generation Programme (PMEGP)

• Provides subsidy on bank loans for new enterprises.
• Project cost: Up to ₹50 lakh for manufacturing units.
• Eligible for individuals 18+ years, with special benefits for women, SC/ST, and minorities.

2. Pradhan Mantri MUDRA Yojana (PMMY)

• Offers collateral-free loans to micro and small enterprises.
• Loan categories: Shishu (up to ₹50,000), Kishore (₹50,000–₹5 lakh), Tarun (₹5–₹20 lakh).
• Helps small manufacturers, shop owners, and artisans.

3. Production Linked Incentive (PLI) Scheme

• Provides financial incentives to increase domestic production.
• Target sectors: Automotive, electronics, pharmaceuticals, IT hardware, solar, etc.

4. National Small Industries Corporation (NSIC)

• Helps MSMEs purchase raw materials (imported or indigenous).
• NSIC pays suppliers directly, and MSMEs can repay in easy instalments.

5. PM Vishwakarma Scheme

• Supports artisans and traditional craftspeople.
• Provides modern toolkits, training, certification, and loan support.

6. Credit Linked Capital Subsidy Scheme (CLCSS)

• Offers subsidy for technology upgradation.
• Helps MSMEs buy modern machinery and improve productivity.

7. Technology Upgradation Fund Scheme (TUFS / ATUFS)

• Special scheme for the textile and garment sector.
• Provides subsidies for replacing old machines and adopting new technology.

8. MSME Credit Guarantee Fund Trust Scheme (CGTMSE)

• Provides collateral-free loans to MSMEs through banks and NBFCs.
• Government guarantees repayment to banks, reducing risk.

9. Stand-Up India Scheme

• Provides loans between ₹10 lakh and ₹1 crore.
• Specially for women entrepreneurs and SC/ST business owners.

10. PM Formalisation of Micro Food Processing Enterprises (PM-FME) Scheme

• Supports micro food processing units.
• Offers subsidies, training, and branding assistance.

11. Startup India Seed Fund Scheme (SISFS)

• Provides early-stage funding of up to ₹20 lakh for prototype development.
• Up to ₹50 lakh available for commercialization and market entry.
• For DPIIT-recognized startups in the manufacturing and innovation space.

12. Market Development Assistance (MDA) Scheme

• Helps manufacturing units promote products in domestic and international markets.
• Reimbursement for trade fairs, exhibitions, and advertising.

13. Technology and Quality Upgradation Support to MSMEs

• Supports energy-efficient and quality-certified manufacturing.
• Grants provided for adopting clean tech, ISO certifications, and modern tools.

14. Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

• Promotes traditional industries like coir, bamboo, honey, and handicrafts.
• Offers cluster-based funding and technology modernization support.

15. MSME Champions Scheme & Self-Reliant India (SRI) Fund

• Supports market access, grievance redressal, and digital adoption.
• Equity-based funding via SRI Fund for high-potential MSMEs.

How to Apply for Manufacturing Funding Schemes in India (Step by Step)

1. Identify the Right Scheme: Based on your sector and business size.
2. Register Your Business: On Udyam portal or MSME registration portal.
3. Prepare a Project Report (DPR): Clear financials, business model, market study.
4. Apply Through the Right Portal:

• PMEGP: kviconline.gov.in
• MUDRA: Through banks
• SISFS: seedfund.startupindia.gov.in
• NSIC, CLCSS, CGTMSE: via respective sites or banks

5. Upload Documents: Aadhaar, PAN, bank details, project report.

6. Track Application Status: Most schemes offer tracking portals.

Month-by-Month Timeline for Applying

Common Mistakes & Tips to Get Approved

Mistakes to Avoid:

• Incomplete documents or wrong formats
• Weak or copy-paste project reports (DPR)
• Financial projections without market study
• Ignoring state-level co-subsidies

Tips to Succeed:

• Show how your business creates jobs or supports local suppliers
• Mention export potential or import substitution
• Keep paperwork simple and professional
• Hire an expert if unsure (StartupFlora can help)

Risks & Post-Scheme Compliance

If you get funding, you also have responsibilities:

• Use funds only for what’s approved
• Maintain the unit for at least 3–5 years, or you may need to return the subsidy
• Audits may be conducted to verify proper use
• Penalties or blacklisting can happen for misuse or misreporting

Why Choose StartupFlora for Manufacturing Business Funding?

• Expert team with deep knowledge of Government Grants for Manufacturing Sector
• End-to-end support from eligibility check to loan sanction
• Assistance in preparing DPRs for funding schemes for manufacturing business
• Trusted by 10,000+ MSMEs and startups across India

With StartupFlora, entrepreneurs don’t just apply for schemes, they actually securefunding and build strong, sustainable manufacturing businesses.

Conclusion:

The Indian government aims to make the country a global manufacturing hub. With schemes like Funding Scheme for Manufacturing Sector, Government Funding Schemes in India, and MSME Manufacturing Schemes 2025, entrepreneurs can now start and expand their businesses with less financial burden. These initiatives will create more jobs, strengthen exports, and boost India’s economic growth.

FAQ

1. What are the top funding schemes for manufacturing businesses?

PMEGP, CGTMSE, CLCSS, TUFS, PLI, MUDRA Yojana, and Stand-Up India.

2. Who can apply for government manufacturing grants?

Any Indian citizen over 18 with a registered manufacturing MSME or startup.

3. How to get collateral-free loans for MSMEs?

Apply via banks or NBFCs under the CGTMSE scheme.

4. Which schemes support tech upgradation?

CLCSS and TUFS provide capital subsidies for machinery and innovation.

5. Is there early-stage funding for startup manufacturers?

Yes Startup India Seed Fund Scheme offers ₹20–50 lakh in support.