Scheme for Assistance to Labour Intensive Industries

You, as an enterprise in Gujarat engaged in labour-intensive manufacturing sectors, can benefit from this scheme run by the Industries & Mines Department, Government of Gujarat. The scheme is titled Assistance to Labour Intensive Industries, and its aim is to promote employment generation in sectors which are labour-intensive (like garments, made-ups, agro & food processing, assembling, etc).

The scheme grants payroll assistance, interest/term loan incentives, and other fiscal support. It is applicable to New Enterprises and expansion of existing units, under the operative industrial policy of Gujarat. The benefit to your business is that by qualifying under this scheme you can receive payroll subventions per new employee, interest subsidy on term loans, and other fiscal incentives – thus lowering the cost of employment and borrowing and improving competitiveness.

Key Features
Financial Assistance
Eligibility Criteria
Who Can Apply
Who Cannot Apply
Documents Required
Application Process for the Scheme

Key Features

Payroll assistance per employee – A fixed amount per employee employed (domiciled in Gujarat) as payroll incentive; extra bonus if woman employee.
Interest subsidy on term loans – Eligible units get subsidy (e.g., up to 7%) on term loans for a defined period.
Minimum employment thresholds and eligible sectors – Only units with certain minimum employment in specified labour-intensive sectors qualify (e.g., garment/apparel, agro & food, assembly) and only new or one-time expansion units.
Non-duplication of other state benefits – Units availing benefits under this scheme may not be eligible for certain other state schemes for the same claim.
Eligibility for new enterprise or expansion once – The scheme covers new units or one time expansion of existing units (with additional employment).

Financial Assistance

Component	Assistance Provided	Detailed Explanation & Example
Payroll Assistance	₹ 1,200 per person employed + extra ₹ 300 for each woman employed (for new employment)	Example: If you hire 150 new domiciled employees, of whom 60 are women, you’ll get (150×₹1,200) + (60×₹300) = ₹1,80,000 + ₹18,000 = ₹1,98,000 as payroll assistance.
Interest Subsidy on Term Loan	Up to ~7% interest subsidy on term loan amount, maximum up to ₹ 1 crore per annum for five years (example)	Example: Your labour intensive unit borrows ₹ 5 crore term loan. Suppose interest subsidy at 7% is allowed; your subsidy could be approx ₹ 35 lakh/year for up to 5 years (subject to ceilings and category) – thereby reducing your interest burden significantly.
VAT / Capital Investment Related Incentives	For eligible units, only 70% of Fixed Capital Investment (FCI) is considered for VAT related reimbursement up to 1/5th of eligible limit per year.	Example: If your eligible FCI is ₹ 20 crore, only 70% i.e., ₹ 14 crore is used for calculation of VAT reimbursement; say reimbursement allowed up to 1/5th per year, you would get a portion of that annually.

Eligibility Criteria

Who Can Apply

Enterprises setting up new units or expanding existing units (one‐time) in defined labour‐intensive sectors.
The enterprise should employ at least the minimum number of persons specified for its sector (for example, 300 persons for garments/apparel/made-ups).
Employees should be domiciled in Gujarat (i.e., local employment).

Who Cannot Apply

Enterprises that fail to hire the required number of persons or engage in sectors not defined as labour-intensive under the scheme.
Existing units applying more than once for expansion under this scheme (beyond the one-time expansion allowance).
Units claiming payroll assistance for employees who were relieved within one year before the commencement of expanded production

Documents Required

Project report for new unit or expansion.
Employment details (number of employees, domiciled staff evidence).
Term loan sanction letter (for interest subsidy).
Proof of production commencement (for payroll subsidy).
VAT/CST registration, EPF registration for employees.
Documents evidencing capital investment, fixed capital investment certificate (for VAT component).
Bank account details of enterprise for claims.

Application Process for the Scheme

Option 1: Apply with Bullit (Recommended)

Click here to start with guided support. Our team verifies eligibility, compiles documents, and handles application & follow-ups on your behalf. You can monitor progress while focusing on operations.

Recommended for: Lean teams. Designed to save you time and effort. Access expert help from start to finish.

Option 2: Government Online / Offline Application

Visit the Industries Commissionerate / local DIC of Gujarat.
Submit application form along with project details (new or expansion).
After registration/approval by the State Level Empowered Committee (SLEC), commence production/hiring.
Post production/hiring, apply for claims under payroll assistance, interest subsidy etc.

Option 3: Reach out to District Industries Centre (DIC) / MSME Facilitation Desk
Contact your local DIC to confirm sector eligibility, employment targets, and claim timelines. Submit the required paperwork and follow up until disbursement.

Frequently asked questions

Which sectors are generally considered labour-intensive under this scheme?

Labour-intensive sectors typically include industries where production relies heavily on manual labour, such as textiles, garments, footwear, food processing, furniture manufacturing and other sectors employing large numbers of workers.

Is there a minimum employee requirement to qualify for the scheme?

Yes. The industrial policy usually defines minimum workforce thresholds that enterprises must meet to qualify as labour-intensive. These thresholds may vary depending on the industry category and scale of the enterprise.

Are contractual workers counted when determining eligibility?

In some cases, contractual workers engaged in production activities may be considered if they are properly registered and comply with labour regulations, though eligibility rules depend on policy provisions.

Can new industries apply immediately after starting operations?

New industries may apply once they meet the employment criteria and provide necessary documentation proving workforce engagement and compliance with statutory regulations.

Does the scheme provide benefits for retaining employees over time?

Some policy provisions may link incentives to sustained employment levels, encouraging industries not only to hire workers but also to maintain stable employment over a defined period.

Are employee welfare contributions considered when evaluating assistance?

Yes. Compliance with statutory contributions such as EPF and ESI may be considered during evaluation to ensure that employees receive proper social security benefits.