MSME Innovative Scheme (Incubation · Design · IPR)
Video Explanation & Insights
What the Scheme Is
The MSME Innovative Scheme amalgamates the erstwhile Incubation, Design and IPR schemes of the Ministry of MSME into a single formulation. The three operate as separate verticals with interflows, integrated sequentially and in parallel to promote innovation, design intervention and IP protection — taking an MSME from idea conceptualisation, through handholding and business development, to growth and outreach. Common implementation agencies (Host Institutes, IISc, IITs, NITs, IPFCs) run all three verticals.
Objectives
- •Promote all forms of innovation across the value chain — from ideas to innovative applications — through incubation and design interventions.
- •Support concept-to-market development, design competitiveness, and protection & commercialisation of intellectual creations of the MSME sector.
- •Build a culture of innovation and creative problem-solving via industry–academia–government–research collaboration.
- •Serve as a connecting link between industry / academia leaders and innovators, encouraging new product development and hand-holding.
- •Develop affordable innovations that benefit large numbers of people while remaining commercially viable and sustainable.
The Three Verticals at a Glance
| Vertical | Focus | Headline Support |
|---|---|---|
| Incubation | Validate untapped creativity at proof-of-concept; nurture ideas from concept to commercialisation via Host Institutes / Business Incubators. | Up to ₹15 lakh / idea; up to ₹1 crore plant & machinery to HI |
| Design | Bring manufacturing and design expertise onto a common platform for new-product development and value addition. | Up to ₹40 lakh / project; ₹2.5 lakh / student project |
| IPR | Improve IP culture — awareness, filing support and commercialisation via Intellectual Property Facilitation Centres (IPFCs). | Reimbursement up to ₹5 lakh; IPFC grant up to ₹1 crore |
From Idea to Proof-of-Concept via Host Institutes
Who Can Be a Host Institute (HI)
Technical colleges, universities, professional colleges/institutes, R&D institutes, NGOs in incubation, MSME-DIs / Technology Centres, or any Central / State Government institute may register as an HI (acting as a Business Incubator) via innovative.msme.gov.in. Earlier-approved HIs continue.
Idea Approval — Four-Stage Flow
- 1HI level: HI gets incubatee ideas evaluated by its own experts; only shortlisted ideas are uploaded on the portal.
- 2First-stage screening (PMU): PMU screens for complete, relevant information; incomplete/incoherent ideas are liable for rejection; programme division counter-checks and forwards to the DESCs.
- 3Domain Expert Selection Committees (DESCs): Ideas segregated into five sector verticals and evaluated by five DESCs; selected ideas recommended in proportion to those received.
- 4PMAC approval: PMAC grants final approval; approved ideas receive financial assistance for development.
Financial Assistance to HI for Nurturing Ideas — Up to ₹15 Lakh / Idea
- •Contribution split: for MSME/others' ideas, 15% is borne by them (deposited to the HI) and 85% by MoMSME, up to a maximum of ₹15 lakh per idea.
- •Students: pay nothing — the entire idea cost is borne by MoMSME up to ₹15 lakh per idea.
- •Release in two instalments: 70% after PMAC approval & HI–Incubatee agreement; 30% after 60% of the first instalment is utilised and the IA submits a physical-verification report.
| Indicative Expenditure Head | Likely Expenditure (₹ Lakh) |
|---|---|
| Technology-related (machine usage, electricity, raw materials, testing/calibration, etc.) | 10.00 |
| Mentors / handholding support team | 3.00 |
| Travel / other overhead & administrative (as needed) | 2.00 |
| Total | 15.00 |
Plant & Machinery Support to HI — Up to ₹1 Crore
- •For procurement / installation of plant, machinery, hardware and software for R&D and common facilities — available to HIs with two or more approved ideas.
- •Provided upfront; UC for 50% within 9 months; complete UC within 18 months.
- •Covers capital + maintenance for a maximum of 5 years or scheme validity, whichever is earlier; procurement within 6 months via open competitive bidding (imports permitted with justification).
- •Land, building and human-resource costs are not covered; pre-existing plant & machinery is excluded. HI must submit a DPR; accept/reject communicated within 30 days.
Implementation: MSME-DIs / TCs act as Implementing Agencies (IAs) and forward HI registration recommendations to PMAC within 15 days; MSME-DIs are not eligible for Grant-in-Aid.
Design Projects, Student Projects & Awareness
The Design component has two parts — Design Projects (new design strategies / products via consultancy) and the Design Awareness Programme (seminars, talks, workshops sensitising MSMEs to the value of design).
Eligibility
A registered Micro / Small / Medium enterprise with a valid UAM or Udyam Registration. Manufacturing MSMEs should preferably be profitable in at least one of the last three FYs (PMAC may relax). Designers engaged must be qualified Industrial Designers with relevant experience.
Financial Assistance
| Sub-Component | GoI Contribution | Ceiling |
|---|---|---|
| Design Project — Micro enterprise | 75% of project cost | ₹40 lakh |
| Design Project — Small & Medium enterprise | 60% of project cost | ₹40 lakh |
| Student Design Project (AICTE/UGC students) | 75% of project cost | ₹2.5 lakh |
The balance project cost is borne by the MSME and deposited to the IA. The design project must complete within one year of receiving assistance, with UC submitted; drop-out attracts a PMAC-decided penalty.
| Design Project — Release Stages | Share |
|---|---|
| Stage 1 — Strategy & Concept | 40% |
| Stage 2 — Detail Design | 30% |
| Stage 3 — Prototype/product completion & final report | 30% |
| Student Design Project — Release Stages | Share |
|---|---|
| Stage 1 — Application approval | 50% |
| Stage 2 — Completion & final report | 50% |
IP Filing Support via IPFCs, and Reimbursement to MSMEs
The component offers filing support (patents, trademarks, copyrights, designs, GIs), IP advisory, patentability searches, technology-gap analyses and IP commercialisation through Intellectual Property Facilitation Centres (IPFCs).
IPFC Recognition & Grant
- •Eligible agencies include MSME-DIs / Technology Centres and other bodies with ≥ 2 years' operation, demonstrated IP work experience, and (for non-government entities) audited reports for the last 2 years.
- •An IPFC is recognised as an IA for 3 years, renewable on performance.
- •Grant up to ₹1 crore per IPFC in milestone-based instalments (three or more); first instalment up to 40% of approved project cost.
- •Administrative / implementation overheads capped at 15% of each instalment; IPFC may claim 2% implementation charges for handling IPR reimbursement (within the 15% limit).
Reimbursement to MSMEs — Maximum Financial Assistance
| Item | Maximum Financial Assistance |
|---|---|
| Foreign Patent | ₹5.00 lakh |
| Domestic Patent | ₹1.00 lakh |
| GI Registration | ₹2.00 lakh |
| Design Registration | ₹0.15 lakh (₹15,000) |
| Trademark | ₹0.10 lakh (₹10,000) |
Equity to Commercialise Approved Ideas, Designs & Patents
Financial assistance of up to ₹1 crore as equity to help MSMEs commercialise their ideas / designs / patents and prepare for pre-investment series funding — a venture-debt-style facility for nurturing incubation / design ventures.
- •Managed by SIDBI with a management fee of 5%, through a separate scheme-specific corpus funded by MoMSME.
- •Equity provided in a ratio up to 80:20 — a maximum of 80% by GoI (via the SIDBI corpus), the remaining by the beneficiary MSME.
- •Approval by PMAC on recommendation of a purpose-specific DESC; SIDBI executes a legal agreement before releasing the first instalment, with subsequent disbursals linked to milestones.
Eligibility
Must be an existing MSME Innovative Scheme beneficiary — i.e. an idea approved under Incubation, a design project approved under Design, or a patent (domestic/international) granted and reimbursement applied for/received under IPR. UDYAM registration required (UAM obtained up to 30.06.2020 eligible per the transition window, then migrate to UDYAM). Seed support is not given more than once, nor where similar support was received from any other GoI/State scheme.
Support Applicable Across All Sub-Schemes
Awareness & Training — Financial Limits
| Programme Type | Deliverable | Amount Limit |
|---|---|---|
| Awareness Programmes | One-day (min. 30 participants) | Webinar ₹40,000 · Physical ₹70,000 |
| Training of officials (MoMSME, DC-MSME, MSME-DIs, TCs, IPFC, etc.) | 5-day (~20–25 participants) | Virtual ₹60,000/day · Physical ₹3 lakh/day (prorated) |
| Regional / State / National Workshop (by IAs) | Multi-day (max 5 days, min. 50 participants) | Physical ₹5 lakh/day (prorated) |
Foreign travel, international trainings, benchmarking and exposure visits for learning best practices are considered case-to-case on merit; PMAC decides the finer details and financial implications.
Digital Platform & Publicity
- •Digital platform: the scheme runs end-to-end online — registration, assessment, financing and monitoring — via a single-window portal interoperable with a robust MIS.
- •Publicity & promotion: an integrated outreach programme across electronic, print and digital media, open to State Governments, DAVP, PIB and the private sector — webinars, films and advertisements through the year.
Who Approves, Evaluates and Implements
Apex & Approval
| Body | Role |
|---|---|
| PMAC — Project Monitoring & Advisory Committee | Apex body chaired by AS & DC (MSME). Responsible for policy formulation, scheme implementation, proposal approvals and monitoring; empowered to take all key decisions and approve minor procedural changes. |
| DESC — Domain Expert Selection Committee(s) | Five DESCs evaluate incubation ideas across five sector verticals (each: domain experts + one MSME-DI expert + one programme-division member). Separate purpose-specific DESCs are constituted for Plant & Machinery support and for Seed Capital. |
Implementation
| Body | Role |
|---|---|
| Implementing Agencies (IAs) | MSME-DIs / Technology Centres, plus IISc, IITs, NITs and IPFCs — the single point of contact between MSMEs and the O/o DC (MSME); constitute PAPs, verify matching funds, ensure timely completion, maintain separate ledgers (open to C&AG audit) and submit UCs and quarterly reports. |
| Host Institutes (HIs) / Business Incubators | Invite and shortlist incubatee ideas, sign agreements with incubatees, nurture ideas and account for funds via PFMS; assets created cannot be transferred/disposed without MoMSME permission. |
| SIDBI | Designs the Seed Capital financial product, executes beneficiary agreements, manages the corpus (5% fee), links disbursals to milestones, and reports performance to PMAC. |
Five DESC Sector Verticals (Incubation)
- •Agriculture, Rivers & Ocean produce-based industries, fertilizers, agri implements & agro-processing.
- •Healthcare & Life sciences, Medical Devices, Pharmaceuticals, Biotech, AYUSH.
- •Power, Renewables, Electricals, Power Electronics, Energy Efficiency.
- •Services, Education, Hospitality, Media, Publishing, Entertainment, Design, Wellness, Logistics, Sports.
- •Miscellaneous (Environment/Water/Sanitation; Foods/Beverages/FMCG; Infrastructure/Construction/Housing; IT/ITES/Electronics/Telecom; Metals/Engineering/Automation; Automotive/E-Vehicles/Railways/Aviation/UAV, etc.).
Combining the Verticals, and the Application Route
The scheme integrates the three components so an MSME can interlink benefits across the intervention phases. An applicant may apply for any one of the following combinations, with financial assistance applicable per the individual component:
- •Only Incubation · Only Design · Only IPR
- •Incubation → Design → IPR
- •Incubation → Design
- •Incubation → IPR
- •Design → IPR
A scheme may move from one completed "gate" to another as the MSME requires, provided the original scheme is taken to its natural conclusion; at each stage the applicant adheres to that component's guidelines.