Strengthening Maharashtra’s industrial ecosystem through targeted incentives

Listen to our podcast about Maharashtra’s Industries, Investments & Services Policy 2025, covering SGST reimbursement, MSME and service sector incentives, and growth drivers.

Key takeaways

Maharashtra adopts a Gross SGST reimbursement method with capped limits by zone and classification.
Manufacturing eligibility is based on fixed capital investment or employment, while service sector eligibility is based solely on employment.
Service units can access a 50% rental subsidy, full stamp duty and electricity duty exemptions and EPF reimbursement up to INR10 crores.
Thrust sectors gain a 20% capital subsidy capped at INR25 crores, with continued benefits from PSI‑2019.
Applicants should watch for the operative guidelines, comply with due dates and evaluate sector‑specific policies to optimize benefits.

One important part of Maharashtra’s policy is how it calculates incentives. While many states use a Net SGST model, Maharashtra gives incentives on the Gross SGST, which can offer businesses higher benefits. Also, the inclusion of Zone A, which was not incentivised previously, is also a welcome step.

Bhavesh Thakkar

Partner, Tax and Regulatory Services, EY India

For your convenience, full text transcript of this podcast is available below.

Vaishnavi Luniya

Welcome to another episode of EY India Insights podcast series on incentive policies. Today, we will take a closer look at incentives in detail. We will discuss the ones with the broadest reach, explore recent developments and understand the essentials together. I am your host, Vaishnavi Luniya and I am a part of EY India's Incentive Advisory practice. In our last episode, we explored the Maharashtra's Global Capabilities Centers Policy 2025.

Today, our focus is once again on Maharashtra as we delve into Maharashtra Industries, Investments & Services Policy 2025. Maharashtra remains a leading destination for investments and this new policy represents a significant step towards the state's goal of achieving a US$1 trillion economy. To discuss this in detail, we have with us Bhavesh Thakkar, Partner, Tax and Regulatory Services, EY India, specializing in incentives and subsidies.

Welcome back, Bhavesh.

Bhavesh Thakkar

Thank you, Vaishnavi. It is wonderful to be back on the podcast with you.

Vaishnavi Luniya

Bhavesh, before jumping into the specifics, I was curious to understand the buzz around this policy and why the release of this policy significant?

Bhavesh Thakkar

Absolutely, Vaishnavi, that is an important question and it is exactly where we should start. Maharashtra has consistently cemented its reputation as one of the top investment destinations in India, largely due to the investment-friendly approach and proactive policy environment. The state also has a rich history of incentivizing businesses to foster economic growth, issuing various incentive policies over the years.

The previous initiative—the Packaged Scheme of Incentive (PSI) 2019—provided substantial support to industries. With PSI-2019 now expired, the industry has been eagerly anticipating a new policy, one that is better aligned with the evolving demands and dynamics of the business ecosystem in Maharashtra.

Vaishnavi Luniya

Building on this, could you share what the key changes or distinctive aspects introduced in the new policy compared to the PSI- 2019?

Bhavesh Thakkar

The new policy raises the bar with some refreshing updates. For starters, businesses can now benefit from Gross SGST reimbursement instead of the Net SGST, making the process simpler and amplifying the benefits of GST. 2.0. What is truly exciting is that, for the first time, MSMEs and large-scale industries can access capital subsidy and production-linked incentives, making support more inclusive and designed for a wider range of sectors.

It does not stop here. The comparatively developed zones—classified as zones A and B—were previously excluded from the Maharashtra’s key central policies for a long time. These zones are now eligible for incentives, which is a major shift that opens up fresh possibilities across the state, plus a dedicated incentive for the priority service sector, have been rolled out. Finally, recognizing just how crucial these services are for economic growth and Maharashtra’s evolving business landscape.

Vaishnavi Luniya

That is great. These are some of the much-awaited changes sought by investors. Moving ahead, could you take us through the structure of the policy?

Bhavesh Thakkar

The policy is divided into three parts. The first covers the eligibility and classification of manufacturing units. These units are classified into SMEs, large, special large, mega and ultra-mega categories. These would be classified on the basis of achieving a minimum threshold of fixed capital investment or minimum employment.

The second part covers the fiscal incentives for manufacturing units. This includes the Gross SGST-base subsidy, electricity duty exemptions, capital subsidy for thrust sectors, EPF reimbursements and many more. The last part is eligibility and incentives for service sector units, which are classified solely on the basis of employment generated. This classification remains the same for manufacturing units.

The incentives for service sector units include rental assistance stamp duty exemption, electricity duty exemption, etc. So, the policy zone wide classification adopted from PSI-2019 has been updated to reflect the state’s changing development needs.

Vaishnavi Luniya

That means for a manufacturing unit, it is an either-or condition. For service units, it is only the employment condition, which seems fair. Also, the incentives you mentioned do look quite lucrative. Could you give us some more details on the incentive structure for manufacturing set-ups?

Bhavesh Thakkar

There is a good incentive structure, as I mentioned before. The base subsidy for the manufacturing units is the investment promotion subsidy, which comes in the form of 100% Gross SGST reimbursement, capped at 30% to 100% of the fixed capital investment based upon your zone and classification. The Gross SGST concept has been extended to all project classifications in light of the GST 2.0 rate revision.

That signifies a department's strong focus on driving the state's development. Also, a capital subsidy of 20% has been introduced, especially for thrust sectors and it is capped at INR25 crore. Along with these incentives, the policy continues benefits from PSI-2019, including stamp duty and electricity duty exemption for specified projects. The policy also extends incremental benefits for MSME and large-scale industries.

This includes an interest subsidy of 5% and production-linked incentive of 1.5% for export-oriented units, providing additional support to units seeking to scale operations or expand into new markets.

Vaishnavi Luniya

These incentives do sound lucrative and are a positive development from the last policy. Bhavesh, I am sure our listeners would be keen to hear more about the incentives being extended to a wider range of services. It seems that Maharashtra is broadening its approach to support more sectors within services. Could you give us an idea regarding the same?

Bhavesh Thakkar

Definitely, this development represents a significant advancement in the service sector and is regarded as a positive initiative by the authorities. The policy offers a 50% rental subsidy to eligible units, with the subsidy ranging from INR1 crore to approximately INR20 crore. Additional benefits for qualifying units include full exemptions from stamp duty and electricity duty, reimbursement of EPF contributions, up to INR10 crore, as well as reimbursement of R&D and innovation expenses capped at INR10 crore.

Vaishnavi Luniya

That is promising. It could help reduce costs and potentially make Maharashtra a more attractive destination for investments. While we are on the topic of benefits, businesses would also be keen to understand critical aspects that need to be kept in mind while analyzing the policy. Could you shed some light on that?

Bhavesh Thakkar

It is a very pertinent question and there are some key aspects to take note of. The operative guideline of the policy is underway and once released, it will clarify certain aspects further. Maharashtra, like many states, prioritizes local employment, so businesses should understand labor conditions and assess their alignment. The policy identifies specific due dates and applications must be filed within these due dates to retain the full benefits.

I will also say that Maharashtra has sector-specific policies, so it is important to draw a comparison between this policy and the sectoral policy to derive optimum benefits.

Vaishnavi Luniya

Okay. Thanks for breaking that down, Bhavesh. These are some key takeaways. Do you have any final thoughts before we wrap up?

Bhavesh Thakkar

This policy represents an important step towards creating a more supportive environment for industries across manufacturing and services. By combining financial incentives with measures to improve the Ease of Doing Business, it signals a positive move for investment and growth in that state. One notable aspect of Maharashtra's policy is its approach to incentive calculation. Unlike many states that follow a Net SGST model, Maharashtra offers incentive on Gross SGST, which means businesses could see higher potential benefits.

Along with the balanced approach where zone-wise benefits are tailored for different regions, is a welcome step. Maharashtra has maintained a fairly consistent track record when it comes to incentive disbursement. So, concluding on a positive note, we are expecting the release of four to five sector-specific policies in the upcoming period in Maharashtra.

Vaishnavi Luniya

Thank you so much, Bhavesh, for sharing those insights. That was a great walk-through of the policy. We will catch up again to discuss the sectoral policies once they are out.

Bhavesh Thakkar

Thank you, Vaishnavi.

Vaishnavi Luniya

Dear listeners, if you are exploring setting up and growing your businesses in Maharashtra, then this policy is worth your attention. This is Vaishnavi Lunia signing off. Stay tuned for more episodes on India's evolving incentive landscape.

Presenters

Bhavesh Thakkar

Partner, Tax and Regulatory Services, EY India

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Strengthening Maharashtra’s industrial ecosystem through targeted incentives

Key takeaways

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Bhavesh Thakkar

Vaishnavi Luniya

Presenters

Bhavesh Thakkar