Gujarat Chief Minister Bhupendra Patel (file picture) | Photo Credit: ANI

In a significant departure from previous industrial policies, Gujarat on Monday unveiled a flexible ‘Choose Your Incentive’ regime and a new relocation framework for industries operating within city limits, betting on customised incentives and spatial reorganisation of manufacturing to drive the State’s next phase of industrial growth.

The measures form part of the Viksit Gujarat Industrial Policy 2026, which will remain in force for five years from June 1, 2026. The policy seeks to build on Gujarat’s strengths in manufacturing and exports while positioning the State as a hub for advanced manufacturing, innovation and research-driven industries. Chief Minister Bhupendra Patel said the policy had been designed keeping future industries in mind, with special thrust on sectors such as green hydrogen, green ammonia, battery storage, electrolysers, electric mobility, aerospace, space manufacturing, semiconductor support industries, robotics, drones, sports goods and toys.

“For the first time in the state we are coming with a ‘Choose Your Incentive’ scheme where industries can choose from a bouquet of incentives,” Additional Chief Secretary (Industries) Mamta Verma said while outlining the policy. The new framework moves away from a one-size-fits-all incentive structure and gives businesses greater flexibility in selecting benefits aligned with their investment requirements. For MSMEs, this would mean the ability to choose from a combination of capital subsidy, interest subsidy and power tariff reimbursement.

More responsive

Officials said the objective is to make incentives more responsive to the needs of different sectors and investment categories while improving ease of doing business.

“It will be very easy for any unit to get incentives. Apart from the flexibility to choose incentives, units can get faster approvals,” Verma said. As part of the simplification exercise, the government has reduced the number of documents required for availing incentives from around 30 to 14. The inspection process has also been streamlined, with a single inspection proposed to determine eligible fixed capital investment.

Alongside the incentive overhaul, the government has introduced a new programme aimed at encouraging industries located within urban municipal limits to relocate outside city areas. “We are coming for the first time with Project THRIVE which is looking into the concept of decongesting cities,” Verma said. Under the initiative, industries operating within city limits will be encouraged to move to locations outside urban centres under the concept of “earning well and living well”.

“We are nudging industries to move beyond these urban centres,” Verma said. Units opting for relocation will be treated as new units and become eligible for a range of incentives and support measures. These include capital subsidy, a wage support subsidy of ₹5,000 per employee per month for six months, assistance for housing and worker infrastructure, and relaxation in floor space index (FSI) norms. Officials said the initiative is intended to reduce pressure on urban infrastructure while creating better planned industrial ecosystems outside city centres.

The new policy marks a significant shift from the state’s previous industrial strategy unveiled in 2020 during the Covid-19 pandemic. While the earlier policy focused on attracting companies looking to diversify supply chains away from China, providing incentives for industrial parks and offering long-term land leases to reduce project costs, the 2026 framework places greater emphasis on advanced manufacturing, innovation, research and development, and high-value-added production. Gujarat in 2020 had positioned itself as a preferred destination for global manufacturers seeking alternatives to China, while becoming the first state to delink industrial incentives from SGST-linked calculations. Six years later, policymakers say the focus has expanded from attracting investments to building an innovation-led industrial ecosystem centred on semiconductors, electric mobility, green energy, robotics and knowledge-based industries.

The new industrial policy offers sizeable incentive support across investment categories. According to government estimates, a micro unit investing ₹1 crore can receive incentives worth ₹25-45 lakh, while a medium enterprise investing ₹100 crore could become eligible for incentives ranging between ₹35 crore and ₹45 crore. Large projects investing ₹1,000 crore can receive incentives of ₹250-350 crore. In identified thrust sectors, however, the incentive support rises substantially, with a ₹1,000-crore investment potentially qualifying for incentives worth ₹450-500 crore. The policy also lays out support for mega and ultra-mega investments. A mega unit investing ₹21,000 crore can receive incentives ranging from ₹6,300 crore to ₹7,000 crore, while an ultra-mega project investing ₹37,000 crore can avail benefits of up to ₹15,000 crore.

The policy also places considerable emphasis on workforce welfare and industrial infrastructure. To support worker accommodation, the government will provide assistance for dormitories, labour hostels and working women’s hostels. Up to 80 per cent of the eligible project cost, subject to a cap of ₹40 crore, will be supported under the scheme. The broader industrial strategy seeks to position Gujarat at the centre of emerging global manufacturing opportunities. Officials said traditional sectors such as textiles, ceramics and pharmaceuticals have become global benchmarks, while future growth will increasingly be driven by sectors such as semiconductors, electric vehicles, green energy and advanced manufacturing.

“Our priorities are very clear. We are moving into high-value-added manufacturing, strengthening integration into global value chains, becoming a preferred innovation and R&D hub, building future-ready skills, driving exports, diversification and import substitution,” Verma said.

The policy also seeks to establish Gujarat as a global research and development destination. The first five global R&D centres set up in the state will be eligible for capital subsidy of 50 per cent of project cost up to ₹250 crore. Additional incentives include payroll support of ₹10,000 per employee per month for three years, power tariff assistance of ₹1 per unit for five years, and support for patents and intellectual property development.

Published on June 15, 2026