Arya Gupta
Background
Micro, Small and Medium Enterprises (MSMEs) account for about 31.1% of the total GDP of India, 35.4% of manufacturing output and 48.58%% of India’s exports and are the second largest employers of labour after agriculture (Ministry of Finance, 2026). However, in Jharkhand, the sector has been under the radar of big industrial houses and industries like the state’s flagship policy Jharkhand Industrial and Investment Promotion Policy (JIIPP) 2021, which focused on large industrial and metal units, leaving MSMEs (the state reported that it had around 2.77 lakh Udyam-registered MSMEs by mid-2023) without a dedicated policy instrument.
In mid-November 2023, Government of Jharkhand notified the draft Jharkhand MSME Promotion Policy 2023 for public consultation and it officially published the draft policy on 4 December 2023 through Gazette notification. The policy aimed at enhancing the competitiveness and sustainability of MSMEs through financial incentives and interest subsidy as well as facilitation support, to formalise the large informal base of MSMEs in the state, to institutionalise the system with a dedicated directorate of MSMEs and district-level facilitation centres, and to foster cluster-based development based on the ‘One District One Product (ODOP)’ model, which included traditional industries like sericulture, khadi, handicrafts, food processing, bamboo, leather and lac.
The policy also outlined a proposed Jharkhand MSME Special Concession Act 2023 that will exempt MSMEs from the entire web of state-level approvals, NOCs and inspections that typically affect small businesses disproportionately compared to large businesses.
Functioning
The main instrument under the policy is the Comprehensive Project Investment Subsidy (CPIS) on fixed capital investment. Under the final notified policy, micro enterprises are eligible for a subsidy of 40% of fixed capital investment, small enterprises for 35%, and medium enterprises for 30%, subject to a maximum admissible CPIS of ₹15 crore. The subsidy is disbursed in two instalments, with 50% in the first year and the remaining 50% in the third year.
SC/ST, women and differently abled entrepreneurs who are residents of Jharkhand are eligible for an additional 5% benefit under CPIS, subject to the policy’s conditions. The Jharkhand resident entrepreneurs of SC/ST, Women and differently abled category also get an additional 5% CPIS benefit. The interest rate subsidy at 5 per cent per annum for a period of five years from the date of commercial production was extended to the micro units with a maximum of ₹25 lakh, small units of up to ₹1 crore and medium units of up to ₹2 crore, and the guarantee fee paid under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme was reimbursed to ease access to collateral-free loans.
On institutional front, the policy recommended to set up a dedicated MSME Directorate at state level for implementation of both the state and central level MSME schemes and a District MSME Centre (DMC) in each district, initially using District Industry Centres (DICs) to facilitate Udyam registration and provide single window and expansion support for manufacturing and service MSMEs.
Other incentives include stamp duty and registration fees reimbursement, quality certification and patent registration support, reimbursement of electricity duty, Export Development Assistance (EDA) for participation in approved trade fairs and exploration of new markets, and some reimbursement of EPF contribution/ESI contribution for units who formalize their workforce in a month. The policy earmarks ₹2 crore annually for EDA (Government of Jharkhand, 2023). The Special Concession Act was proposed to be implemented along with these fiscal incentives as a regulatory-relief measure, and had to exempt eligible MSMEs from the regular state-level clearances.
Performance
Jharkhand’s MSME base is also part of a much bigger national formalisation initiative, with cumulative Udyam registrations in the nation rising from 0.79 crore at the end of FY 2021–22 (the first full year of the MSME portal) to 7.83 crore as of February 2026. In Jharkhand, Udyam registrations increased from approximately 2.77 lakh in mid-2023 to over 3.5 lakh by November 2023, an increase of roughly 26.4%. Jharkhand’s 3.5 lakh-plus registrations accounted for approximately 1.69% of India’s 2.08 crore Udyam registrations at the time. However, these increases cannot be directly attributed to the Jharkhand MSME Promotion Policy 2023, given the broader national formalisation drive and the absence of state-level implementation or beneficiary-level evidence linking registrations to the policy.
| Indicator | At Notification (2023) | Latest Available (2025-26) |
| Jharkhand MSMEs registered on Udyam | ~2.77 lakh (mid-2023) rising to 3.5 lakh+ (Nov 2023) | No consolidated state-specific figure published since; national base nearly doubled in the same period |
| Jharkhand’s share of national Udyam base | ~1.69% (Nov 2023, of 2.08 crore URP registrations) | Not separately re-published by the state government |
| MSME Special Concession Act | Proposed alongside the 2023 policy | Reflected as the Jharkhand MSME (Special Concession) Act 2025 in Invest India’s state policy listing — exact enactment details not independently verifiable in public sources |
| Dedicated MSME Directorate / DMCs | Proposed in policy text | No public confirmation found of directorate establishment or district-wise DMC rollout |
| Subsidy/incentive disbursement | CPIS: 40% of FCI for micro, 35% for small and 30% for medium enterprises; maximum admissible CPIS of ₹15 crore | No public, unit-wise disbursement data located |
| World Bank-assisted RAMP programme | Not applicable | Strategic Investment Plan (SIP) for Jharkhand prepared under RAMP (JIIDCO as nodal agency), targeting MSME formalisation, competitiveness and district-wise cluster development |
Source: Compiled from India Environment Portal (2023), Financial Express / KNN India (2023), PIB / Ministry of MSME (2026), IBEF (2026), Invest India (2026), and the RAMP Strategic Investment Plan for Jharkhand (JIIDCO, 2026). See Selected References for full citations.
The biggest disparity is not with any individual negative data but because there is a lack of implementation data published by the government at the state-level, in particular subsidy disbursement, rollout of DMCs and the number of Udyam registrations after the notification of the policy in 2023, which could not be found in public sources for Jharkhand specifically. There is no doubt that the key regulatory-relief promise of the policy, the Special Concession Act, took about two years from proposal (2023) to enactment (2025 listings), and a World Bank-supported RAMP Strategic Investment Plan for Jharkhand has been developed as a separate, more recent, instrument with similar formalisation and competitiveness targets.
Impact
The most tangible, measurable success of the Jharkhand MSME Promotion Policy 2023, as a policy, is not an outcome, but institutional design, the creation of a comprehensive fiscal incentive framework, a proposed dedicated directorate, and a regulatory-relief law that were established as written policy within the span of approximately one year of the policy process.
It is not possible to gauge the implications of these in terms of the creation of a materially larger, more competitive or more formalised MSME base in Jharkhand, given the lack of publicly available information on the state level since late 2023 on Udyam count, disbursement figure or district-wise categorical DMC status, which is itself an important finding, irrespective of the efficacy of the underlying incentives.
The overall national picture indicates that the policy is riding the favorable tailwind of a formalisation push which saw a growth of almost ten times in the number of Udyam registrations between FY22 and FY26, with a significant portion of the growth from the launch of the Udyam Assist Platform for informal micro enterprises from January 2023 onwards. The state policy’s design, which is one of the reasons why it is hard to find state-specific data on MSMEs that can be attributed to their efforts, may not have been responsible for the increase in the MSME base in Jharkhand over this time period.
The increase in Jharkhand’s MSME registrations during this period may therefore reflect the broader national formalisation trend rather than the specific effects of the 2023 policy. In the absence of implementation and beneficiary-level data, the policy’s contribution to this increase cannot be established. Concurrently, a RAMP Strategic Investment Plan for Jharkhand, being implemented with the support of the World Bank, had similar aspirations of formalisation and cluster development, indicating that even amongst government, the policy of 2023 was not seen as adequate or effective solution for MSME development.
Emerging Issues
- There is no consolidated or public data to date on CPIS or interest-subsidy disbursement since the policy’s notification in December 2023, and no way to verify the number of MSMEs that have received these incentives that the policy provides.
- The policy proposed the Jharkhand MSME Special Concession Act as a key measure to provide regulatory relief to Micro, Small and Medium Enterprises (MSMEs) by exempting eligible units from certain state-level clearances. However, the Act’s enactment and operational status should be independently verified through a primary legal or government source, as its inclusion in later state policy listings does not by itself establish that it was enacted or implemented.
- Although the policy identifies the MSME Directorate and District MSME Centres (DMCs) as key institutional mechanisms, publicly available information does not provide sufficient evidence on their implementation and functioning.
- It will be difficult to gauge the impact of the policy’s incentives for MSMEs in Jharkhand due to the MSME up-skirt formalisation trend being hard to separate from the overall trend in the country (which has seen a near ten fold increase from FY22 to FY26).
- Since then, a separate RAMP Strategic Investment Plan for Jharkhand, funded by the World Bank, has been released, with overlapping formalisation and competitiveness objectives, and questions have been raised regarding the coordination between the state’s own MSME policy architecture and this separately-funded plan.
Way Forward
The single most important step the State government could take is to publish an implementation dashboard, with a periodic update, which could include information on the number of applications received and beneficiaries covered, CPIS and interest-subsidy amounts sanctioned and disbursed, investment mobilised, employment generated, Udyam registrations, and the operational status of DMCs across districts. This would provide researchers and policymakers with a clearer basis for assessing implementation and distinguishing the effects of the 2023 policy from broader national formalisation trends, including the Udyam Assist Platform.
The state should work towards speeding up the remaining regulatory reliefs that are yet to be finalized, because they will help in achieving the ease-of-doing-business aspect of the policy, which will be undermined if they take two years or more to get finalized. Lastly, there is a need for explicit coordination (through one monitoring mechanism ideally) between the 2023 MSME Promotion Policy and the newer RAMP Strategic Investment Plan (World Bank assisted) so as to avoid duplication of efforts and ensure that both policies’ cluster-development and formalisation targets complement and build on each other.
References
Ministry of Finance, Government of India. (2026, January 29). Micro, small, and medium enterprises form the backbone of India’s industrial economy: Economic Survey 2025–26. Press Information Bureau. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2219984&lang=1®=6
Government of Jharkhand. (2023, December 4). Jharkhand MSME Promotion Policy 2023 [Gazette Notification]. https://www.jharkhand.gov.in/PDepartment/ViewDocument?id=D014DO002SD00213122023023259626
India Environment Portal. (2023). Draft Jharkhand MSME Promotion Policy 2023. http://www.indiaenvironmentportal.org.in/content/476277/draft-jharkhand-msme-promotion-policy-2023/
KNN India. (2023, November 17). Jharkhand Draft MSME Policy Proposes Interest Subsidy of 5% to New Units.
https://knnindia.co.in/news/newsdetails/state/jharkhand/jharkhand-draft-msme-policy-proposes-interest-subsidy-of-5-to-new-units
Financial Express. (2023, November 16). Draft Jharkhand MSME Policy: Dedicated MSME Directorate, DMCs in Every District, Interest Subsidy, More. https://www.financialexpress.com/business/sme/draft-jharkhand-msme-policy-dedicated-msme-directorate-dmcs-in-every-district-interest-subsidy-more/3308961/
Press Information Bureau / Ministry of MSME. (2026, March 30). Over 7.83 crore enterprises registered on Udyam Registration Portal (URP); growth trend indicated. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2246892®=3&lang=1
India Brand Equity Foundation. (2026). Over 7.83 crore enterprises registered on Udyam platforms, indicating strong MSME formalisation growth. https://www.ibef.org/news/over-7-83-crore-enterprises-registered-on-udyam-platforms-indicating-strong-msme-formalisation-growth
Invest India. (2026). Investment Opportunities in Jharkhand [State policy listing]. https://www.investindia.gov.in/state/jharkhand
Jharkhand Industrial Infrastructure Development Corporation Ltd. (2026). Strategic Investment Plan (SIP) for Jharkhand under the Raising and Accelerating MSME Performance (RAMP) Programme. Ministry of MSME, Government of India. https://ramp.msme.gov.in/ramp/sites/default/files/2026-05/Jharkhand.pdf
About the Contributor
Arya is a Research and Editorial Intern at IMPRI Impact and Policy Research Institute, New Delhi. A Master’s student pursuing Economics at Delhi School of Economics and Economics graduate from Shri Ram College of Commerce (SRCC), University of Delhi, and originally from Jharkhand, Arya’s research interests include Indian political economy, labour markets and development policy.
Acknowledgements
The author thanks the IMPRI review team (Shivanshi and Gargi Bisht) for their comments and guidance on this Policy Update.
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organisation.
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