MSME Innovative Scheme: Driving Design, Incubation & IPR Support in India
- klub zero
- May 11
- 8 min read
The MSME Innovative Scheme was introduced by the Ministry of Micro, Small & Medium Enterprises (MSME), Government of India to promote innovation, design intervention, and the protection of intellectual property rights (IPR) among MSMEs. This integrated support scheme combines three major sub-components: Incubation, Design, and IPR – each aimed at strengthening the innovation ecosystem for MSMEs in India.
The scheme is specifically designed to nurture new ideas, support the development and commercialization of innovative products and processes, and help MSMEs protect their intellectual property assets.
As of December 2023, the scheme has approved 643 Host Institutes (HIs) under the Incubation component, established 20 Intellectual Property Facilitation Centres (IPFCs), and facilitated the approval of 74 patents, 942 trademarks, and 48 design registrations, thereby significantly contributing to the innovation landscape of MSMEs in India.
Funding Details: MSME Innovative Scheme
1. Incubation Support
Idea Development: Financial assistance of up to ₹15 lakh per idea is provided to Host Institutes (HIs) for nurturing innovative concepts.
Infrastructure Support: HIs can receive up to ₹1 crore for the procurement and installation of relevant plant and machinery, including hardware and software, to facilitate research and development activities.
2. Design Support
Design Projects:
Micro Enterprises: Eligible for 75% government funding of the total project cost, up to a maximum of ₹40 lakh.
Small & Medium Enterprises: Eligible for 60% government funding of the total project cost, up to a maximum of ₹40 lakh.
The grant is disbursed in three stages:
Stage 1: Strategy & Concept – 40%
Stage 2: Detail Design – 30%
Stage 3: Successful Completion & Final Report – 30%
Student Projects: Financial assistance up to ₹2.5 lakh is provided, covering 75% of the project cost.
3. Intellectual Property Rights (IPR) Support
Reimbursement for Registration Costs:
Foreign Patent: Up to ₹5 lakh
Domestic Patent: Up to ₹1 lakh
Geographical Indication (GI) Registration: Up to ₹2 lakh
Design Registration: Up to ₹15,000
Trademark Registration: Up to ₹10,000
These reimbursements are one-time supports, ensuring that the same expenses are not claimed under any other Central or State Government schemes.
4. Seed Capital Support
Equity Funding: Up to ₹1 crore as equity support is provided to encourage MSMEs to commercialize their ideas, designs, or patents.
Funding Structure: The funding follows an 80:20 ratio, where 80% is contributed by the Government of India through a corpus managed by the Small Industries Development Bank of India (SIDBI), and 20% by the beneficiary MSME.
Eligibility: MSMEs that have already benefited from the Incubation, Design, or IPR components of the scheme are eligible to apply for seed capital support.
Eligibility Criteria – MSME Innovative Scheme (Incubation, Design & IPR Support)
The scheme is thoughtfully designed to nurture individual innovators, startups, MSMEs, and academic and research institutions by offering them the financial, infrastructural, and mentoring assistance needed to bring their ideas to life. Through its structured eligibility framework, the scheme ensures that only impactful, scalable, and original ideas with commercial and societal benefits are selected for incubation and further development.
The eligibility criteria are segmented into three primary categories:
Applicants (individuals, startups, MSMEs)
Host Institutes (HIs) / Business Incubators (BIs)
Project/Idea Eligibility
Who Can Apply?
Applicant Type | Eligibility Conditions |
Individual Innovators | Must be an Indian citizen with an original, innovative idea. No formal company registration is initially required. |
Startups | Must be recognized by DPIIT (Department for Promotion of Industry and Internal Trade) under the Startup India initiative. The startup should be less than 10 years old from the date of incorporation. Must have a valid Startup India Certificate. |
MSMEs (Micro, Small & Medium Enterprises) | Must have valid Udyam Registration. Must meet the latest MSME classification norms based on investment and turnover limits. Should be working on innovative products, services, or processes. |
Student Innovators / Research Scholars | Final-year students, recently graduated students (within 2 years), or research scholars from recognized institutions are eligible. The project must show strong potential for real-world application and business development. |
2️⃣ Eligibility for Host Institutes (HIs) / Business Incubators (BIs)
Host Institute Type | Eligibility Conditions |
Engineering/Technical Colleges, Management Institutes | Must be approved by AICTE/UGC/state/central government. Must have the necessary incubation infrastructure. |
Universities (Public & Private) | Must be accredited and recognized. Should have active R&D cells, incubation centers, or entrepreneurship development cells. |
R&D Institutions | Must have a government-recognized track record in research, development, and commercialization of technology. |
MSME-DIs/Tool Rooms/Technology Centers | Government institutions under the Ministry of MSME are automatically eligible. |
NGOs/Industry Associations | Must be registered and actively engaged in entrepreneurship or innovation promotion. Should have the infrastructure to support incubation activities. |
Government Organizations | Central or State government bodies promoting entrepreneurship and innovation can act as HIs. |
Note: HIs must register on the MSME Innovative Scheme portal and meet mandatory infrastructure and compliance standards.
3️⃣ Eligibility of the Project/Idea
Project Aspect | Eligibility Conditions |
Innovation | The idea should be original, novel, and demonstrate a clear advantage over existing products or processes. |
Prototype Feasibility | The idea must be capable of being developed into a working prototype or a proof of concept within a reasonable timeframe. |
Commercialization Potential | The project must show strong business viability with the ability to scale or capture a significant market need. |
Societal Impact | Projects that address national priorities like clean energy, healthcare, agriculture, digital transformation, financial inclusion, etc., are encouraged. |
Duplication | The idea should not have received funding support for the same stage from any other Central/State government scheme. |
IP Ownership | Intellectual property rights resulting from the project must be held by the innovator/startup/MSME, or must have clear agreements when developed through Host Institutes. |
4️⃣ Important Specific Rules
Requirement | Details |
Nationality | Only Indian citizens are eligible to apply. |
Age Limit | No strict age limit. Young innovators and students are encouraged.Student innovators should preferably be in final year or have graduated within the last 2 years. |
Business Age for Startups | Startup must be less than 10 years old. |
Legal Entity | Startups and MSMEs must have proper registration as a Proprietorship, Partnership, LLP, or Private Limited Company. |
Priority Sectors | While the scheme is sector-agnostic, projects in sectors like Healthcare, Agriculture, Clean Energy, Waste Management, Industry 4.0, AI & IoT, and Sustainable Development are given priority. |
Encouragement to Special Groups | Women entrepreneurs, SC/ST entrepreneurs, and innovators from Aspirational Districts receive encouragement and facilitation support. |
Key Priority Sectors
Sector/Industry | Focus Area | Example Projects |
Healthcare & Life Sciences | Affordable healthcare solutions, medical devices, diagnostics, biotech innovations. | Low-cost ventilators, rapid testing kits, and telemedicine platforms. |
Agriculture & Agri-Tech | Smart farming, irrigation technologies, food processing, agri-supply chains. | IoT-based soil sensors, organic farming platforms, drone farming. |
Clean Energy & Sustainability | Renewable energy, energy efficiency, waste-to-energy, green tech solutions. | Solar panel innovations, battery recycling solutions, bio-energy plants. |
Information Technology (IT) & Artificial Intelligence (AI) | Digital tools, AI/ML models, data-driven solutions, IoT devices. | AI-driven crop prediction models, IoT smart meters, cybersecurity tools. |
Manufacturing & Industry 4.0 | Advanced manufacturing, automation, robotics, smart factories. | Robotics for quality inspection, 3D printing for manufacturing parts. |
Textiles & Handicrafts | Modernization of traditional industries, sustainable fashion, rural enterprise. | Eco-friendly textile production, smart wearable tech from artisans. |
Education & Skill Development (EdTech) | Technology in education, rural skill-building, new learning models. | Mobile learning platforms, VR-based vocational training. |
Financial Technologies (FinTech) | Digital payment solutions, financial inclusion, rural banking innovations. | Mobile wallets for rural areas, blockchain for microfinance. |
Environment & Waste Management | Waste recycling, water purification, sustainable packaging, climate tech. | Plastic recycling innovations, water ATM solutions, biodegradable packaging. |
Food Processing & Agri-Business | Innovation in food storage, logistics, value addition to agricultural produce. | Smart cold chains, farm-to-fork traceability platforms. |
When to Apply
Continuous Application Window: The MSME Innovative Scheme accepts applications year-round through its official portal:
Mode | Details |
Online Application (Main Mode) | The primary and official method. All applications must be submitted through the |
Through Host Institutes (HIs) | If you are applying under the Incubation component, you can submit your idea directly to a registered Host Institute. The HI will guide you in submitting your application through the portal. |
Special Calls (Hackathons, Challenges) | For specific programs like MSME Idea Hackathons, you must apply through the designated special portal link (which is also hosted on during the event). |
Pre-requisites Before Applying
Make sure you have these ready:
Aadhar Card / PAN Card
Startup India Recognition Certificate (for startups)
Udyam Registration (for MSMEs)
Idea Summary / Executive Summary
Letter of Association with a Host Institute (optional but recommended for Incubation)
Past patents/designs/IPR (if applying for IPR support)
Step-by-Step Application Process
Step 1: Registration
Visit innovative.msme.gov.in
Click New Registration.
Fill basic details: Name, Mobile Number, Email, Aadhaar, Organization details (if any).
Set up your login credentials.
Step 2: Fill Application Form
After login, choose the Scheme Component:
Incubation Support
Design Support
IPR Support
Complete the detailed online form:
Describe your idea/concept
Upload necessary documents (business plan, pitch deck, patents, designs if any)
Step 3: (For Incubation) Associate with a Host Institute
If applying for Incubation support, select a registered Host Institute from the provided list.
Submit your idea through them (they can assist in refining your pitch).
Step 4: Final Submission
Double-check all information and attachments.
Submit the form online.
You will receive an Application ID and confirmation email.
Step 5: Application Status Tracking
Log in to the portal anytime.
Use the dashboard to:
Track status
Respond to clarifications if requested
See evaluation updates
After Application – What Happens Next?
Phase | Timeline | Description |
Initial Scrutiny | 15 days | The Implementing Agency (IA) checks the completeness of your application. |
Forwarding to NMIU | After scrutiny | Eligible proposals are forwarded to National Monitoring and Implementation Unit. |
Expert Evaluation | 30 days | Domain experts assess the technical, commercial, and innovative strength of the idea. |
PMAC Approval | 30–60 days | The Project Monitoring and Advisory Committee (PMAC) takes the final funding decision. |
Communication | Immediately after approval | Selected applicants receive confirmation via email and portal notification. |
Disbursement | After signing agreements | Funding is released as per the specific scheme rules (installments/stages). |
Klubzero Playbook: Insider Hacks to Win the MSME Grant
Get strong referral or endorsement from your Host Institute (HI) — they should be known, active on the portal, and ideally already have approved projects.
Build a relationship with HI coordinators or MSME-DI officers — they can vouch for you, and guide internal scrutiny before forwarding to NMIU.
Attach a Letter of Association (LoA) with the Host Institute, even before submitting — this adds weight even if not mandatory.
Choose ideas that fit national priority themes (e.g. AI for agriculture, clean tech, med-tech for rural India) — PMAC prioritizes these.
Show user validation or pilot use-case — e.g. MoUs, letters from customers, local bodies, or farmers using the prototype.
Use a Startup India-recognized DPIIT certificate if applying as a startup — this adds credibility instantly.
Have a clear IPR strategy — even a provisional patent application strengthens your pitch. Bonus if filed via a registered IP agent.
Add financial projections with break-even timeline — they don’t want blue-sky ideas; they fund scalable, revenue-capable models.
Collaborate with a recognized design institute (like NID, IIT, or IIIT) for the Design component — grants are more likely to get cleared if backed by experts.
Highlight team capabilities — technical + business mix. Single-founder applications with no team often get low scores.
Mention any previous grants, awards, or government recognitions (BIRAC, DST, Hackathons) — these validate your track record.
For Seed Capital, ensure your books are clean, firm is compliant (PAN, GST, Udyam, ITRs), and show post-scheme traction (revenues, customers, POC results).
Include visuals like CAD, 3D renders, early-stage prototypes, and where possible, a short pitch video or walkthrough — this helps evaluators visualize.
Use language aligned with the scheme — highlight innovation, commercialization potential, societal impact, and non-duplication explicitly.
Don’t apply blindly — attend scheme webinars, workshops, or MSME Innovation Hackathons for insider cues and evaluator expectations.
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