From Idea to Funding: Step-by-Step Application Process for the MSME Innovative Scheme
- klub zero
- Aug 11
- 6 min read
Launched in March 2022 under the Ministry of Micro, Small and Medium Enterprises, the MSME Innovative Scheme is a flagship initiative designed to foster innovation, design excellence, and intellectual property creation among India’s MSMEs and startups. As an integrated program, it brings together three critical components—Incubation, Design, and Intellectual Property Rights (IPR)—to provide end-to-end support for transforming ideas into market-ready products.
The scheme addresses key challenges faced by entrepreneurs, such as limited access to infrastructure, professional design expertise, and the high cost of securing IP protection. Through a nationwide network of over 630 recognized Host Institutes, it offers financial assistance of up to ₹15 lakh per innovative idea for incubation, design support to enhance product competitiveness, and reimbursement for domestic and international patents, trademarks, GI registration, and design registration.
Since its inception, the MSME Innovative Scheme has supported hundreds of startups and MSMEs across diverse sectors, facilitating technology commercialization, boosting competitiveness, and helping enterprises secure follow-on funding. By nurturing grassroots innovation and building IP-rich businesses, the program plays a pivotal role in accelerating India’s transition toward a knowledge-driven and globally competitive economy.
Funding Commitment
The MSME Innovative Scheme, launched in March 2022 under the Ministry of Micro, Small and Medium Enterprises, is backed by a strong financial commitment to drive innovation, improve product design, and safeguard intellectual property among MSMEs and startups. The scheme integrates three major components—Incubation, Design, and Intellectual Property Rights (IPR)—ensuring comprehensive support from concept to commercialization.
Total Funding Pool
Funding under the MSME Innovative Scheme is mandatorily routed through recognized Host Institutes (HIs). MSMEs or startups seeking support must first be associated with one of the 630+ Host Institutes approved under the program. These HIs act as implementation partners, providing infrastructure, mentoring, and facilitation of funds as per the scheme guidelines.
Incubation Support: Up to ₹15 lakh per innovative idea, provided through Host Institutes to support infrastructure, prototype development, and commercialization.
Design Support: Subsidized assistance for engaging professional design expertise; cost-sharing arrangement based on approved proposals.
IPR Support: Reimbursement of up to ₹5 lakh for foreign patents, ₹1 lakh for domestic patents, ₹2 lakh for GI registration, ₹15,000 for design registration, and ₹10,000 for trademarks.
Equity Support: Up to ₹1 crore, managed via SIDBI, for commercializing and scaling proven innovations.
Types of Funding Available
Funding Category | Purpose | Support Amount | Funding Mode |
Incubation | Develop and commercialize innovative ideas via Host Institutes | Up to ₹15 lakh | Grant to Host Institute |
Design Intervention | Enhance product usability, aesthetics, and market positioning | Based on approved proposal | Subsidized cost-sharing |
IPR Reimbursement | Secure patents, trademarks, GI, and design registrations | ₹10,000 – ₹5 lakh | Direct reimbursement via HI |
Equity Support | Scale commercially viable innovations | Up to ₹1 crore | Equity investment via SIDBI |
Fund Disbursement Criteria and Process
All grants under the MSME Innovative Scheme are disbursed in three installments, strictly linked to milestone achievement and utilization of previous funds.
Installment | Condition | Amount |
First Installment | Upon association with a Host Institute, approval of proposal, and completion of documentation | 40% of sanctioned amount |
Second Installment | After utilization of at least 80% of the first installment and completion of initial milestones | 40% |
Final Installment | After utilization of at least 80% of the second installment and final milestone achievement | 20% |
To tap into funding under the MSME Innovative Scheme, you must be affiliated with one of the official Host Institutes (HIs) recognized by the scheme. A comprehensive directory of all 773 Host Institutes, including names, states, and contact details, is available on the official MSME MIS portal. You can easily access this list, filter by your state or institution type, and identify the most suitable HIs for your innovation journey.
Explore the full list here: https://my.msme.gov.in/inc/HIList.aspx
Complete List of Startups Benefiting from the MSME Innovative
Scheme
The Ministry of MSME does not publish a single consolidated list of all startups funded under the scheme. However, official results from various MSME Idea Hackathons—the primary selection process for incubation and funding—list approved ideas along with the incubatee name, Host Institute, and sector/theme.
You can explore the complete lists here:
MSME Idea Hackathon 2022 – Approved Ideas (257 Proposals)
Find the official PDF with incubatee names, Host Institutes, and project themes:
MSME Idea Hackathon 4.0 (Youth) – Approved Ideas (~488 Proposals)
See the detailed PDF including startup names, sectors/themes, and Host Institutes:
Additional Beneficiary Data – DC MSME
Older incubation scheme pages may include extra beneficiary listings for reference:
Eligibility Criteria – MSME Innovative Scheme
Category | Requirement |
Nationality/Ownership | Must be Indian citizen (individual) or Indian-owned entity with at least 51% Indian ownership. |
Eligible Applicants | - Registered MSMEs with valid Udyam Registration.- DPIIT-recognized Startups. - Individual innovators partnered with a recognized Host Institute. - Approved Host Institutes (HIs). |
Innovation Requirement | Proposal must be innovative, technologically feasible, and commercially viable. |
Funding Restrictions | Must not have received similar funding for the same idea from another government scheme. |
Compliance | Must comply with legal norms and environmental regulations. |
Incubation Support Criteria | - Mandatory association with a recognized Host Institute. - Idea must be at proof-of-concept, prototype, or commercialization stage. - Detailed project plan required. |
Design Support Criteria | - Must be a manufacturing MSME. - Product must require design intervention (functionality, aesthetics, or cost reduction). - Willingness to share part of the cost. |
IPR Support Criteria | - Must have filed or be filing IPR application (domestic or international). - Expenses must be supported by receipts, invoices, or certificates. |
Equity Support Criteria | - Product must be market-ready and commercially viable. - Detailed business plan required. - Funding will be in form of equity via SIDBI. |
Ineligible Applicants | - Entities with loan defaults. - Pure trading businesses without innovation. - Applicants violating Host Institute or scheme guidelines. |
Mandatory Documents | - Udyam Registration or DPIIT Startup Certificate. - Aadhaar & PAN of promoters. - Detailed project proposal & cost estimates. - Technical drawings/prototype (if applicable). - IPR filing proof (for IPR support). - MoU/association letter from Host Institute (for incubation/design). |
MSME Innovative Scheme – Application Guide
The application process is structured into three parts, depending on the component you are applying for: Incubation, Design, or IPR Support. Each part has its own focus, form, and steps.
Decide your track first
Incubation (idea → prototype → market)
Design (professional design intervention)
IPR (reimbursement for patent/Trademark/GI/Design; plus SCIP for commercialization)
Step-by-Step Guide to Applying for the MSME Innovative Scheme
1) Confirm Basic Eligibility
MSME with valid Udyam Registration OR DPIIT-recognised startup (individual innovators can apply through a Host Institute).
Read the official scheme guidelines: Final Guidelines (PDF).
2) Choose / Join a Host Institute (HI) (mandatory for Incubation; commonly used in Design)
What counts as a Host Institute?
Technical colleges, universities, other professional colleges/institutes, R&D institutes, NGOs involved in incubation, MSME-DIs/Technology Centres, or any Central/State Govt. institute/organization.
Reference: About Incubation – Eligibility for HI.
Where to find HIs?
Searchable HI directory (filter by state): HI List (700+ entries).
A) Incubation Track (idea → prototype → commercialization)
When to Apply:
Apply during MSME Idea Hackathon rounds announced here:
Sample round instructions: Hackathon 5.0 – Instructions (PDF)
How Many Times You Can Apply:
You can re-apply in later rounds if not selected; each edition may set per-round limits—check the notice for that round.
Steps:
Associate with a Host Institute via the HI List.
Prepare your idea proposal with your HI (problem, solution, TRL, budget, milestones).
Submit during Hackathon window through the portals above; HI will verify & forward.
Evaluation at HI/MoMSME level; final decision by PMAC.
Sign agreement with HI → Funds in milestones (40% / 40% / 20%).
Execute project, report, and claim subsequent instalments upon milestone completion.
Note: Applications are free; beware of fake sites. See the Official Caution Notice.
B) Design Track (professional design intervention)
When to Apply:
Rolling/ongoing—submit anytime (subject to funds) via:
How Many Times You Can Apply:
Generally one project at a time; subsequent projects possible after closure, as per guidelines.
Steps:
Ensure Udyam Registration (manufacturing MSMEs typically).
Register via Join Design Scheme Form.
Match with an empanelled design expert and prepare a proposal.
Submit proposal on the Design Portal for evaluation.
Sign tripartite agreement (MSME–Design Expert–Implementing Agency) and start the project.
C) IPR Track (reimbursements + SCIP commercialization)
When to Apply:
Anytime after filing the IP. Start here: IPR vertical home
Direct Forms:
How Many Times You Can Apply:
Multiple claims allowed for different filings, within per-item funding caps.
Steps:
Have Udyam Registration ready; IP filed/registered.
Open the relevant reimbursement form above and fill it online.
Upload proofs: application/registration, receipts, invoices, bank details.
Submit → Scrutiny → Approval → Reimbursement to your bank account.
For commercialization (SCIP), follow SCIP Guidelines (PDF).
Tips to Boost Your Application Success
Match Your Idea to Current Priorities – Review the latest Hackathon themes or focus areas before applying (e.g., sustainability, digitalisation, export competitiveness) and position your idea accordingly.
Pick a Proactive Host Institute – Not all HIs are equally active; choose one with a track record of shortlisted/approved ideas under MSME schemes.
Back Your Claims with Data – Include market stats, cost savings, or impact numbers to strengthen your proposal’s credibility.
Show Technical and Commercial Viability – Demonstrate that your innovation isn’t just creative, but also feasible to build and profitable to scale.
Highlight Collaboration – If you have partnerships (suppliers, pilot customers, design experts), mention them to show readiness.
Use Visual Aids – Add sketches, diagrams, or prototypes in your proposal to make it stand out in evaluation.
Align Budget with Milestones – Avoid inflated costs; make your funding request realistic and tied to clear deliverables.
Learn from Past Winners – Review past approved ideas (Hackathon lists) to understand what kinds of proposals have been selected.
Comments