Every MSME should know about the GIFT and SPICE schemes

India’s micro, small, and medium enterprises (MSMEs) are more than just businesses—they are the lifeline of our economy. Contributing nearly 30% to the national GDP and employing over 110 million people, MSMEs fuel innovation, livelihoods, and regional development.

But times are changing. Global supply chains are shifting, consumer preferences lean towards eco-friendly products, and stricter sustainability regulations are coming into play. To stay competitive, MSMEs must adapt.

The government has introduced two powerful schemes to support this transition—GIFT (Green Investment and Financing for Transformation) and SPICE (Scheme for Promotion and Investment in Circular Economy). Individually impactful, together they offer a roadmap for greener, more resilient businesses.

This article breaks down what these schemes are, how they complement each other, and why MSMEs should seriously consider adopting them.

What is the GIFT Scheme?

The GIFT Scheme, run by SIDBI (Small Industries Development Bank of India), is designed to help MSMEs embrace green technologies by tackling two major hurdles: high upfront costs and lack of affordable financing.

Key Highlights:

  • Interest Subvention: 2% annual interest rebate on term loans up to ₹2 crore for five years.

  • Risk Sharing: Partial credit guarantee that encourages banks to lend more confidently.

  • Capacity Building: Funding support for energy audits, cluster-based projects, and pilot demonstrations.

Essentially, GIFT makes it easier and cheaper for businesses to install solar panels, upgrade to energy-efficient machinery, or invest in pollution control measures.

What is the SPICE Scheme?

The SPICE Scheme focuses on circular economy practices, especially in sectors like plastics, e-waste, rubber, and solid waste management. Also managed by SIDBI, it complements the GIFT scheme by targeting resource efficiency.

Key Highlights:

  • Capital Subsidy: 25% subsidy on machinery costs (up to ₹12.5 lakh per unit) for eligible projects.

  • Awareness & Training: Financial support for outreach programs, workshops, and training.

  • Regulatory Support: Helps MSMEs meet Extended Producer Responsibility (EPR) and recycling obligations.

This means MSMEs can cut costs by reusing waste, setting up recycling units, and aligning with sustainability mandates.

Why Use Both GIFT and SPICE Together?

While each scheme has its own focus, MSMEs gain maximum advantage when they combine them. Here’s how:

1. Financial Relief for Going Green

Transitioning to sustainable operations is often expensive.

  • GIFT reduces loan interest rates for green investments.

  • SPICE provides direct subsidies for recycling and waste-reduction projects.

Together, they lower both upfront and operational costs, making sustainability financially doable.

2. Stronger Market Position

Eco-conscious buyers, both domestic and international, now demand compliance with sustainability standards.

  • GIFT helps MSMEs qualify for certifications like ISO 14001.

  • SPICE ensures compliance with EPR rules.

This makes MSMEs more attractive to global supply chains and larger corporations.

3. Easier Access to Credit

Banks are often hesitant to finance small businesses. But with GIFT’s risk-sharing guarantee and SPICE’s subsidy benefits, MSMEs appear low-risk and policy-aligned, making lenders more willing to extend credit.

4. Operational Savings

Sustainability = efficiency.

  • Energy audits under GIFT cut electricity bills.

  • Recycling units under SPICE reduce raw material dependency.

The result? Long-term savings and reduced vulnerability to market disruptions.

5. Alignment with National Goals

Both schemes contribute to India’s climate goals, including:

  • Paris Agreement commitments

  • National Circular Economy Roadmap

  • Sustainable Development Goals (SDGs)

MSMEs that adopt these schemes not only future-proof themselves but also contribute to the country’s larger sustainability mission.

Quick Comparison: GIFT vs SPICE

FeatureGIFT SchemeSPICE Scheme
FocusGreen technology adoptionCircular economy practices
SupportInterest subvention, risk-sharing25% capital subsidy
TargetEnergy efficiency, pollution controlWaste reduction, recycling, EPR
Implementing BodySIDBISIDBI
EligibilityAll Udyam-registered MSEsUdyam-registered MSEs in 11 sectors

Using them together = reduced emissions + smarter resource use.

How MSMEs Can Strategically Use Both

It’s important to note that the same project cannot claim both subsidies. However, businesses with multiple operations can plan smartly. For example:

  • Use GIFT for installing solar panels or energy-efficient machinery.

  • Use SPICE for setting up a recycling unit in the same facility.

This way, MSMEs maximise support while staying compliant.

Application Basics

For GIFT:

  1. Apply via a participating financial institution (MoU with SIDBI).

  2. Submit a project proposal + required documents (sanction letter, invoices, Udyam registration, etc.).

  3. Receive benefits once approved.

For SPICE:

  1. Ensure Udyam registration and EPR compliance.

  2. Apply via SIDBI-partnered financial institution with project details.

  3. Get subsidy after approval.

Final Thoughts

For MSMEs, sustainability is no longer a buzzword—it’s a survival strategy. The GIFT and SPICE schemes aren’t just government aids, but growth tools for businesses that want to stay competitive, cost-efficient, and future-ready.

By embracing them together, MSMEs can cut costs, attract more customers, access credit easily, and contribute to India’s green future.SIDBI

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