A.P. State Government introduced a new Interest subsidy scheme of Pavala vaddi (with maximum reimbursement of 9% p.a) to reduce the financial burden for setting up of New Micro and Small enterprises including Food processing Industries in the state.

New MICRO AND SMALL ENTERPRISES set up in ANDHRA PRADESH STATE except in the Municipal Corporation limits of Visakhapatnam, Vijayawada and Hyderabad. The benefit shall be extended only to the eligible new units which are promptly and regularly repaying the loan installments of principal and interest.
Shall comply with operational guidelines of IIPP 2005-10 scheme issued vide G.O.MS No.328, Ind & com (IP) dept dt 13.12.2005 read with G.O.MS No.149, Ind & com.(IP) dept dated 20.06.2008.

The scheme shall be applicable to the Term loan availed on fixed capital investment by the eligible new Micro and Small Enterprises on or after 01.04.2008.
More than 75% of the plant & machinery should be new and not second hand.
The new Micro and small Enterprises shall commence commercial production after 01.04.2008 and before 31.03.2010.
Benefit will be available for a period of 5 years from the date of commencement of commercial production

The reimbursable interest on term loan is that portion which is in excess of 3% per annum, subject to a maximum reimbursement of 9% per annum.

The interest amount paid by the eligible Micro and Small enterprises to the financial Institution/Banks on the Term loan availed will be reimbursed with a maximum limit of 9% on Half-yearly basis to the concerned Financial Institutions or Banks. 

The state level committee (SLC)/ District level committee (DLC) will sanction and release the reimbursement of interest.