Plug and Play Industrial Shed Policy (DBFOT Model) 2026: Key features, eligibility, implementation

All you need to know about the Plug and Play Industrial Shed Policy (DBFOT Model), 2026

POLICY AT A GLANCE

Item	Position
Official title	Plug and Play Industrial Shed Policy (DBFOT Model), 2026
Alternative official description	Scheme for Plug-and-Play Industrial Sheds Development under the Public-Private Partnership-DBFOT model
Launch date	March 24, 2026
Administrative department	Infrastructure and Industrial Development Department, Uttar Pradesh
Implementing bodies	Participating Industrial Development Authorities
Development model	Design, Build, Finance, Operate and Transfer
Principal beneficiaries	Micro, small and medium enterprises and light-to-medium manufacturing units
Minimum project land	10 acres
Preferred pilot size	15-20 acres
Concession period	45 years, extendable by up to 15 years
State financial support	No subsidy, annuity, viability-gap funding or government guarantee
Current implementation status	Pilot implementation proposed; an automobile cluster at Bara Bachhpera in Raebareli is identified as a potential project

The Plug and Play Industrial Shed Policy (DBFOT Model), 2026, was launched alongside Nivesh Mitra 3.0 and the Uttar Pradesh Private Business Park Development Scheme, 2025, on March 24, 2026. The English policy document was uploaded by Invest UP on May 19, 2026.

 

What is the Plug and Play Industrial Shed Policy?

The policy creates a framework under which private developers can construct and operate ready-to-use industrial sheds on land owned by an Industrial Development Authority. Businesses can rent these sheds instead of first acquiring or leasing an empty plot and constructing a factory.

 

The model is intended primarily for micro, small and medium enterprises that need relatively small factory spaces and cannot readily bear the cost or delay associated with land development and civil construction.

 

The policy uses a design, build, finance, operate and transfer (DBFOT) structure. Under this arrangement, a competitively selected private concessionaire designs, finances, builds, operates and maintains the industrial facility. The land remains in public ownership, and the buildings and related infrastructure revert to the industrial development authority at the end of the concession period.

 

Why was the policy introduced?

The government identified the existing lease-and-build model as a constraint for smaller manufacturers. Under that model, an enterprise ordinarily has to obtain land and separately develop roads, drainage, waste-management systems, firefighting facilities, utilities and the factory building before beginning production. However, data indicated that the state’s industrial base was predominantly composed of relatively small enterprises, sensitive to construction costs and delays.

 

For instance, an Industries Department survey cited by Invest UP found that nearly 75 per cent of operational units in Industrial Development Authority areas occupied plots of less than 1,200 square metres. The median plot size was about 600 square metres, and such units typically employed fewer than 27 workers. 

 

The official material estimates that constructing a conventional industrial unit can delay the start of production by 18-36 months. The policy seeks to replace this process with a rent-and-operate model under which an enterprise can occupy a completed shed with basic infrastructure already available. 

 

What are the main objectives?

The policy seeks to:

• Reduce the initial cost of establishing a manufacturing unit;
• Shorten the period between an investment decision and the start of production;
• Convert vacant or underused public industrial land into productive facilities;
• Improve access to factory infrastructure for micro, small and medium enterprises;
• Encourage industrial clusters and local supply chains;
• Generate employment earlier in the project cycle;
• Create recurring revenue for Industrial Development Authorities without direct budgetary support from the state;
• Facilitate industrial development across districts, including relatively less-developed regions.

  Key provisions of the policy

Public land and private development

The participating industrial development authority retains ownership of the land throughout the project. A private party is selected through competitive bidding and receives the right to develop, operate and maintain the project during the concession period. The concessionaire is responsible for: 

• Designing and constructing modular industrial sheds
• Arranging the entire project finance
• Developing internal infrastructure and common facilities
• Operating and maintaining the project
• Marketing and renting industrial units to eligible enterprises
• Returning the assets to the authority after the concession ends

Project size and concession period

A project must ordinarily cover at least 10 acres. The policy indicates that land parcels of 15-20 acres are preferred for pilot projects where this improves financial viability.

 

The initial concession period is 45 years, including construction and operation. It may be extended by up to 15 years on the basis of satisfactory performance, mutual agreement and approval by the competent committee under the state’s public-private partnership framework.

 

Development obligations

The concession agreement must prescribe minimum development obligations to prevent the concessionaire from holding public land without building the promised infrastructure.

 

The indicative timetable provides for:

• Completion of about 50 per cent of the planned built-up area within two to three years of the appointed date;
• Completion of the entire committed built-up area within three to five years.

Where a prescribed milestone is delayed by more than 90 days for reasons not attributable to force majeure or the authority, the concessionaire may be liable to pay damages of 0.1 per cent of the performance security for each day of delay. Continued non-compliance can lead to termination under the concession agreement.

 

The policy allows project-specific timelines and penalty thresholds to be modified by the competent authority where project size, sector requirements, market conditions or feasibility assessments justify a different arrangement.

 

Infrastructure and common facilities

The sheds are intended to provide essential infrastructure such as:

• Power and water connections
• Internal roads
• Drainage
• Waste-management systems
• Digital connectivity
• Fire-safety systems
• Common industrial facilities

Subject to limits and statutory approvals, projects may also include training facilities, skill-development centres, testing laboratories, research and development centres, logistics support and other common amenities.

 

Which industries are covered?

The scheme is primarily directed at micro, small and medium enterprises and light-to-medium manufacturing activities requiring quick operationalisation and comparatively low initial expenditure. The identified sectors include:

 

• Light engineering and fabrication
• Electrical and electronics manufacturing
• Electric-vehicle components and automobile ancillaries
• Textiles, garments and apparel finishing
• Food processing and agriculture-based industries
• Plastics, packaging and consumer goods
• Defence and aerospace manufacturing
• Electronics system design and manufacturing

Industrial development authorities may give priority to sectors according to local demand and existing industrial clusters. They may also reserve part of the built-up area in specialised parks for sectors such as defence, electronics or electric-vehicle manufacturing.

 

Who is eligible?

The policy has two distinct participant groups.

 

The first consists of private developers or concessionaires, which will compete for the right to develop and operate individual projects. The policy document states that detailed technical and financial qualification requirements will be specified in the relevant request for proposal. It does not establish a single universal net-worth or turnover threshold for every project.

 

The second consists of industrial tenants, primarily micro, small and medium enterprises and light-to-medium manufacturing units in eligible sectors. Their detailed rental eligibility, unit-allocation conditions, rent, security deposit and occupancy rules are expected to be governed by project-specific concession documents and operating guidelines.

 

The official documents reviewed do not provide a common statewide application form or uniform rental tariff for industrial tenants.

 

What financial support is available?

The policy is not structured as a subsidy scheme for either the developer or the industrial tenant.

 

The state does not provide:

• Capital subsidy
• Annuity payments
• Viability-gap funding
• Government guarantees
• A contingent financial commitment for project debt

The private developer assumes the financing, construction, market and operating risks. In return, it receives the contractual right to rent the industrial sheds and collect permitted charges during the concession period.

 

The developer must make payments to the authority. The indicative financial structure includes: 

Payment	Indicative policy provision
Upfront land premium	At least 5-10 per cent of the prevailing industrial land value
Fixed annual concession fee	Typically at least 2 per cent of the land value, with escalation
Revenue share	Determined through competitive bidding
Performance security	Indicatively 5 per cent of the total project cost

The final figures may vary by project and must be confirmed from the applicable RoP and concession agreement.

 

For industrial tenants, the economic benefit lies in avoiding land purchase and factory construction rather than receiving a cash subsidy. The rent and other charges payable by tenants have not been prescribed uniformly in the policy document reviewed.

 

How can businesses access the sheds?

The scheme will be implemented project by project by industrial development authorities.

 

The broad sequence is:

• An authority identifies a suitable land parcel and undertakes a feasibility assessment.
• Bid and concession documents are prepared.
• A private developer is selected through competitive bidding.
• The concession agreement is signed and financial closure is achieved.
• The developer constructs the sheds and common infrastructure in phases.
• Completed units are marketed and rented to eligible industrial enterprises.

 

Applications for individual sheds can begin only after a project has been developed and the responsible authority or concessionaire publishes its allotment or rental procedure.

 

The official documents do not yet provide a single statewide portal through which a micro, small or medium enterprise can apply for a shed. Businesses should therefore monitor Invest UP, Nivesh Mitra and the relevant industrial development authority for project-specific notices.

 

Implementation and progress so far

The policy envisages phased implementation beginning with pilot projects. The official roadmap provided for the identification of three or four pilot locations, followed by feasibility studies, preparation of bid documents, selection of developers and signing of concession agreements.

 

Invest UP identifies an automobile cluster at Bara Bachhpera in Raebareli as a potential project. However, the official material reviewed does not establish that the project has been awarded, that construction has begun or that industrial sheds are operational. It should therefore be described as a potential or proposed project rather than an implemented achievement.

 

No consolidated official data were identified on developers selected, concession agreements signed, sheds completed, units rented, investment realised or employment generated under the policy.

 

How does the policy support Uttar Pradesh’s wider industrial strategy?

The policy attempts to improve industrial land productivity while reducing establishment costs for smaller manufacturers. It also creates a way for Industrial Development Authorities to generate an upfront premium, annual fee and revenue share without financing construction themselves.

 

Sector-specific reservations could support existing policy priorities in electronics, electric vehicles, textiles, food processing, defence and aerospace. The model may also enable authorities to establish clusters based on district-level manufacturing strengths rather than developing only general industrial estates. 

 

Key challenges and limitations

Dependence on project viability: Developers bear the financing and occupancy risks. Projects in locations with uncertain industrial demand may struggle to attract competitive bids or tenants.

 

Rental affordability: The policy reduces upfront expenditure but does not itself guarantee that rent and service charges will be affordable for smaller enterprises.

 

Project-level variation: Important conditions, including developer eligibility, tenant selection, rental terms and construction specifications, will be determined through individual Requests for Proposal and concession agreements.

 

Construction timetable: Although ready sheds can reduce the tenant’s set-up time, the first projects still require land identification, bidding, financial closure and two to five years of phased construction.

 

Limited implementation data: At present, the official material largely describes the policy design and expected outcomes. Evidence of completed sheds and operational tenant units is not yet publicly available.

 

What businesses should keep in mind

An enterprise should not treat the policy as an application for a direct cash incentive. Its principal benefit is access to rented factory infrastructure that has already been developed.

 

Businesses should verify:

 

• Whether a project has actually been tendered and completed
• Which sectors are permitted at that location
• Shed size and technical specifications
• Rent, escalation and common-area charges
• Power, water and waste-management arrangements
• Lock-in, renewal and exit conditions
• Responsibility for sector-specific approvals
• Whether machinery installation or structural alterations are permitted

Eligibility and benefits remain subject to the notified policy, project-specific bid documents, the concession agreement, subsequent government orders and approval by the competent authority.

 

FAQs

What is the main purpose of the policy?

It seeks to provide ready-built factory sheds that allow smaller manufacturers to begin operations without first acquiring land and constructing an industrial building.

 

Does the government give a subsidy to enterprises renting the sheds?

The policy document does not provide a direct cash subsidy to industrial tenants. The intended benefit is lower initial expenditure and faster operational readiness.

 

Who owns the land?

The concerned Industrial Development Authority retains ownership throughout the concession period.

 

Who builds and manages the sheds?

A private concessionaire selected through competitive bidding designs, finances, constructs, operates and maintains the project.

 

What is the minimum project size?

The normal minimum land parcel is 10 acres. Pilot projects may preferably use 15-20 acres.

 

How long can the private developer operate the project?

The initial concession is 45 years and may be extended by up to 15 years, subject to performance and approval.

 

Can a business apply for a shed immediately?

A business can apply only after a project is developed and the authority or concessionaire issues a project-specific rental or allotment process. A common statewide tenant-application procedure was not identified in the official documents reviewed.

 

Conclusion

The Plug and Play Industrial Shed Policy changes the state’s conventional approach from allotting undeveloped industrial land to facilitating ready-built rented factories. Its structure can reduce the construction burden on micro, small and medium enterprises while allowing private developers to finance and manage the infrastructure.

 

However, the policy was at an early implementation stage when the official material was reviewed. Its practical effect will depend on the selection of viable sites, competitive developer participation, affordable rental terms and timely completion of the pilot projects. The principal indicators to monitor are concession awards, sheds completed, tenant occupancy, investment realised and employment generated.

 

Sources

• Scheme for Plug-and-Play Industrial Sheds Development under the Public-Private Partnership–DBFOT Model, Infrastructure and Industrial Development Department, Government of Uttar Pradesh; English document uploaded May 19, 2026.
• Plug and Play Industrial Shed Policy (DBFOT Model), 2026, Invest UP, Government of Uttar Pradesh; page updated June 3, 2026.
• Uttar Pradesh Ends the “Build Before You Operate” Era for MSMEs, Invest UP, Government of Uttar Pradesh; updated June 10, 2026.
• Uttar Pradesh Chief Minister launched Nivesh Mitra 3.0, Akashvani News, Ministry of Information and Broadcasting, Government of India; March 24, 2026.