New Delhi: The union cabinet extended the Special Package of Industrial Incentive on Wednesday for Himachal Pradesh and Uttarakhand until 2017, a move that might affect the geographically disadvantaged states of the North East.
A meeting of the Cabinet Committee on Economic Affairs (CCEA) sanctioned the extension of the Special Package of Industrial Incentive for Himachal Pradesh and Uttarakhand from January 7 2013 to March 31 2017, an official release said.
Union Commerce and Industry Minister, Anand Sharma while welcoming the decision of the CCEA for extending the special package of industrial incentives for Himachal Pradesh and Uttarakhand, said, “the UPA Government has always been sensitive to the aspirations of the hill people.
” The objective of the scheme is to create an enabling environment for industrial development to provide a fillip to private investment in these states,” Sharma said.
All new industrial units and existing units on substantial expansion would be eligible for Central Capital Investment Subsidy at the rate of 15 percent of investment in plant and machinery subject to a ceiling of Rs 30 lakh. Further, the cap on amount of subsidy will be raised from Rs 30 lakh to Rs 50 lakh for MSME units at the rate of 15 percent of their investment in plant and machinery.
Subsidy would be available to all new and existing units on substantial expansion located in notified areas as well as to “thrust industries” for units located anywhere in these states. Only those units that pre-register under the scheme, commence commercial production before March 31 2017 and file claims within one year of the commencement of commercial production, shall be eligible for subsidy under the scheme.
Incentive on substantial expansion will be given to units affecting an increase by not less than 25 percent in the value of fixed capital investment in plant and machinery for the purpose of expansion of capacity. Expenditure on purchase, procurement and installation of second hand plant and machinery will not be eligible for subsidy under the scheme. A single unit cannot avail subsidy both from the central as well as state government for the same purpose.
The New Industrial Policy and other concessions for the States of Himachal Pradesh and Uttarakhand were announced on January 7 2003 for a period of ten years, keeping in view the facts that these states lag in industrial development. The objective of the policy is to provide the required incentives as well as enabling an environment for industrial development, improve availability of capital and increase market access to provide a fillip to private investment.
Official sources said that Himachal Pradesh and Uttarakhand have during the period of ten years been able to attract 300 percent more investment, as compared to the pre-incentive package level. On an average, total investment generated in Himachal Pradesh is above Rs 12,500 crore and number of units set up has grown by 28 percent, while growth in employment generation is more than 33 percent.
In Uttarakhand, investment generated is close to Rs 30,000 crore, which is 42 times the level in the year 2000. The number of units set up has grown by more than 130 percent while growth in employment generation is more than 490 percent for the same period, sources said.
But in the case of North Eastern states, investment has trickled, forcing the trade bodies like the Federation of Industries of North Eastern Region (FINER), the chief ministers of North Eastern states and MPs had been opposing extension of the Special Industrial Package to HP and Uttarakhand.