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Centre resumes Northeast industrial policy, but industry calls it a sham

The policy, after remaining for two years in suspension mode, resumed before only four months before its expiry

Supratim Dey  |  Guwahati 

Policy
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Though the Centre after the lapse of almost two years has revoked suspension on registration of new units under Northeast Industrial and Investment Promotion Policy (NEIIPP), the industry of the region has termed it as a sham. 

The industry is of the view that with just four months left for the expiry of the policy, this revocation of the suspension was more out of compulsion after two adverse court judgements that questioned the suspension. On the top of it, the new notification dated November 22 (which revoked the suspension) has diluted several incentives that were guaranteed in the original policy declared in 2007, thus leaving the industry guessing.  

“When only four months are left for the policy to end, the resumption of the policy appears to be a calculated move to frustrate the industry. The resumption is practically of little or no use, as most people who had projects in the pipeline will not be able to complete them to commence production from 31 March 2017 to enjoy the benefits”, said Rajeev Agarwal, vice-president of FINER. He added that such abrupt declaration, which suddenly takes away given promises, “disrupts the motivation of the industry.”

Vide a notification in December 2014; the Centre had suspended the registration of new units under NEIIPP. It meant no new units, which are registered post-December 1, 2014, would be eligible for enjoying the benefits under NEIIPP. The Centre had sited fund crunch as the reason behind taking the decision, though it said it was a temporary measure. 

The industry of the region, under the banner of ‘Federation of Industry and Commerce of North Eastern Region’ (FINER), moved the Gauhati High Court questioning the suspension and the court ruled in their favour. 

Though the Centre has now re-introduced the policy, the industry finds that many of its incentives have been diluted. Take, for example, Central Capital Investment Subsidy. As per the original policy, was 30% of the investment in plant and machinery without any upper ceiling.  However, as per the revised notification dated 22 November, has been kept to a maximum of Rs 5 crore per industrial unit operating in the manufacturing sector and Rs 3 crore per industrial unit operating in the service sector.

 Also, the Freight Scheme (FSS) of 2013, which had a sunset clause to expire on 22 January 2018, has been discontinued immediate effect vide the new notification. 

 “The NEIIPP, 2007 was suspended from 1 December 2014 to 22 November 2016 that is almost for two years. During this period almost all new investments were kept on hold, and therefore practically FSS was discontinued from December 2014 that is just after one year and eleven months from the date of its notification,” said Sandeep Khaitan, an industry expert. 

According to the industry, has been the single largest contributor to employment in the Northeastern region apart from agriculture. Approximately, 50,000 direct and 2,00,000 indirect employment has been generated due to setting up of units after the announcement of in 2007. 

“Since 2007, around 9,000 units have been set up in the region. It was expected that employment opportunities would further increase with series of big investments and its indirect investments effects in MSME sector,” said Pabitra Buragohain, president of FINER. 

Buragohain lamented that when the government could seek industry’s views on several other issues including before announcing budget, what held them back from consulting the industry of the region to understand ground realities before finalising things with regard to NEIIPP. 

Bajrang Lohia, an industrialist from the region, felt diluting provisions guaranteed originally without consulting the industry and stakeholders amounted to step-motherly treatment to Northeast. 

was announced in 2007 and is due to expire on March 31, 2017. As per the provisions of NEIIPP, industrial units in the region are eligible for 100 per cent income tax exemption, 30 per cent capital investment subsidy, excise duty benefits varying from goods to goods, interest subsidy, among others.

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Centre resumes Northeast industrial policy, but industry calls it a sham

The policy, after remaining for two years in suspension mode, resumed before only four months before its expiry

The policy, after remaining for two years in suspension mode, resumed before only four months before its expiry
Though the Centre after the lapse of almost two years has revoked suspension on registration of new units under Northeast Industrial and Investment Promotion Policy (NEIIPP), the industry of the region has termed it as a sham. 

The industry is of the view that with just four months left for the expiry of the policy, this revocation of the suspension was more out of compulsion after two adverse court judgements that questioned the suspension. On the top of it, the new notification dated November 22 (which revoked the suspension) has diluted several incentives that were guaranteed in the original policy declared in 2007, thus leaving the industry guessing.  

“When only four months are left for the policy to end, the resumption of the policy appears to be a calculated move to frustrate the industry. The resumption is practically of little or no use, as most people who had projects in the pipeline will not be able to complete them to commence production from 31 March 2017 to enjoy the benefits”, said Rajeev Agarwal, vice-president of FINER. He added that such abrupt declaration, which suddenly takes away given promises, “disrupts the motivation of the industry.”

Vide a notification in December 2014; the Centre had suspended the registration of new units under NEIIPP. It meant no new units, which are registered post-December 1, 2014, would be eligible for enjoying the benefits under NEIIPP. The Centre had sited fund crunch as the reason behind taking the decision, though it said it was a temporary measure. 

The industry of the region, under the banner of ‘Federation of Industry and Commerce of North Eastern Region’ (FINER), moved the Gauhati High Court questioning the suspension and the court ruled in their favour. 

Though the Centre has now re-introduced the policy, the industry finds that many of its incentives have been diluted. Take, for example, Central Capital Investment Subsidy. As per the original policy, was 30% of the investment in plant and machinery without any upper ceiling.  However, as per the revised notification dated 22 November, has been kept to a maximum of Rs 5 crore per industrial unit operating in the manufacturing sector and Rs 3 crore per industrial unit operating in the service sector.

 Also, the Freight Scheme (FSS) of 2013, which had a sunset clause to expire on 22 January 2018, has been discontinued immediate effect vide the new notification. 

 “The NEIIPP, 2007 was suspended from 1 December 2014 to 22 November 2016 that is almost for two years. During this period almost all new investments were kept on hold, and therefore practically FSS was discontinued from December 2014 that is just after one year and eleven months from the date of its notification,” said Sandeep Khaitan, an industry expert. 

According to the industry, has been the single largest contributor to employment in the Northeastern region apart from agriculture. Approximately, 50,000 direct and 2,00,000 indirect employment has been generated due to setting up of units after the announcement of in 2007. 

“Since 2007, around 9,000 units have been set up in the region. It was expected that employment opportunities would further increase with series of big investments and its indirect investments effects in MSME sector,” said Pabitra Buragohain, president of FINER. 

Buragohain lamented that when the government could seek industry’s views on several other issues including before announcing budget, what held them back from consulting the industry of the region to understand ground realities before finalising things with regard to NEIIPP. 

Bajrang Lohia, an industrialist from the region, felt diluting provisions guaranteed originally without consulting the industry and stakeholders amounted to step-motherly treatment to Northeast. 

was announced in 2007 and is due to expire on March 31, 2017. As per the provisions of NEIIPP, industrial units in the region are eligible for 100 per cent income tax exemption, 30 per cent capital investment subsidy, excise duty benefits varying from goods to goods, interest subsidy, among others.
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Business Standard
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Centre resumes Northeast industrial policy, but industry calls it a sham

The policy, after remaining for two years in suspension mode, resumed before only four months before its expiry

Though the Centre after the lapse of almost two years has revoked suspension on registration of new units under Northeast Industrial and Investment Promotion Policy (NEIIPP), the industry of the region has termed it as a sham. 

The industry is of the view that with just four months left for the expiry of the policy, this revocation of the suspension was more out of compulsion after two adverse court judgements that questioned the suspension. On the top of it, the new notification dated November 22 (which revoked the suspension) has diluted several incentives that were guaranteed in the original policy declared in 2007, thus leaving the industry guessing.  

“When only four months are left for the policy to end, the resumption of the policy appears to be a calculated move to frustrate the industry. The resumption is practically of little or no use, as most people who had projects in the pipeline will not be able to complete them to commence production from 31 March 2017 to enjoy the benefits”, said Rajeev Agarwal, vice-president of FINER. He added that such abrupt declaration, which suddenly takes away given promises, “disrupts the motivation of the industry.”

Vide a notification in December 2014; the Centre had suspended the registration of new units under NEIIPP. It meant no new units, which are registered post-December 1, 2014, would be eligible for enjoying the benefits under NEIIPP. The Centre had sited fund crunch as the reason behind taking the decision, though it said it was a temporary measure. 

The industry of the region, under the banner of ‘Federation of Industry and Commerce of North Eastern Region’ (FINER), moved the Gauhati High Court questioning the suspension and the court ruled in their favour. 

Though the Centre has now re-introduced the policy, the industry finds that many of its incentives have been diluted. Take, for example, Central Capital Investment Subsidy. As per the original policy, was 30% of the investment in plant and machinery without any upper ceiling.  However, as per the revised notification dated 22 November, has been kept to a maximum of Rs 5 crore per industrial unit operating in the manufacturing sector and Rs 3 crore per industrial unit operating in the service sector.

 Also, the Freight Scheme (FSS) of 2013, which had a sunset clause to expire on 22 January 2018, has been discontinued immediate effect vide the new notification. 

 “The NEIIPP, 2007 was suspended from 1 December 2014 to 22 November 2016 that is almost for two years. During this period almost all new investments were kept on hold, and therefore practically FSS was discontinued from December 2014 that is just after one year and eleven months from the date of its notification,” said Sandeep Khaitan, an industry expert. 

According to the industry, has been the single largest contributor to employment in the Northeastern region apart from agriculture. Approximately, 50,000 direct and 2,00,000 indirect employment has been generated due to setting up of units after the announcement of in 2007. 

“Since 2007, around 9,000 units have been set up in the region. It was expected that employment opportunities would further increase with series of big investments and its indirect investments effects in MSME sector,” said Pabitra Buragohain, president of FINER. 

Buragohain lamented that when the government could seek industry’s views on several other issues including before announcing budget, what held them back from consulting the industry of the region to understand ground realities before finalising things with regard to NEIIPP. 

Bajrang Lohia, an industrialist from the region, felt diluting provisions guaranteed originally without consulting the industry and stakeholders amounted to step-motherly treatment to Northeast. 

was announced in 2007 and is due to expire on March 31, 2017. As per the provisions of NEIIPP, industrial units in the region are eligible for 100 per cent income tax exemption, 30 per cent capital investment subsidy, excise duty benefits varying from goods to goods, interest subsidy, among others.

image
Business Standard
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