Subsidy for Uttarakhand, HP industries to stay

The Centre on Wednesday extended a subsidy scheme for new units in Himachal Pradesh and Uttarakhand till March 31, 2017, retrospectively from January 7, 2013.

The Cabinet Committee on Economic Affairs (CCEA) approved the extension  under a special package for the two hill states till the end of the 12th Five Year Plan. However, there was no extension in the key tax incentives under the excise and income-tax holiday scheme. The new industrial policy and other concessions for these states were announced on January 7, 2003, for 10 years. The policy had attracted several companies to the state. The expiry of the concessions had led to reports of companies looking to exit the state.

OTHER DECISIONS

• The CCEA cleared a proposal  to reserve 30 per cent of procurement orders by BSNL and MTNL  for Indian Telephone Industries (ITI). The move  will enable ITI survive in the competitive environment of telecom manufacturing. The policy will remain in force for one year with retrospective effect from September 21, 2013
• The CCEA okayed a Rs 761-crore road project in Odisha under its flagship, the National Highways Development Project

Extending the policy deadline, Commerce and Industry Minister Anand Sharma said it would help the two states generate employment, especially for rural youth. It would also give a fillip to manufacturing and the small and medium enterprises, Sharma said.

All new and existing industrial units on a substantial expansion would be eligible for subsidy of 15 per cent for their investments in plant and machinery. The subsidy would be given up to Rs 30 lakh. For micro, small and medium enterprises, the cap would be Rs 50 lakh.

Subsidies would be available to units in notified areas and to “thrust industries” for units located anywhere in these states. Eligible units should have been pre-registered under the scheme, started commercial production or operation before March 31, 2017, and filed claims within one year of the commencement of commercial production.

Units going in for expansion would get subsidy only if there was an increase in not less than 25 per cent in the value of fixed capital investment in plant and machinery.  Expenditure on purchase, procurement or installation of second-hand plant and machinery would not be eligible. A single unit cannot avail subsidy from the Central and state governments for the same purpose.

Though the industrial policy was announced on January 7 for 10 years, 100 per cent excise holiday scheme was curtailed to seven years, expiring on March 31, 2010.

Himachal Pradesh has attracted 300 per cent more investment as compared to the pre-incentive package level. On an average, investment generated in Himachal Pradesh is above Rs 12,500 crore and the number of units set up had grown 28 per cent. Growth in employment generation was more than 33 per cent.

In Uttarakhand, investment generated was close to Rs 30,000 crore, 42 times the level in 2000. The number of units set up had grown 130 per cent, while growth in employment generation was 490 per cent for the same period.