Chhattisgarh stops incentives to mega industries

Chhattisgarh government has decided not to give incentives to the investors planning to set up mega industrial projects in the mineral-rich state.

In the new industrial policy that will be valid for next five years, the investors coming up with mega projects in the core sector will be barred from getting any incentive barring stamp duty exemption.

The core sector industries include cement/clinker, integrated steel, alumina/aluminium and power plants.

The policy also underlined that the projects for which deal was signed by the state government and the investor under the last industrial policy would be de-barred for getting incentives if the unit failed to start the commercial production by October 31, 2010. {

In the last policy, the state government had given directed incentives in the form of interest subsidy, infrastructure development/capital investment subsidy, exemption from electricity duty, stamp duty, entry tax, land diversion fee, reimbursement of project report expenses and so on.

The clause would have severely impact on the Tata and Essar steel projects coming up in Bastar region. Both the companies had signed agreement with the state government in 2006 for the project, but were still waiting to get land from government.

Since it is not possible at any cost to start the commercial production by October 2010, the new policy will have severely adverse impact on the project, a senior official of Tata Steel said.

The official said they were hopeful that the state government would find some solution to avoid any deadlock.

The state chief minister, Raman Singh, hinted that the decision to stop giving incentives for mega projects was taken after considering all aspects. The mega industrial unit will have to come without sops as the state is endowed with rich minerals, Singh said.

The big units will be compelled to come following rich minerals, it is time to give thrust for the promotion of small and medium industries, the chief minister said. The new policy will help the growth of small and medium units in the state, he added.

The industrialists are, however, skeptical that the small and medium will get any help.

The motive behind scrapping incentives is that the state government does not want mega projects to come in the state, Chhattisgarh Udyog Mahasangh President Mahesh Kakkar told Business Standard.

The medium and small industries cannot boom as the state lacks development of units on cluster basis that is viable, Kakkar said, adding that the state is yet to develop the basic industrial infrastructure and resources to house mega industrial projects.

This could be the reason for avoiding mega projects in the state by cutting incentives, Kakkar added.