Gujarat may offer subsidy to large food processing units

AGRI BIZ POLICY - PART I

New Agri Business policy, expected in two months, seeks to attract mega investments in the agro-processing sector.

With a view to attracting large scale investments in food processing sector, Gujarat government proposes to offer a slew of incentives for mega projects. The incentives may include cost subsidy and cent per cent stamp duty reimbursements for the industry players.

The new sops and incentives will be a part of new Agri Business Policy-2008, which is expected to be unveiled in two months’ time. Among other things, the new policy will encourage mega projects in food processing sector.

The draft policy has already been prepared and it also acknowledges the fact that there is lack of large-scale investments in the food processing sector.

In order to promote setting up of large processing projects in the state, the Gujarat government may offer additional subsidy at the rate of 50 per cent of the cost of infrastructure for mega projects having capital investment above Rs. 40 crore.

The infrastructure may include facilities such as approach road, water system, power and other things. The draft of the policy also mentions a ceiling of Rs. 4 crore for cost subsidy.

The incentives would be given to projects to be set up in non-GIDC area or projects to be executed on the basis on public-private partnerships (PPP), special purpose vehicles and joint ventures.

The primary draft of the policy further proposes 100 per cent stamp duty reimbursement to the agribusiness project.

In a bid to attract large international service providers for setting up cold chain and supply chain infrastructure projects in the state, the new agri business policy is likely to give 6 per cent back-end interest subsidy on capital investment with a ceiling of Rs. 4 crore.

The state government is also mulling to provide 1 per cent additional backended subsidy if the project is promoted by women or if it takes place in backward taluka.

However, officials in state agriculture department said that these incentives are subject to change as the state may incorporate fresh suggestions of various stakeholders of the agriculture sector. The department plans to convene a meeting of the stakeholders by the end of this month. The final draft of the policy would be worked out only after the consultation with the stakeholders.

It may be mentioned here that Gujarat government is leaving no stone unturned to strengthening the food and agro processing sectors in the state. Recently, the state government through a circular made the acquisition of land for food and food processing activities hassle-free.

The state has decided to accord Deemed NA status to the agriculture land acquired for food and agro processing projects. In simple words, the players will not have to wait for NA (non-agriculture) to start their project on agricultural land.

As per the new circular, agriculture land acquired for food and agro processing activities will be treated as land having NA.