Industrial policy not to alter excise duty benefits to Northeast entities

Centre had in Dec 2014 suspended registration of new units under NEIIPP due to paucity of funds

There is some breather for the industry in Northeast as the Union Finance Ministry has announced industrial units in the region would continue to enjoy excise duty benefits under the Centre-sponsored North East Industrial and Investment Promotion Policy (NEIIPP).

The industry was visibly upset following Centre’s December 2014 decision to suspend registration of new units under NEIIPP due to paucity of funds.

The new Finance Ministry notification, dated December 2, said existing units undertaking 'substantial expansion' between December 1, 2014 to March 31, 2017 (the date when NEIIPP expires) will continue enjoying excise duty exemption for a period of ten years. It also said new units registered during the same period too would be eligible for the excise exemption.

“Doubts have been raised regarding availability or otherwise of central excise duty exemption under notification No.20/2007 dated 25.04.2007 to new units or units undertaking substantial expansion after 1.12.2014 in the Northeastern region including Sikkim pursuant to the suspension of fresh registrations....under NEEIIPP. The matter has been examined by the ministry (finance) in consultation with department of industrial policy and promotion (DIPP). It is clarified that new units or units undertaking substantial expansion shall continue to be eligible for excise duty exemption,” said the Union finance ministry notification.

Welcoming the Centre’s notification, RS Joshi, chairman of Federation of Industry and Commerce of North Eastern Region (FINER), the premier trade and industry body of Northeast, said this notification has at least brought “clarity” amongst the industry as “people were apprehensive if they would be eligible for availing benefits under NEIIPP further”.

“We had in recent days taken up the matter strongly with Central Board of Excise and Customs (CBEC) and Union finance ministry for continuation of NEIIPP benefits. At least now we have clarity on excise duty exemption we expect to hear from the Centre on other benefits soon. There are still doubts and uncertainty in our minds with regard to other benefits of NEIIPP,” said Joshi. The existing units would enjoy excise duty benefits only if they undertake “substantial expansion”, which Joshi said meant at least 25% capacity expansion.

Under NEIIPP, which came into force from April 1, 2007 with a validity of ten years, industrial units in Northeast are eligible for 30% capital investment subsidy, income tax subsidy, excise duty exemption (varying from goods to goods), reimbursement of insurance premium paid on capital assets, among others. Industrial units could enjoy these benefits for a period of ten years.  

As against a growth of 0.42% in manufacturing sector of India from 2011-12 to 2013-14, the growth in Assam during the same period had been 6.95%.

The growth in service sector too has been higher in Assam than the national average during the same period. The industry of the region attributes the above national average growth in both manufacturing and service sectors to the Centre sponsored industrial policy.

There has been investment proposal of Rs. 17,000 crore in last few years in Assam, said Joshi. Micro, Small and Medium Enterprises (MSMEs) in the state were provided institutional credit of Rs.1,774 crore as on March 31, 2014, which is 71% higher than the previous highest institutional credit of Rs.1,035 crore as March 31, 2013.

Furthermore, there had been a growth of more than 100% in establishment of business establishments in Assam from 2005 to 2013 and employment growth of 78.84% during the same period.