New challenges for U'khand after expiry of exemptions

The Centre has allowed the Concessional Industrial Package (CIP), which created an industrial boom in Uttarakhand, to end.

The expiry of the area-based exemptions last night has now thrown up new challenges before the government, which wanted them to continue till 2020, to face the harsh realty of inviting fresh investments without any excise exemptions.

Even after the curtains fell on the cent per cent heavy excise rebate, a key component of the package for which industries came rushing to the hill state, other exemptions like income tax rebate and capital subsidy are likely to continue for 2 to 3 more years.

Experts said the government must prepare itself to do some hard work to build on the investment scenario which till yesterday looked very attractive. Be it ultra low-cost Nano of Tata Motors or FMCG items of ITC and HUL, a wide-ranging products are being manufactured in the key industrial estate of Pantnagar and Haridwar which are mainly in the plains.

However, the hills of Uttarakhand are still devoid of industrial activities as the government failed to invite manufacturing industries there despite announcing a separate hill industrial policy in 2008. Shortage of land and heavy transport cost became major hurdles in the way of the hill industrial policy. And in between, there was a period of recession also. “During the past two years, the investment scenario in the hills remained bleak,” admitted a top government official.

The real challenge before the state government is now to improve the investment scenario in the hill state, where top-notch companies have set up shops. The government is claiming that the expiry of the package would affect an investment of Rs 30,000 crore. Already, some top companies like ACC and Hero Honda are not too keen to set up new units in Uttarakhand despite having such plans.

On the other hand, the expiry of the area-based exemptions has given handle to Chief Minister Ramesh Pokhriyal Nishank to launch attacks on the Congress. “The Centre has done injustice to Uttarakhand by not extending the package. We will raise this issue everywhere in Uttarakhand in a big way,” said Nishank.