Graded concessions on offer in new Uttarakhand policy

The draft of Uttarakhand's first MSME policy is ready, with a bonanza of incentives for developing new enterprises.

With a thrust on skill development and creation of new infrastructure like mini tool rooms and flatted factories, a host of potential sectors for the development of MSMEs has been identified. They include agro-based food processing and allied industry, handloom, hosiery, textile, pharma, khadi and village industry, floriculture, tourism, herbal, medicinal plants and others.

The incentives are being offered in areas that have been grouped into three major categories - A, B and C. Incentives like capital investment subsidy, interest subsidy, employment-intensive subsidy and venture capital assistance are being offered in a big way. Remote districts like Pithoragarh, Chamoli and Uttarakashi have been included in category A (which is the most remote), where capital investment subsidy will be higher - 40 per cent for micro enterprises and 25 per cent for small and medium enterprises.

Similarly, in category B districts like Pauri, Tehri and Bageshwar, the capital investment subsidy will be 30 per cent for micro and 20 per cent for small and medium enterprises. In category C areas, like Udhamsingh Nagar and Haridwar, the subsidy will come down to 25 per cent for micro units and 15 per cent for small and medium enterprises.

An interest subsidy will also be available. In category A areas it will be seven per cent for micro enterprises, six per cent for small and five per cent for medium units. This subsidy will be one percentage point lower in the other categories. For example, in category B, micro enterprises will get six per cent, small units will get five per cent and medium-sized units will get four per cent.

To qualify for interest subsidy, it will be mandatory for units to comply with pollution control norms. Enterprises will also have to remain in production for three years from the date of commencement of commercial production if they avail of the interest subsidy.

An employment-intensive subsidy of 15 per cent on labour wages, subject to a maximum of Rs 5 lakh per year, will be granted. Besides, the government will also offer venture capital assistance for all those MSMEs which adopt innovative technologies like nanotechnology.

The new policy also envisages a power subsidy in a graded manner. MSMEs will also be entitled to VAT (or the goods and services tax, when it is implemented) in the first five years after production starts. Similarly, transport subsidy will also be provided in a graded manner. In addition, financial assistance to the tune of Rs 50 lakh per unit would be provided for creation of basic infrastructure for setting up centres of excellence and incubators.

Provision of flatted factories to accommodate small and micro enterprises will be made in existing as well as new industrial estates. The government will also provide all support for the cluster development schemes of the Central government and set up mini tool rooms.

The development of a land bank is another hallmark of the new policy. At least 25 per cent of the areas in the new industrial estates developed by the Sidcul (State Infrastructure and Industrial Development Corporation of Uttaranchal) will be reserved for MSMEs. Sidcul will also provide land to MSMEs at a concessional rate.

An infrastructure development fund with an initial corpus of Rs 100 crore will also be created.

The policy also calls for providing awards to the best MSMEs on the basis of their growth and profitability.

An empowered committee headed by the state chief minister is being set up for effective monitoring of the implementation of the policy, which was prepared by the state MSME department and the Industries Association of Uttarakhand on the basis of suggestions from the Confederation of Indian Industries and others.