New Industrial Development Scheme: A comparison with existing incentives

Mir Saqib Ali

mirsaqibali@gmail.com

All the stakeholders have welcomed the recently announced new Central Industrial Development Scheme for Jammu and Kashmir. Emphasising to empower about half a million people in terms of employment, the scheme with an outlay of Rs 38400 crore will be valid for 16 years till 2036-37.

This new package is also claimed to get unprecedented investment in the union territory of Jammu and Kashmir. It will open investment option in new areas for which notification of establishment of new industrial estate in ZoneB districts has been already issued. ZoneB is mainly the rural and underdeveloped areas. The 50% capital subsidy for industries in these areas is aimed to get more rural and under-utilised area into industry map.

Earlier central industrial scheme too had some offerings for investors. But post-GST and toll post abolishment there has been a huge blow to the industrial development in Jammu and Kashmir.

The new policy has emphasised to provide e-disposal of claims related to GST, to make the investment in the union territory to look business-friendly. This is first of kind of policy post-GST implementation which gives emphasis on tax rebate to industries and that too in online automated systematic manner (details here).

Comparing the new policy with the old shows that some groundbreaking incentives have been introduced:

The announcement will surely boost industrial activity in both Kashmir and Jammu regions and the package offers very less interest rates and tax reimbursement.

Furthermore, the erstwhile state always had a special budget for industries which was guided by state industrial policy. The industrial policy surely did promote the industrial activity in J&K. However, after the abrogation of Article 370 there was a confusion that the state industrial policy is no more valid. But that was not the case. In fact, authorities clarified that the state industrial policy is in vague till the further orders.

Some of the key features of state industrial policy valid today are:

1. Land acquisition rate Rs 5 lakh per kanal for ZoneA and Rs 4 lakh for ZoneB.
2. 100% subsidy for procurement of labs equipment for quality assurance.
3. 100% subsidy for diesel gen-set or solar system.
4. Transport subsidy for goods up to nearest railhead.

Present understanding is that both subsidies under old policy and new scheme are applicable, but it is to be seen that how existing industrial units will fit in the criteria of eligibility to get the benefits.

The eligibility criteria is yet to be notified.