North East Industrial Policy (NEIP), 1997
Before 2002, the North East Region comprised only seven States, popularly known as the Seven Sisters. Because of the severity of the socio-economic problems faced by the region, both economically and industrially, it gave rise to the need for Central intervention. Thus, intending to bring economic development to the region, the Government of India (GoI) announced the “North East Industrial Policy 1997”, which was operational for a period of 10 years from 24 December 1997 to 23 December 2007. Under this policy, emphasis was laid on the development of industrial infrastructure and fiscal subsidies and incentives to encourage the people of the Region to be more involved in such activities.
The salient features of this policy are briefly highlighted as follows:
1. Development of growth centres to be financed entirely by the Central Government, subject to a ceiling of Rs. 15 crores.
2. Financing of Integrated Infrastructure Development Centres (IIDCs), to be shared between Government and SIDBI in the ratio 4:1.
3. Transport subsidy scheme extended for another 7 years.
4. Industrial activities in growth centres and IIDCs to be exempted from income tax and excise for a period of 10 years from the commencement of production.
5. Central capital investment subsidy to eligible units @15% of their investment in plant and machinery, up to a ceiling of Rs.30 lakhs.
6. Central interest subsidy to eligible units @3% on working capital loan for a period of 10 years after the commencement of production.
7. Central comprehensive insurance scheme wherein eligible units can avail 100% subsidy on premium paid for a period of 10 years.
8. One-time grant of Rs.20 crores by the Central Government to North East Development Financial Corporation (NEDFi) for techno-economic studies on industries and infrastructure for the region.
9. Explore export possibilities of products of North East to neighbouring countries like Bangladesh, Myanmar and Bhutan.
10. Development of village and small industries through training, exhibitions etc.
North East Industrial and Investment Promotion Policy (NEIIPP), 2007
In pursuance to enable industrial growth, development and encourage private investments, the NEIIP-2007 was introduced with a substantial increase of the fiscal incentives and other concessions under NEIP-1997. However, registrations of units for schemes falling under this policy were suspended w.e.f from December 1st, 2014. Following are the salient features of the policy:
1. Excise duty exemption – Continuation of 100% excise duty exemption on finished products made in NER, as in NEIP-1997.
2. Income tax exemption – Continuation of 100% income tax exemption as was available under NEIP-1997.
3. Substantial expansion – Under NEIP, for an enterprise to enjoy incentives for expansion, it required that the substantial expansion should not be less than 33.5% in the value of the fixed investment and plant and machinery for the purpose of expansion of capacity or modernization and diversification. This was brought down to not less than 25% under the new industrial policy.
4. Capital investment subsidy scheme – All eligible industrial units located anywhere in India, be it in the private sector, joint sector or cooperative sector, as well as units set up by the concerned State Governments of the NER, will be given capital investment subsidy at the rate of 30% of their investment in plant and machinery or additional investment in the same. The limit for automatic approval of subsidy at this rate would be Rs.1.5 crore, and for an amount above this, it would require the intervention of an Empowered Committee.
5. Interest subsidy scheme – Made available at 3% on working capital loan as was available under NEIP-1997.
6. Comprehensive insurance scheme – New industrial units and existing units will be eligible for reimbursement of 100% insurance premium on their substantial expansion.
7. Transport subsidy scheme – 90% of transport cost of raw material and finished goods to and from the unit's location to designated rail-head. 50% if transportation is within NER.
8. Incentives for service/other sector industries – The incentives under NEIIPP-2007 will apply to the service sector activities/industries and includes (a) hotels (not below two-star category), adventure and leisure sports including ropeways; (b) medical and health services like nursing homes with a minimum capacity of 25 beds and old age homes; (c) vocational training institutes such as institutes for hotel management, catering and food crafts, entrepreneurship development, nursing and paramedical, civil aviation-related training, fashion, design and industrial training.
9. Incentives for the biotechnology industry – The biotechnology industry will also be eligible for benefits under the new industrial policy.
10. Incentives for power generating industries – As earlier, the power generating industries will continue to receive the benefits under this policy. Also, power generating industries up to 10mw based on both conventional and non-conventional sources will be eligible for capital investment subsidy, interest subsidy and comprehensive insurance as applicable under NEIIPP-2007.
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