In a move that could take some sheen off its Make in India campaign, the government is likely to reduce the time frame for availing benefits under Modified Special Incentives Package Scheme (MSIPS) to five years from the current 10.
Under MSIPS, the government offers a host of incentives to electronics and component makers to manufacture domestically, including a 20% to 25% subsidy on capital expenditure.
The Cabinet is likely to take up the proposal to amend the policy on incentives for electronic manufacturers in its meeting on Wednesday, a senior government official told HT on the condition of anonymity.
The move comes amid growing demand from the industry for clarity on several tax and incentive clauses for manufacturing in the country. The grey areas in the policy have led to several demands for incentives being stuck before the government.
Several multinationals, including iPhone maker Apple, have sought fiscal benefits, as a pre-condition to begin manufacturing in India. The final decision on Apple’s demands will be taken later this month by an inter-ministerial panel of bureaucrats.
MSIPS, which was introduced in 2012, provides a capital subsidy of 20% in special economic zones (SEZs) and 25% in non-SEZ. It also offers reimbursements of excise for capital equipment (vehicles, machinery, laboratory equipment, computer systems and furniture) for non-SEZ units, and reimbursement of central taxes and duties for high-investment projects.
The government has been mulling a shorter timeframe for extending benefits under MSIPS, with both finance and IT ministries said to be looking at a three-year period.
Applications of companies investing more than $1 billion for setting up shops in India are dealt on a case-to-case basis by a select group of government officials. The group decides whether exceptions can be doled out to some companies, especially those in the tech sector, based on the kind of technology they bring into the country.