Just ahead of Lok Sabha elections, the Centre on Wednesday restored the special industrial package for Himachal Pradesh which had expired four years ago.
The Cabinet Committee on Economic Affairs (CCEA) that met in New Delhi approved the extension of the special package of industrial incentive for Himachal Pradesh and its neighbour Uttarakhand. The concessional industrial package has been granted from January 7, 2013, to March 31, 2017.
"The UPA Government has always been sensitive to the aspirations of the hill people. This decision will catalyse industrial development in Himachal Pradesh and Uttarakhand and generate gainful employment especially for the rural youth," Union commerce and industry minister Anand Sharma said in a release issued by Public Information Bureau. "It will also give a fillip to manufacturing and the Small and Medium Enterprises in these two states."
Under the extended industrial package, all new industrial units and existing units on substantial expansion would be eligible for Central Capital Investment Subsidy at the rate of 15 % of investment in plant and machinery, subject to a ceiling of Rs. 30 lakh. Further, the cap on amount of subsidy will be raised from Rs. 30 lakh to Rs. 50 lakh for units of micro, small, and medium enterprises at the rate of 15 % of their investment in plant and machinery.
Subsidy would be available to all new and existing units on substantial expansion located in notified areas as well as to "thrust industries" for units located anywhere in these states. Only those units that pre-register under the scheme, commence commercial production/ operation before March 31, 2017, and file claims within one year of the commencement of commercial production shall be eligible for subsidy under the scheme.
Incentive on substantial expansion will be given to units affecting an increase by not less than 25 % of the value of fixed capital investment in plant and machinery for the purpose of expansion of capacity.
"Expenditure on purchase/procurement/installation of second-hand plant and machinery will not be eligible for subsidy under the Central Capital Investment Subsidy Scheme. A single unit cannot avail subsidy both from the Central as well as state government for the same purpose," said an industries department official.
Chief minister Virbhadra Singh hailed the decision, and thanked central leaders, including Prime Minister Manmohan Singh, UPA chairperson Sonia Gandhi, All India Congress Committee vice-president Rahul Gandhi, and union commerce and industries minister Anand Sharma.
"This would not only give a boost to the industrialisation in the state, but also generate employment, especially for rural youth," he said.
Earlier, the state government had submitted a memorandum to the President, requesting him to recommend the case of Himachal Pradesh for extension of this package. Industries minister Mukesh Agnihotri has also welcomed the decision. Agnihotri had recently called on the Anand Sharma in New Delhi and urged him to restore the industrial package.
The new industrial policy and other concessions for Himachal Pradesh and Uttarakhand were announced on January 7, 2003, for a period of ten years, as the two states lagged in industrial development.
The objective was to provide required incentives and enabling environment for industrial development, improve availability of capital and increase market access to provide fillip to private investment.
The package was withdrawn on March 31, 2010. Virbhadra Singh had earlier blamed neighboring states for opposing the special package to Himachal, citing the reason of migration of industries. Himachal Pradesh attracted 300% more investment as compared to the pre-incentive package level. On an average, total investment generated in Himachal Pradesh is above Rs. 12,500 crore and number of units set up has grown by 28% while growth in employment generation is more than 33%.