Earn your own incentive
Punjab's much-awaited industrial policy unveiled on Monday is made for mainly potential entrepreneurs looking to enter the state. The existing units in Punjab must expand to qualify to use the fiscal incentives.Updated: Jun 04, 2013, 00:33 IST
Punjab's much-awaited industrial policy unveiled on Monday is made for mainly potential entrepreneurs looking to enter the state. The existing units in Punjab must expand to qualify to use the fiscal incentives.
Liberal inducements have come to the manufacturing, integrated textile, agro and food processing, and electronic hardware and information technology sectors. The policy cleared in a cabinet meeting in the morning will come into force once it is notified in a week.
The new policy offers the retention of value-added tax (VAT) and central sales tax (CST) up to 80% and complete exemption from property tax, electricity and stamp duty. To woo the agro-based processing industry, it offers major incentives on marketing fee, rural development fund (RDF) and infrastructure development (ID) cess.
This is the third (2009, 2011, and now) industrial policy that the coalition government of the Shiromani Akali Dal (SAD) and Bharatiya Janata Party (BJP) has come out with in more than six years. In spite of elements such as the electricity duty and stamp duty exemption and the introduction of the single-window facility, the previous policies had failed to bring significant investment into the state.
Deputy chief minister Sukhbir Singh Badal and industrial and commerce minister Anil Joshi described the new policy aggressive, pro-active and incentive-based, and one to not only change the industrial development paradigm but also facilitate investment in the state. "The policy is based on extensive feedback from the industry in Punjab, and focuses primarily on 'earn your own incentive'," said Sukhbir.
Punjab had taken a proactive step to facilitate investment in the state by offering more incentives than any other state, ensuring surplus power and 24-hour electricity to the information technology (IT) industry, world-class infrastructure, regulation-free regime, and self-attested proposals without site verification, Sukhbir added.
"The new policy hinges on three points: incentives, simplifying procedures and facilitation," said the deputy CM. "All earlier steps of the screening committee and empowered committee are eliminated, and Punjab now is first to offer online approvals in a most transparent manner."
The industrial department was still drafting the procedures for facilitating the incentives and creating the units, and will take another month to complete the job, Sukhbir has said.
"We'll also create a nodal point in the state, where the potential entrepreneurs will get all facilities under one roof to build the units. Once final, we'll take it up in the cabinet meeting," the deputy CM added.
He stressed the need for amending in the VAT Act to let industry retain incentive by some percentage as defined in the policy.
The new policy divides the state in two zones separated on the basis of industrial development. The lesser industrial developed cities are Fazilka, Ferozepur, Tarn Tarn, Amritsar, Gurdaspur, Pathankot, Hoshiarpur, Sangrur, Barnala, Mansa, Bathinda, Muktsar and Faridkot.
The industrial developed cities are Ludhiana, Patiala, Fategarh Sahib, Moga, Jalandhar, Kapurthala, Nawanshahr, Rupnagar and Mohali.
Entrepreneurs who set up units in less industrial developed cities will get more fiscal benefits.
Zone 1 (less developed)
FCI (Rs crore) Benefit
1 to 10 50% VAT, 75 % CST retention for 7 years
10 to 25 50% VAT, 75 % CST retention for 8 years
25 to 100 60% VAT, 75% CST retention for 10 years
100 to 500 70% VAT, 75% CST retention for 11 years
Above 500 80% VAT, 75% CST retention for 13 years
Zone 11 (more developed)
10 to 25 25% VAT, 50% CST retention for 8 years
25 to 100 30% VAT, 50% CST retention for 10 years
100 to 500 35% VAT 50% CST retention for 11 years
Above 500 40% VAT, 50% CST retention for 13 years
What is retention
Instead of paying VAT and CST to the government, the entrepreneurs can self-assess own accounts and retain the percentage as prescribed for the category for a particular period.
FCI: Fixed capital investment
VAT: Value-added tax
CST: Central sales tax