The Industrial Incentive Scheme of INR 28,400 cr approved by the Cabinet Committee for Economic Affairs (CCEA) with a long term approach of 17 years to both incentivize new industrial investment in the UT of J&K and nurture the existing industries is expected to provide big impetus to key sectors like Tourism, IT, in the Jammu & Kashmir.
Considering the new Central Sector Scheme for Industrial Development talks about taking industrial development to the grassroots level of Administrative Blocks, there is a lot of expectation that the new incentive scheme will usher a new era of industrial activity in the region. Tourism being a major service sector of the J&K economy, the new incentive scheme will provide the much-required impetus to the sector in the Union Territory.
The J&K Lieutenant Governor, Manoj Sinha has called the scheme a “historic one” which will provide a boost to the J&K economy for sustainable development. With the new incentive scheme, different departments of the government including tourism will now draw up schemes to attract private investments into the region.
The Central Scheme is intended to bring about a radical transformation in the existing industrial ecosystem of J&K with emphasis on job creation, skill development, and sustainable development by attracting new investment and nurturing the existing ones, thereby enabling J&K to compete nationally with other leading industrially developed States/UTs of the country.
It is anticipated that the proposed scheme is likely to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons. Additionally, because of the working capital interest subvention, the scheme is likely to give indirect support to about 35,000 persons.
The incentives comprise, Capital Investment Incentive at the rate of 30% in Zone A and 50% in Zone B on the investment made in Plant & Machinery (in manufacturing) or construction of the building and other durable physical assets (in the service sector) is available. Units with an investment up to INR 50 crore will be eligible to avail of this incentive. The maximum limit of incentive is INR 5 crore and INR 7.5 crore in Zone A & Zone B respectively.
It also proposes a Capital Interest subvention at the annual rate of 6% for a maximum of 7 years on a loan amount up to INR 500 crore for investment in plant and machinery (in manufacturing) or construction of the building and all other durable physical assets(in the service sector). The Central Scheme also proposes a GST Linked Incentive of 300% of the eligible value of actual investment made in plant and machinery (in manufacturing) or construction in building and all other durable physical assets (in the service sector) for 10 years. The number of incentives in a financial year will not exceed one-tenth of the total eligible amount of incentive.
There is a Working Capital Interest Incentive component in the new Central scheme which promises all existing units at the annual rate of 5% for a maximum of 5 years. The maximum limit of incentive is INR 1 crore. The scheme is made attractive for both smaller and larger units. Smaller units with an investment in plant & machinery up to INR 50 crore will get a capital incentive up to INR 7.5 crore and get capital interest subvention at the rate of 6% for a maximum of 7 years.