The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved a proposal of the Department for Promotion of Industry and Internal Trade for a Central Sector Scheme for Industrial Development of Jammu and Kashmir.
The scheme will have an outlay of Rs 28,400 crore up to 2037.
The government has formulated the New Industrial Development Scheme for Jammu and Kashmir as a Central Sector Scheme for the development of industries in the UT of JK.
The main objective is to generate employment leading to socio-economic development of the area.
The scheme comes after the reorganisation of Jammu and Kashmir from October 31, 2019 into a UT under the J&K Reorganisation Act, 2019.
The proposal is being implemented with the vision that industry- and service-led development of J&K needs to be given a fresh thrust with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones.
The scheme will offer many incentives, among them Capital Investment Incentive at the rate of 30 per cent in Zone A and 50 per cent in Zone B on investments made in plant and machinery (in manufacturing) or construction of building and other durable physical assets (in service sector).
Units with an investment up to Rs 50 crore will be eligible to avail this incentive.
Maximum limit of incentive is Rs 5 crore and Rs 7.5 crore in Zone A and Zone B, respectively.
Capital interest subvention will be offered to an annual rate of 6 per cent for a maximum of seven years on loan amount up to Rs 500 crore for investment in plant and machinery (in manufacturing) or construction of building and all other durable physical assets (in service sector). GST-Linked Incentive will be 300 per cent 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 service sector) for 10 years.
The amount of incentive in a financial year will not exceed one-tenth of the total eligible amount of incentive.
Under the Working Capital Interest Incentive of the scheme will cover all existing units at the annual rate of 5 per cent for maximum of five years and the maximum limit of incentive is Rs 1 crore.
The scheme is ambitious in that it offers attractions for both smaller and larger units.
Smaller units with an investment in plant and machinery up to Rs 50 crore will get a capital incentive up to Rs 7.5 crore and get capital interest subvention at the rate of 6 per cent for a maximum of seven years.
The scheme also seeks to take industrial development to the block level in J&K, which is the first time in any Industrial Incentive Scheme of the Government besides attempting a more sustained and balanced industrial growth in the entire UT.
The scheme has been simplified on the lines of ease-of-doing business by bringing one major incentive – GST-Linked Incentive – that will ensure less compliance burden without compromising on transparency. It envisages a greater role of the UT of J&K in registration and implementation of the scheme while having proper checks and balances by having an independent audit agency before the claims are approved.
“It is not about reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the UT of JK faces. Earlier schemes offered a plethora of incentives but the overall financial outflow was much lesser than the new scheme,” a government statement said.
The Centre hopes the scheme will bring about 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 and UTs of the country.
It is anticipated that the proposed scheme will attract unprecedented investment and give direct and indirect employment to about 4.5 lakh people.
Additionally, because of the working capital interest subvention the scheme is likely to give indirect support to about 35,000 people.
The financial outlay of the proposed scheme is Rs 28,400 crore for the scheme period 2020-21 to 2036-37.
So far, the amount disbursed under various special package schemes is Rs 1,123.84 crore.