Centre unveils Rs28,400-cr new industrial development scheme for J&K

The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi at its meeting on Friday considered and approved the proposal of the Department for Promotion of Industry and Internal Trade for the central sector scheme for industrial development of Jammu and Kashmir. 

The scheme is intended to generate employment which directly leads to the socio economic development of the area, especially in view of the historic development of reorganisation of Jammu & Kashmir with effect from 31 October 2019 into a union territory under the J&K Reorganisation Act, 2019. 

The present scheme 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 proposes to make available incentives to investments to achieve the desired goals. For capital investment, the scheme proposes incentives at the rate of 30 per cent in Zone A and 50 per cent in Zone B areas on investment made in plant and machinery (in manufacturing) or construction of building and other durable physical assets(in service sector). Units with an investment of up to Rs50 crore will be eligible to avail of this incentive. Maximum limit of incentive is Rs5 crore and Rs7.5 crore in Zone A and Zone B, respectively

Capital interest subvention will be provided at the annual rate of 6 per cent for maximum 7 years on loan amount up to Rs500 crore for investment in plant and machinery (in manufacturing) or construction of building and all other durable physical assets (in service sector).

Under the scheme, GST linked incentive of up to 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) will be provided for 10 years. The amount of incentive in a financial year will not, however, exceed one-tenth of the total eligible amount of incentive.

All existing units will be eligible for working capital interest incentive at the annual rate of 5 per cent for maximum 5 years. The maximum limit of incentive has been fixed at Rs1 crore.

The scheme has been made attractive for both smaller and larger units. Smaller units with an investment in plant and machinery of up to Rs50 crore will get capital incentive of up to Rs7.5 crore and capital interest subvention at the rate of  6 pr cent for a maximum 7 years.

For the first time for any central sector industrial incentive scheme, the new J&K Industrial Development Scheme aims to take industrial development to the block level, and attempts for 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.

The scheme envisages 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.

The scheme aims at bringing 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 with other industrially developed states/UTs of the country.

The proposed scheme is expected to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons. Additionally, because of the working capital interest subvention scheme is likely to give indirect support to about 35,000 persons.

The total financial outlay of the proposed scheme is Rs28,400 crore for the period 2020-21 to 2036-37. So far, an amount of Rs1,123.84 crore has been disbursed under various special package schemes.