Punjab industrial reset in 2025: Amendment to 160-year-old law, plan to save MSMEs, one-time settlement for disputes

The government also amended the Right to Business Act, 2025, to streamline approvals and clearances across departments, including the Punjab Pollution Control Board (PPCB) and the Forest Department. The amendments were intended to reduce procedural delays and address industry complaints about regulatory bottlenecks, though their on-the-ground impact has yet to be fully realised.

Another notable reform came with the amendment to the Society Registration Act, 1860, marking the first change to the legislation since its enactment over 160 years ago. Industry bodies have described the reform as a historic step towards simplifying compliance and improving governance of registered bodies.

In a long-awaited decision, the Punjab government announced a one-time settlement scheme for the industry to settle long-pending dues with the Punjab Small Industries and Export Corporation (PSIEC), providing relief for pending allotment-related dues that had remained unresolved for nearly three decades. The move was welcomed across the industrial sector, as it helped resolve legacy disputes and offer closure to hundreds of entrepreneurs.

Amendments were also made to the Industrial and Business Development Policy (IBDP), 2023, providing substantial relief by allowing stamp duty exemption incentives to be secured through a first charge on the concerned property until the commencement of commercial production. This change removed the requirement of bank guarantees, easing financial pressure on investors during the initial stages of projects, added Sharma.

Additionally, the abolition of the 0.25 per cent duty levied by the Punjab government on the total loan addressed a long-standing industry grievance and helped reduce the overall cost of doing business in the state, said Sharma. However, this decision was taken in the last week of October 2025.

Bid to attract investments

Throughout 2025, the government reiterated its intent to attract fresh investment, and Punjab CM Bhagwant Mann even visited Japan and other parts of India to secure investment. Industry leaders, however, believe that while intent and policy announcements are important, consistent execution and administrative efficiency will ultimately determine outcomes.

Despite these initiatives, several core issues continue to trouble Punjab’s industrial sector. According to Pankaj Sharma, industry remains concerned about the pace, transparency and efficiency of departmental functioning, particularly in matters related to approvals and inspections.

The delay in operationalising Halwara Airport remains a major setback, especially for Ludhiana’s industry, which already faces locational disadvantages as a border-state economy. Industry believes that, once operational, the airport could significantly improve connectivity and revive investment momentum in the region. Another major challenge is the over 50,000 industrial units operating in mixed-use areas, whose relocation deadline is September 2026.

Industry, meanwhile, is seeking an OTS to remain at its location, as relocation is not possible for so many units due to limited industrial land outside the city and associated costs.  Another major pain point is the delay in GST refunds, which has caused growing resentment among entrepreneurs. Punjab Tax Bar Association president Anil Sarin has flagged this issue multiple times. Industry has called for urgent reforms to simplify refund procedures, as the Punjab CM repeatedly announces increases in GST collection.

Pollution body’s role

The functioning of the Punjab Pollution Control Board remains a source of concern, with entrepreneurs alleging excessive procedural complexity and harassment. Industry bodies have repeatedly sought comprehensive reforms to make the regulator more facilitative rather than punitive.

Rising industrial land costs have emerged as a critical constraint on growth. Industry leaders stress the need to develop new industrial areas and create dedicated industrial zones for MSMEs, supported by robust infrastructure and handholding mechanisms. They argue that the lack of affordable industrial land has significantly impacted Punjab’s industrial growth compared to other states.