Centre redrafts NEIP to lure industrialists

The Centre has redrafted the North East Industrial Policy to provide for a graded system of incentives to "promote more timely development"...

The Centre has redrafted the North East Industrial Policy 2006 to provide for a graded system of incentives to 8220;promote more timely development8221; and accelerate industrialisation in the eight north-eastern states.

Under the new scheme, industrial units that come up in the first three years after NEIP 2006 is announced would get fiscal incentives for 10 years while those that spring up between 3rd and 7th year would get same concessions for 7 years. Those who enter after the 7th year of NEIP 2006 can avail of these benefits only for 5 years.

The incentives 8212; available after start of production 8212; include income tax and excise duty exemptions, capital investment subsidy, interest subsidy of 3 percent on working capital loans and subsidy for moving products to nearest consumption centres.

Similar exemptions would also be made available to an existing unit which expands by 25 per cent, instead of previously mandated 33.5 per cent, in the first three years of the scheme.

If the expansion is carried out between 3rd and 7th year, the manufacturer would have to make an additional investment of 50 per cent in plant and machinery to qualify for the same quantum of relief. After the 7th year, the additional investment would have to be 75 per cent of the existing size to claim the incentives.

To provide for this graded system, the tenure of the NEIP 2006 is being increased to 15 years from the 10 years allowed in NEIP 1997, says the proposal from the ministry of commerce and industry.

8220;This would provide adequate time to reap the benefits of the policy after teething problems associated with setting up of industries in the northeastern region 8212; delays in acquiring land, arranging capital, procuring raw material, locating appropriate workforce 8212; has been resolved,8221; it says.

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The longer duration would boost the confidence of prospective investors while ensuring the flow of further investments in the region, it adds.

In capacity expansions, the graded system would help curb investor8217;s tendency to claim benefits for entire 10 years while pumping money in the later years of the scheme.