ComMin issues norms for setting up NMIZs

The guidelines,experts said,give clarity to the existing manufacturing policy and rationalises the procedures for setting up the zones.

In a move to promote manufacturing in the country,the ministry of commerce and industry has issued norms for setting up National Manufacturing and Investment Zones NMIZs with a slew of benefits,including exemption from payment of capital gains tax.

The guidelines,experts said,give clarity to the existing manufacturing policy and rationalises the procedures for setting up the zones. The manufacturing zones will help increase the share of manufacturing in the GDP to 25 per cent from the current 16 per cent,and help create 100 million jobs till 2025.

According to the guidelines,there will be exemption from capital gains tax on sale of plant and machinery of a unit located in an NMIZ. This will be in case of re-investment of sale consideration within a period of three years for purchase of new plant and machinery in any other unit located in the same NMIZ or other NMIZ .

NMIZs will also be eligible for viability gap funding,which cannot exceed 20 per cent of the project cost.

This is the broad framework of the policy,providing a lot of clarity to investors about the role of state governments and the centre in the zones. It is a welcome move,and now the zones which have got in-principle approval can come up with detailed proposals, Chetan Bijesure,director,Ficci,said.

As per the norms,developers of NMIZs will be allowed to raise funds through external commercial borrowing ECBs for developing the internal infrastructure of the NMIZs while soft loans from multilateral institutions will be explored for funding infrastructure development in the zones. The guidelines said that assistance would be provided for negotiating non-sovereign multilateral loans by providing back-to-back support,if necessary.

Bijesure said that the support in terms of financing,enabling environment in the states and the role of states has become clear with the guidelines.

Story continues below this ad

NMIZs are conceptualised as integrated industrial townships of at least 5,000 hectares with state-of- the-art infrastructure and at least 30 per cent of the total land area would have to be devoted to manufacturing units.

With regards to labour policy,the Centre will have to put in place a job loss policy to enable units to pay suitable worker compensation in the eventuality of closures,through insurance. The compensation under this instrument would be equivalent to 20 days average pay for every completed year of continuous service,or any part thereof in excess of six months.