New Delhi, March 29: The Cabinet Committee on Economic Affairs today approved a new industrial policy for the Northeast, extending 100 per cent tax exemption and doubling the capital subsidy given on investment by new as well as existing units.
The North East Industrial and Investment Policy 2007, cleared by the committee, brings Sikkim along with the seven sister states of the region under its purview and provides liberal fiscal incentives for 10 years.
“This landmark policy will accelerate the pace of industrialisation and development of the Northeast,” said Union minister of commerce and industry Kamal Nath.
However, according to the impact assessment carried out by the Tata Economic Consultancy Services, the industrial policy in the past 10 years has managed to woo investments worth only Rs 1,067.28 crore. Just 681 units have been set up.
“Compared to the investments of over Rs 18,000 crore in Uttarakhand and Himachal Pradesh, the northeastern states have been left high and dry,” said a highly-placed official from the Dharampal Satyapal Group, a major producer of latex thread in Agartala.
The official added that no major industrial development has taken place in the Northeast owing to frequent policy changes. These have put the new industrial units in great discomfort.
Echoing him, Abhay Chowdhury, chief financial officer of Assam Company, said: “Hurdles in the way of industrial growth in the Northeast are its remote location and lack of connectivity with major towns and cities.” However, he did laud the government for creating an incentive and an infrastructure growth-based policy.
“Under the North East Industrial and Investment Policy, 100 per cent excise duty exemption would be continued on finished products made in the Northeast. Capital subsidy would be enhanced from 15 per cent of the investment in plant and machinery to 30 per cent,” said information and broadcasting minister P.R. Das Munshi.
The limit of automatic approval for capital subsidy has also been enhanced to Rs 1.4 crore from Rs 30 lakh.
For granting capital investment subsidy higher than Rs 1.5 crore but up to a maximum of Rs 30 crore, the decision would be taken by an empowered committee, Das Munshi told mediapersons after the cabinet committee meeting.
“The policy would lead to both demand and resource-based growth of industries in the Northeast,” said Dipankar Chatterjee of the Northeast council of the Confederation of Indian Industry (CII). He added that with the road to the east opening up, the northeastern states would soon start exporting to China.