Calcutta, Aug. 29: The Mamata Banerjee government has committed to pay interest at market rates if it fails to provide incentives to new industrial units after three years.
The novel clause — a government official said he did not know of such a commitment in any other state — addresses a key concern among investors who had complained of inordinate delay in disbursing incentives in the past.
The assurance is tucked inside the 88-page ‘Investment and Industrial Policy West Bengal 2013’ announced by the chief minister today.
The government also made other land-related announcements that confirmed that the chief minister has made industry her immediate priority and is trying to work around the constraints she has put in place through the hands-off land policy.
Under the new policy, the state will pay 8 per cent annual interest on the monetary incentive due to a unit. The clause will kick in three years after the unit gets from the commissioner of commercial tax a document certifying its eligibility for the sop.
“I don’t think any state has made such a commitment to pay interest in case of delay in disbursement of incentives. This is a landmark step, addressing the delay that investors had been grappling with,” a senior industry department official said.
The biggest component of the incentive package is often refundable value-added tax (VAT). The cash-strapped government has been sitting on VAT refunds amounting to several hundreds of crores.
Three years down the line, there will be a financial disincentive for not paying up in time. “The burden on the state will go up if the interest is added,” the official said.
The new policy seeks to cut paperwork for refunds and weed out malpractices, either by the units or by officials handling the claim. Electronic filing of the application has been made mandatory for any units investing over Rs 10 crore.
“There is no scope of missing papers and files any more. Everything will be uploaded on the website and it will be a transparent process. It will make the government department more accountable, too,” another official said.
The new policy features three more changes from the one announced by the then chief minister, Buddhadeb Bhattacharjee, in 2008.
One, central sales tax will qualify for refund along with VAT. Two, in some cases, units will be allowed to seek incentives for 15 years, against 10 years now. Three, some will be eligible for refunds up to 90 per cent of VAT paid, compared with 80 per cent now.
The measures evoked a mixed reaction. Ficci West Bengal state council chairman Gaurav Swarup hailed the move as a “great initiative”.
However, a section of industry doubted the state’s ability to pay higher incentives or the interest. “Today, they can’t give incentives. Tomorrow, they will give neither the incentive nor the interest, that’s it,” said an industrialist who did not want to be named.