North Eastern Industrial Policy

Notification

Cabinet approved a new industrial Policy for the North Eastern Region on November 20, 1997. Ministry of Industry notified this Policy on December 24,1997. The salient features of the Policy are as follows:

  1. Expenditure on Growth Centres, up to Rs. 15 crores would be me through Central assistance.

  2. Funding pattern for Integrated Infrastructure Development Centres

    (IIDCS) changed from 2:3 between Government of India and SIDBI to 4-1. The Government of India funds would be in the nature of grant.

  3. Transport subsidy scheme has been extended by 7 years upto 31.3-2007 and amount to be disbursed through North Eastern Development Finance Corporation.

  4. Industries located in the Growth Centres would be given capital investment subsidy at the rate of 15% on Plant & Machinery, subject to a ceiling of Rs. 30 lakhs.

  5. Growth Centres & IIDCs become tax-free zones for, income tax and excise duty for a period of 10 years. Certain high growth potential industries have also been given the tax-free status irrespective of the location in the North-East.

  6. An interest subsidy of 3% on the working capital loans would be provided for a period of ten years after the commencement of production.

  7. Comprehensive Insurance Scheme for new industrial units has been put in place.

Notification issued for all aforesaid major items envisaged in the Policy

 

 

 

 

Government of India

Ministry of Industry

Department of Industrial Policy & Promotion

24th December, 1997

OFFICE MEMORANDUM

New Industrial Policy and other concession in the North Eastern Region.

In view of the continuing backwardness of North East region the need for a new and synergetic incentive package was widely felt to stimulate development of industries (Hon’ble Prime Minister made a statement at Guwahati on October 27, 1996 that new initiatives would be announced for the industrial development of the North Eastern Region). Expert groups/committees were constituted by the Ministry of Industry and the Planning Commission to concretize the initiatives.

Subsequently, Inter Departmental Meetings were held under the Chairmanship of Member Secretary (Planning Commission) to consider the recommendations and finalise the proposals. Based on these proposal, Government approved the new Industrial Policy and Other Concessions in the North Eastern Region which inter envisage the following:-

A. DEVELOPMENT OF INDUSTRIAL INFRASTRUCTURE

Currently the funding pattern for the growth centres envisages a Central assistance of Rs. 10 crores for each Centre and balance amount to be raised by the State Government. Government has approved that entire expenditure on the growth centres would be provided as Central assistance, subject to a ceiling of Rs 15 crores.

In respect of the IID centres, the landing pattern would be changed from 2:3 between GOI and SIDBI to 4:1 and the GOI funds would be a grant

B TRANSPORT SUBSIDY SCHEME

The Transport subsidy scheme will be extended further in so far as N.E. States are concerned, for a period of another 7 years i.e. upto 31st March, 2007 being coterminous with the Tenth Five Year Plan on same terms and condition as are applicable now.

C. FISCAL INCENTIVES TO NEW INDUSTRIAL UNITS AND THEIR SUBSTANTIAL EXPANSION

(i) Government has approved for converting the growth centres and IIDCs into a total tax free zone for the next 10 years. All industrial activity in these zones would be free from income tax, excise, for a period of 10 years from the commencement of production. State Governments would be requested to grant exemptions in respect of Sales Tax and Municipal Tax.

(ii) Industries located in the growth centres would also be given capital investment subsidy at the rate of 15% of their investment in plant and machinery. Subject to a maximum ceiling of Rs 30 lakhs.

(iii) The commercial banks and the North East Development Financial Corporation (NEDFI) will have dedicated branches/counters to process applications for term loans and working capital in these centres. While sanctioning assistance NEDFI and commercial banks would take a liberal view of the debt: equity ratio.

(iv) An interest subsidy of 3% on the working capital loans would be provided for a period of ten years after the commencement of production. The working capital requirements would be worked out as per the Nayak Committee.

(v) Similar benefits would also be extended to the new industrial units or their substantial expansion in other Growth centres or IIDCs or industrial estates/parks/export promotion zones set up by the States in the BE region New industrial units or their substantial expansion in the specified industries (as at Annex A) located outside these growth centres and other identified locations would also be eligible for the similar fiscal incentives.

D. RELAXATION OF PMRY NORMS

The PMRY would be expanded in scope to cover areas of horticulture, piggery, poultry, fishing. Small tea gardens, etc. so as to cover all economically viable activities. PMRY would have a family income ceiling of Rs. 40,000 per annum for each beneficiary along with his/her spouse and upper age limit will be relaxed to 40 years. Projects costing upto Rs 2 lakhs in other than business sectors will be eligible for assistance. No collateral will be insisted for projects costing upto Rs 1 lakh. Group financing upto Rs 5 lakhs will be eligible. Scheme will have a subsidy component @ 15% with an upper ceiling of Rs. 15,000. The margin money may vary from 5% to 12.5% of the project cost to make the subsidy and margin contribution at 20% of the project cost. PMRY would continue to have Entrepreneurship Training Component as per the existing rate.

E. OTHER INCENTIVES PROPOSED

(i) A comprehensive insurance scheme for industrial units in the North East will be designed in consultation with General Insurance Corporation of India Ltd and 100% premium for a period of 10 years would be-subsidised by Central Government.

(ii) A one time grant of Rs.20 crores will be provided to the North East Development Financial Corporation (NEDFI) by the Central Government through NEC to fund techno-economic studies for industries and infrastructure best suited to this region

(iii) State Government may consider setting up of a "Debt Purchase Window" by the NEDFI which buys the debt of the manufacturing units particularly in respect of the supplies made to the Government Departments so as to reduce the problem of blocking of funds for these units.

(iv) For development of mothers in north east possibilities of exports of products of north east to the neighbouring countries particularly Bangladesh, Myanmar and Bhutan would be explored.

(v) It may be considered to provide assistance for restructuring State PSUs from National Renewal Fund

The community pattern of land holding on large parts of NE region does not lend itself to providing collateral security as required under conventional bank lending RBI has constituted a committee to look into this issue. An appropriate system of "guarantees" will be evolved for NE region.

F. PROCEDURE FOR RELEASE OF ASSISTANCE UNDER THE NEW INITIATIVES

(vi) It is approved that the transport subsidy budget may be released by a designated agency on the basis of the recommendations of the S.L.C. It is proposed that NEDFI may be designated as the nodal agency for release of transport subsidy in N.E. States. NEDFI may be paid administrative expanses for this service which may be decided in consultation with IDBI.

 

G. DEVELOPMENT OF VILAGE & SMALL INDUSTRIES (VSI) SECTOR

Weaver’s Service Centres (WSCs) in NE region and Indian Institute of Handloom Technology at Guwahati would be suitably strengthened to provide technology and training support to the weavers. National Handloom Development Corporation will give priority in supply of hank yarn to the NE region. All the four verities of silk would be covered under the Mill Gate Price Scheme. Priority would be given to the N.E. region in scheme of setting up of market complexes and permanent exhibition facilities. A new design centre for development of handicraft would be setup in NE region. To upgrade the skill of artisan, advance training programme through master craftsmen would be organised. New emporia will be set up and financial assistance for renovation of existing emporia will be provided. The Central Silk Board will give priority to NE region in implementation of its schemes.

Ministry of Finance etc. are requested to amend rules/notifications etc. and issue necessary instructions for giving effect to these decisions

(Ashok Kumar)

Joint Secretary

Copy for information & necessary action to

All Ministries/Departments of Governments of India.

Chief Secretaries of North Eastern States.

Secretaries of Industries (North Eastern States)