In a significant move, Central Government on Friday announced Industrial Development Scheme for Jammu and Kashmir (IDS) on the pattern of a special package announced in March for the Northeast states. The scheme will provide slew of benefits to industries including exemption on GST, income tax and transport subsidy for next five years.
The extension of the scheme to J&K was a long pending demand of the business community of state.
Department of industrial promotion and policy (DIPP) has given nod to the extension of IDS to J&K which was extended to north eastern states from March 21, 2018.
“Central government had left out Himalayan state of Jammu and Kashmir from industrial development package in March announcement. Though earlier, industrial policies were applicable to Northeast and Himalayan states, however this one had left out J&K which has been now extended to the state,” said a J&K Government official.
Till June 2017, the benefits given to new industrial units in Jammu and Kashmir were largely similar to the benefits extended to Northeast states under the industrial development scheme of the government of India.
“However, when a new scheme was approved for the state separately in 2017, only 3 benefits given to the Northeast were extended to J&K,” another official said, adding these included capital investment incentive of 30 percent, interest incentive of 3 percent and insurance incentives for next 5 years.
The benefits given to the Northeast, such as GST reimbursement, income tax reimbursement, transport incentive and employment incentives were not extended to Jammu and Kashmir. “In fact, these incentives are critical to attracting new investment and consequently, very few units took advantage of this scheme,” he said.
On the tax front, according to this package, new units will get a reimbursement of the GST that they pay to the central government for a period of five years from the date of commencement of production. The units will also be reimbursed the centre’s share of income tax for five years.
These units will also get a 3 percent interest subsidy on working capital credit for the first five years. In addition, they will get a central capital investment incentive amounting to 30 percent of the investment in plant and machinery, with an upper limit. They will also get full reimbursement of insurance premium on buildings, plants and machinery for five years.
To counter the geographical and logistical hardship of setting up units, the scheme proposes a transport incentive. These units will get a transport incentive of 20 percent of their cost of transportation using railways and inland waterways, and 33 percent in the case of air freight for perishable items.
There is also an employment incentive wherein the central government will contribute up to 3.67 percent of the employer’s contribution to the EPF.
Meanwhile, the business community has welcomed the extension of IDS to the state.
President, KCCI, Sheikh Ashiq Ahmad said, “Announcement was an important step for attracting investment in the industrial sector and boosting local industrial growth.”
He thanked state government, particularly Advisor to Governor KK Sharma and chief secretary BVR Subramanyam for making constant efforts.
Chairman, PHD Chamber-Kashmir chapter, Mushtaq Ahmad Chaya said it is a welcome decision. “Business community has been taking up this issue with the government. We are thankful that the governor’s administration took this issue with DIPP and got it sanctioned.”
President, Federation Chamber of Industries Kashmir, Muhammad Ashraf Mir said “It was a long pending demand of the industrialists of the state.”