Government approves new scheme for Industrial Development of Jammu & Kashmir

Government approves new scheme for Industrial Development of Jammu & Kashmir

News: Cabinet Committee on Economic Affairs has approved the Central Sector Scheme for Industrial Development of Jammu & Kashmir.

Facts:

  • Aim: To develop development of Manufacturing as well as Service Sector Units in J&K which will generate employment and leads to the socio economic development of the area.
  • Incentives: The following incentives would be available under the scheme:
    • Capital Investment Incentive at the rate of 30% in Zone A and 50% in Zone B on investment made in Plant & Machinery (in manufacturing) or construction of buildings and other durable physical assets(in service sector) is available.Units with an investment upto Rs. 50 crore will be eligible to avail this incentive. Maximum limit of incentive is Rs 5 crore and Rs 7.5 crore in Zone A & Zone B respectively
    • Capital Interest subvention: At the annual rate of 6% for maximum 7 years on loan amount up to Rs. 500 crore for investment in plant and machinery (in manufacturing) or construction of building and all other durable physical assets(in service sector).
    • GST Linked Incentive: 300% of the eligible value of actual investment made in plant and machinery (in manufacturing) or construction in building and all other durable physical assets(in service sector) for 10 years. The amount of incentive in a financial year will not exceed one-tenth of the total eligible amount of incentive.
    • Working Capital Interest Incentive: All existing units at the annual rate of 5% for maximum 5 years. Maximum limit of incentive is Rs 1 crore.
  • Other Key Features of the Scheme:
    • Scheme is made attractive for both smaller and larger units. Smaller units with an investment in plant & machinery upto Rs. 50 crore will get a capital incentive upto Rs. 7.5 crore and get capital interest subvention at the rate of 6% for maximum 7 years
    • The scheme aims to take industrial development to the block level in UT of J&K, which is first time in any Industrial Incentive Scheme of the Government of India and attempts for a more sustained and balanced industrial growth in the entire UT
    • Scheme has been simplified on the lines of ease of doing business by bringing one major incentive- GST Linked Incentive- that will ensure less compliance burden without compromising on transparency.
  • Expenditure involved: The financial outlay of the proposed scheme is Rs.28,400 crore for the scheme period 2020-21 to 2036-37.
  • Impact:
    • Scheme will bring radical transformation in the existing industrial ecosystem of J&K with emphasis on job creation, skill development and sustainable development.
    • The scheme is likely to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons. Additionally, because of the working capital interest subvention the scheme is likely to give indirect support to about 35,000 persons.

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