The Centre has notified the new central scheme for industrial development of Jammu and Kashmir.
As per a notification, this scheme will be called New Central Sector Scheme for Industrial Development of Jammu & Kashmir.
It will be effective from April 1, 2021 and will remain in force up to and inclusive of March 31, 2037. The scheme was earlier approved by the Cabinet Committee on Economic Affairs (CCEA).
All units eligible under Manufacturing and eligible Service sector will be granted incentive(s) under this scheme as defined under respective incentives.
The scheme shall not be applicable to the units which manufacture the products listed in the negative list.
Service sector units with a minimum investment of Rs 1 crore in building and other durable physical assets will be eligible for incentives under this scheme.
All eligible units have to commence commercial production/operation within 3 years from the date of grant of registration.
Any investment made on or after April 1, 2019 by a unit in plant and machinery (for manufacturing sector) or construction of building and other durable physical assets (for service sector) will be taken into consideration to decide the eligible value of investment as per the entitlement under Capital Investment Incentive, Capital Interest subvention and GST Linked Incentive of this scheme.
However, the date of commencement of commercial production/operation has to be on or after April 1, 2021. The eligibility for availing any incentive is subject to grant of registration under the scheme.
The cost of plant and machinery (in manufacturing sector) that is essential for manufacturing of finished goods but excludes cost of land, consumables, disposables or any other item charged to revenue
The Jammu & Kashmir Development Finance Corporation Ltd. (JKDFC) or any other agency authorized in this regard by the Government of India will be the nodal agency for disbursal of incentives under various components of the scheme.
The nodal agency will release incentive only through e-transfer to the designated bank accounts of eligible units.
The scheme will be implemented under the supervision of the Government of India i.e. the Department for Promotion of Industry & Internal Trade (DPIIT).
However, the registration process as well as processing of claims under different incentive components is delegated to the UT of Jammu &Kashmir. Details will be given in the guidelines for implementation of the scheme.
Committees have been constituted for governance and implementation of this scheme. The Apex committee will be headed by the Union Home Minister as Chairperson and will include the Union Commerce and Industry Minister and Lt. Governor of UT of J&K.
The powers and functions of the committee will include deciding on any modification in the scheme within its overall financial outlay which have not been specifically delegated under the power and function of other Committees.
The incentives under the scheme would include 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 building and other durable physical assets (in service sector). 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 will be given 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 will be 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 will be for all existing units at the annual rate of 5% for maximum 5 years. Maximum limit of incentive is Rs 1 crore.
The scheme has been 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 a maximum of 7 years.
The scheme aims to take industrial development to the block level in the UT of J&K, which is the 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.
The 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.
It envisages greater role of the UT of J&K in registration and implementation of the scheme while having proper checks and balances by having an independent audit agency before the claims are approved.
It is not a reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the UT of J&K faces.
Earlier schemes though offered a plethora of incentives. However, the overall financial outflow was much less than the new scheme.