The Hindu Business Line : States shower incentives for attracting investments

Leading the pack is the Samajwadi Party-led Government of Uttar Pradesh, which less than two years ago had announced a host of sops for sugar companies investing a minimum of Rs 350 crore between April 2004 and March 2007.

The success of the 2004 policy, in terms of facilitating investments exceeding Rs 4,000 crore by mills, has now emboldened the State Government to consider a new policy that not only lowers the minimum investment criteria to Rs 100 crore, but also covers all industries.

Among the sops is a facility to convert the entire sales tax or central sales tax amount payable by the investor into an interest-free loan from the State Government every year. This facility of annual plough-back of sales tax proceeds would be extended over 15 years. The interest-free loan is repayable over seven years. Other major incentives include total reimbursement of freight expenses on industrial raw materials procured from outside the State (barring coal and natural gas) for 15 years and a 10 per cent capital subsidy on fixed investments (20 per cent in case of investment above Rs 200 crore).

Policy defended

UP Government officials have defended the new policy - which is yet to obtain Cabinet approval - citing the slew of concessions available to investors in neighbouring Uttaranchal due to the Centre declaring it a `special category' State. A five-year tax holiday and 10-year excise relief regime has attracted hordes of prospective investors to Uttaranchal, from Tata Motors to Hero Honda, Bajaj Auto, LG and Samsung. "We cannot afford to be silent when so much capital is flowing into a neighbouring State because of concessions announced by the Centre," the officials said.

UP, incidentally, has not yet adopted the value added tax (VAT) system, which would have, in a sense, obliged it to maintain uniform floor rates in relation to other States.

But it is not only UP, but even Bihar that has recently joined the game. As of now, its focus is on sugar, where it has followed UP's example by announcing refund of excise duty, waiver of purchase tax of cane, exemption of stamp duty and registration fee on land purchase and 10 per cent incentive on fixed capital.

More Stories on : States | Industrial Policy | Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Monsoon pauses, could revive to `shut out' briefly

States shower incentives for attracting investments

M&M clocks 110 pc growth in Q4 net

UB Group not to outbid competitor for Taittinger

Snuffing out smoking with pictorial health warnings

Fundamentals favour upside for metals

UTI AMC to launch $200-300-m overseas infrastructure fund

FMC tells bourses to set up investor protection fund