The Hindu Business Line : New mega integrated auto policy in TN

A slew of tax incentives would also be offered to the eligible investors like refund of gross output VAT and CST without any set off for 21 years or up to 115 per cent of eligible investment

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Coimbatore March 7 In a move that is set to intensify competition among the States to attract investors in major automobile projects, the Tamil Nadu Government has come out with a new `Ultra Mega Integrated Automobile Projects Policy.'

The concessions offered under the policy would be applicable to automobile projects involving an investment of not less than Rs 4,000 crore in the same location to be made in seven years from the date of signing of MoU with the Government or any other date specified by the Government.

Automobile Project

According to GO issued on February 26 by the Industries Secretary, Mr Shaktikanta Das, since 1996, apart from Ford and Hyundai that set up their manufacturing base near Chennai, there has not been any new big automobile project in Tamil Nadu. The announcement made in the New Industrial Policy 2003 that the Government at its discretion would offer specific packages to single investment exceeding Rs 300 crore made in eligible fixed assets within a period of not more than three years has `not attracted any major auto projects'.

Engine Plant

The order said that Ultra Mega Integrated Automobile Projects would mean automobile projects, either new or expansion that would have engine plant, press shop, body shop, transmission line, assembly line, paint shop etc either on its own or in consortium/joint venture mode in the same location `with an investment of not less than Rs 4,000 crore' to be made in seven years from the date of signing of the MoU with the Government or any other date specified by the Government.

Power Supply

According to the GO, the concessions to be extended included land allotment at concessional price (the Government would decide the concession on a case-to-case basis), 100 per cent exemption from stamp duty, provision of power supply through dual feeder lines by TNEB with the cost of the feeder lines being borne by the Government/TNEB and exemption from electricity tax for ten years for both TNEB and captive power.

A slew of tax incentives would also be offered to the eligible investors like refund of gross output VAT and CST without any set off for 21 years or up to 115 per cent of eligible investment, whichever was earlier. Input tax refund would run parallel with the VAT and CST refund and these concessions would be termed as `Investment Promotion Subsidy'.

Eligible Investments

The policy would strive to provide incentives to enable the company achieve at least 100 per cent availment of incentives with reference to the limit of eligible investments made in the project. Towards this end, the sales tax/VAT on vehicles manufactured outside Tamil Nadu but sold in Tamil Nadu by a company might also be taken into account, only if that company had not received any tax concessions earlier in the State.

The policy also provided for exemption from entry tax, VAT on capital goods, works contract tax, octroi and other State levies. The GO said that wherever exemption could not be given, it would be replaced by tax refund.

The benefit in respect of capital goods and works contract tax would be limited to the investment period and the exemptions/refund would not be considered while calculating the ceiling of output VAT and CST refund. Any other concession provided already under the Super Mega Project or New Industrial Policy 2003 would continue.

More Stories on : Industrial Policy | Automobiles | Tamil Nadu

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