Karnataka to get new industrial policy this week

Karnataka, which is set to announce its new industrial policy for 2014-2019 this week, seeks to make it easier for industries to invest, for old companies to relocate their plants and to close down unviable units or revive them.

The State Government is revising the policy to attract investments worth ₹5 lakh crore and create 15 lakh jobs in the five-year period.

“Through the policy we have provided an equal opportunity for industrial and urban development in every district/region in the State and are creating job opportunities by classifying them into zones,” a senior official of the industries and commerce department told BusinessLine .

“For spreading investments and industrial activity across the State, we have created zones depending on the backwardness of the taluk/district and we have also identified them based on the level of industrial activity in the regions,” the official added.

The zones created are Hyderabad Karnataka region (Zone 1), Special Zone, Most Backward Zone (Zone – 2), More Backward Zone (Zone – 3), Backward Zone (Zone – 4) and Industrially Developed Zone (Zone – 5).

The policy’s major emphasis of the policy is on encouraging self-employment, creating opportunities for micro-small enterprises and providing a host of incentives to companies investing in the State.

TB Jayachandra, Law and Parliamentary Affairs Minister, had said, “The Government, through this policy, is offering an attractive package of incentives. Tax-related incentives are in the form of interest-free loans of 100 per cent of value added tax (VAT) and Central sales tax (CST) with the maximum of 100 per cent of value of fixed asset for a period of seven to 14 years depending upon investment (size) and zone.”

The Government through the policy has listed the following service enterprises which are eligible for the package of incentives and concessions – Logistics facilities supporting to industries only like container freight station operators, warehouses, cold storages and cold chains for logistic support to the food processing industry and material handling equipment industry (except for transport vehicles and goods carriers).

Material testing centres, R&D centres, technical testing and analysis servicing, maintenance and repair of equipment, packaging services, refuse disposal services, tailoring, flour mills, printing and general engineering, fabrication, motor winding, automobile servicing and repairs, electro plating, industrial paintings engaged in job work will also be included. Investments into weighbridges and healthcare facilities set up within the KIADB/KSSIDC industrial areas are also being included.

The sick unit revival policy for small, medium and large scale units, which was issued in 2002, is still in force with a few modifications. In view of changes in the unit’s classifications, financing procedures, and changes in policies, it needs to be replaced with comprehensive alternative policy.

An official said: “Efforts are being made to adopt an exit mechanism for non-viable businesses which have lead to locking of funds and capital assets locked up, while giving full protection to the interest of employees.”

“Further, in view of rapid growth of cities like Bangalore, Mysore, Dharwad, and Belgaum, which are facing a shortage of infrastructural facilities and with traffic congestion, there is an urgent need for the introduction of a relocation policy for labour-intensive industries,” the official explained.

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