Central Sector Scheme to fuel the impetus for Industrial development in J&K

In its aim to generate employment which directly leads to the socio economic development of Jammu and Kashmir, the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved the Central Sector Scheme for Industrial Development of J&K with a total outlay of Rs 28,400 crore upto the year 2037.

It is for the first time that any industrial incentive scheme is taking industrial development to the block level. This scheme, while encouraging new investment, also nurtures the existing industries in J&K by providing them working capital support at the rate of five per cent for five years.

Considering the historic development of reorganization of Jammu and Kashmir with effect from October 31, 2019 into UT of Jammu and Kashmir under the J&K Reorganisation Act, 2019, the present scheme is being implemented with the vision that industry and service led development of J&K needs to be given a fresh thrust with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones.

The government believes that this scheme will bring about radical transformation in the existing industrial ecosystem of J&K with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones, thereby enabling J&K to compete nationally with other leading industrially developed States/UTs of the country.

It is anticipated that the proposed 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.

The financial outlay of the proposed scheme is Rs.28,400 crore for the scheme period 2020-21 to 2036-37. So far, the amount disbursed under various special package schemes is Rs. 1,123.84 crore.

Under the scheme, 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 six per cent for maximum seven years. 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 a 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.

The following incentives would be available under the scheme:

<strong>Capital Investment Incentive</strong> at the rate of 30 per cent in Zone A and 50 per cent in Zone B on investment made in Plant & Machinery (in manufacturing) or construction of building 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 five crore and Rs 7.5 crore in Zone A & Zone B respectively

<strong>Capital Interest subvention </strong>at the annual rate of six per cent for maximum seven 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).

<strong>GST Linked Incentive:</strong> 300 per cent 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.

<strong>Working Capital Interest Incentive:</strong> All existing units at the annual rate of five per cent for maximum five years. Maximum limit of incentive is Rs one crore.

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