Two issues concerning industrial incentives to industrial entrepreneurs in the state are under discussion. One is the continuation of incentive package almost as regular feature of industrial policy, and the second is extension of the time line of the package from five years to ten years. The Special Package Scheme for the industrialists of Jammu and Kashmir completed five years in June 2012 after which it remained in limbo. Until now, the Union Ministry of Industries and Commerce have taken no decision on its extension. Ceasing the incentives has adverse effect on the industrial health of the State. In particular, as industries provide employment to a large number of people, their livelihoods become perilous.
A closer study of the case unveils some of its dimensions. The Industries Department had broached the matter with the Union Ministry of Industries and Commerce knowing that the time limit of the package would expire in June this year. Even the Chief Minister Omar Abdullah had personally written an official letter on June 10, 2011 to Prime Minister on the issue. Despite prolonged interaction with the Union Ministry officials, the basic objective of obtaining agreement to the extension of the package hasn’t happened. Evidently, there has been some serious bottleneck somewhere, which the Industries Department is loath to deal with.
Secondly, we learn that the Union Ministry of Commerce and Industry conducted Impact Evaluation Study for Special Package Scheme extended to industrialists in Jammu and Kashmir. A team of the Department of Industrial Policy and Promotion (Special Package Section) visited the state and interacted with its functionaries and stakeholders in March-April 2012. The team has since submitted its report. Obviously, the functionaries of the Union Ministry formulated a policy and decision based on the report. The Department has not divulged broad features of the report whether the Ministry of Commerce and Industry is satisfied with it and that the targets envisaged stand achieved. There should be no misunderstanding on the subject that the Union Ministry of Commerce and Industry would be too happy to extend the time limit and consider offering industrial incentive package on permanent basis if it is satisfied with the performance and delivery at the receiving end. This also brings to fore the question of hurdles in the way of speedy development of industrial sector of the State. Recently, at Congress Youth Convention in Srinagar, Congress General Secretary had brought representatives of corporate houses and industrial magnates with him to the convention. The purpose was to boost industrial sector in the State. Any Government at the Centre will be too willing to extend all incentives to the State aimed at developing industries and providing incentives to private industrialists. The Department of Industries is right in demanding that special incentive package extends to those private industrialists of the State also whose establishments fall outside the area of identified industrial areas. Nobody challenges the fact that for a hilly state like Jammu and Kashmir, development of industries is of primary importance to generate economy and employment. That is the crux of offering special packages. The Special Package Scheme given by the Ministry of Commerce and Industry included Central Capital Investment Subsidy Scheme, Central Interest Subsidy Scheme and Central Comprehensive Insurance Scheme and all these schemes expired on June 14 this year.
The Central Capital Investment Subsidy Scheme had earlier started with subsidy of 15% of investment of plant and machinery subject to a ceiling of Rs 30 lakh for a period of 10 years until 14 June 2012. However, from 6th January 2011, this scheme stands enhanced to 30% of investment in plant and machinery to industrial units in Micro, Small and Medium Enterprises sector. They were supposed to commence commercial production or become operational/ functional, as the case many be, on or after 6th January, 2011 in respect of new units or additional such investment in respect of first ceiling of Rs 3 core and Rs 1.5 crore for manufacturing and service sector respectively.
In any case, development of industries is of prime importance to the economic well being of the State of Jammu and Kashmir. This is the time that stakeholders contemplate revised and pragmatic industrial policy The Union Ministry of Commerce and Industry has to take geographical, physical and other factors of the State into consideration. The rationale for special packages is true for all times. Of course, if the State offers periodical review of impact of successful industrial package, that will help in streamlining future plans and programmes of extending and diversifying incentives for industrial entrepreneurs. Incentives by parts and instalments do not serve the purpose. A long-term industrial policy with delivery commitment is the right solution.
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