Government Identifies
Sectors to Grant Infra Tag
The Central Government has released a
harmonised list of sectors that should get
infrastructure status. This list is expected to help
the government in policy making as there has been lot of
ambiguity in definition of what constitutes infrastructure.
The Cabinet Committee of Infrastructure (CCI), on 1 March
2012, identified five main sectors and 29 infra subsectors
that should get infrastructure status. The five sectors Include
Transport, Energy, Water Sanitation, Communication and
Social and Commercial infrastructure. The infra tag allows
certain benefits including access to easier borrowings
overseas, ability to raise funds through tax-free bonds, tax
concessions, and access to dedicated lenders such as IIFCL,
and the debt funds. The new master list will serve as a
guideline for all the agencies responsible for supporting
infrastructure in various ways. However, each agency will be
free to draw its own list of sub-sectors out of the master list,
which it intends to support, with adequate justification for
inclusion or exclusion.
Any fresh sector or a subsector will be included in the
master list if it has six characteristics namely natural
monopoly, high sunk costs and asset specificity, nontradability
of output, non-rivalness in consumption,
possibility of price exclusion, and presence of externalities.
A special institutional mechanism will decide on the
inclusion and exclusion of subsectors after an "appropriate
period" of time.
Presently there are more than 14 definitions of infrastructure
leading to confusion and different interpretations by various
agencies for providing concessions. Reserve Bank of India alone has three definitions of infrastructure for lending, ECB and NBFC purposes.
This apart, the Ministry of Power is likely to move a proposal
to levy 19 per cent duty on imported electricity equipment
for large projects to the Cabinet.
Earlier, the ministry had withdrawn a proposal in this
regard. The proposal is aimed at safeguarding the
interests of the domestic power equipment makers like
BHEL and L&T. Presently, equipment for projects with less
than 1,000 MW generation capacity attract five per cent
import duty while the rest enjoy duty-free import of
equipment. Power gear manufacturers have been
demanding the duty as they are facing stiff competition
from the Chinese companies.
On a state level, the Maharashtra Government has unveiled
a New Textile Policy that aims to attract an investment of
`40,000 crore by 2017 in the key sector.
The policy aims to lay special emphasis on setting up
processing units in the cotton producing sectors, expansion
of the textile industry and growth of employment. The main
highlight of the policy is that cooperative spinning mills in
Vidharba, Marathwada and North Maharashtra will be given
equity support in the ratio of own share capital (5):
Government share capital (45): loan (50). A 10 per cent
capital subsidy scheme will be started for new textile
projects in Vidarbha, Marathwada and North Maharashtra.
Interest subsidy on long-term loan linked to centrally
sponsored Technology Upgradation Fund Scheme will be
started for new projects. Modernisation or expansion of
existing textile units will be undertaken.
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