The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi approved the proposal of the Department for Promotion of Industry and Internal Trade for central sector scheme for industrial development of Jammu & Kashmir.
The scheme is approved with a total outlay of Rs 28,400 crore up to 2037.
The Centre has formulated the New Industrial Development Scheme for Jammu & Kashmir (J&K IDS, 2021) as the central sector scheme for development of industries in the Union Territory of Jammu & Kashmir.
The main purpose of the scheme is to generate employment which directly leads to socio- economic development of the area.
Considering the historic development of reorganisation of Jammu & Kashmir with effect from 31 October 2019 into the Union Territory of Jammu & Kashmir under the Jammu & Kashmir Reorganisation Act 2019, the present scheme is being implemented with the vision that industry- and service-led development of the Union Territory 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 following incentives will be available under the scheme:
Capital Investment Incentive at the rate of 30 percent in Zone A and 50 percent in Zone B on investment made in plant & machinery in manufacturing or construction of building and other durable physical assets in the service sector is available. Units with an investment up to Rs 50 crore will be eligible to avail this incentive. The maximum limit of the incentive is Rs five crore and Rs 7.5 crore in Zone A& Zone B respectively.
Capital Interest subvention: At the annual rate of six percent 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 the service sector.
GST Linked Incentive of 300 percent 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 the 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.
Working capital interest incentive will be for all the existing units at the annual rate of five percent for maximum five years and the maximum limit is Rs one crore.
The scheme is made attractive for both smaller and larger units. Smaller units with an investment in plant & machinery up to Rs 50 crore will get a capital incentive up to Rs 7.5 crore and get capital interest subvention at the rate of six percent for maximum seven years.
The scheme aims to take industrial development to the block level in the Union Territory, which is the first time in any Industrial Incentive Scheme of the government of India and attempts for a more sustained and balanced industrial growth in the entire Union Territory.
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.
The scheme envisages greater role of the Union Territory in registration and implementation of the scheme while having proper checks and balances by having an independent audit agency before the claims are approved. It is not a reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the Union Territory faces.
It is anticipated that the proposed scheme is likely to attract 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 Rs28,400 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.