Jun. 17 – This week the Indian government extended its Special Package for Industrial Incentive for the state of Jammu & Kashmir. The industrial package, designed to boost manufacturing and commercial development in the country’s northernmost state, is sponsored by the Department of Industrial Policy & Promotion and is worth Rs. 296 crore.
The Special Package for Industrial Incentive will offer a capital subsidy of 15 percent for investments in plants and machinery, with a cap of Rs. 30 lakh per company. Micro, Small and Medium Enterprises (MSMEs) will be eligible for a subsidy worth 30 percent for investments in plants and machinery, with a cap of Rs. 3.0 crore for the manufacturing sector and Rs. 1.5 crore for the service sector.
The industrial package also includes a 100 percent subsidy on insurance premiums for new companies and companies expanding their infrastructure. A three percent interest subsidy will also be offered to companies with working capital loans.
The incentives will be available to industries established in Jammu & Kashmir’s Industrial Parks and Estates, as well as businesses operating within key ‘thrust industries,’ which include agriculture, textiles, engineering, and mineral exploration.
Economic activity in Jammu & Kashmir has been dominated by agricultural and allied activities, with the state exporting the majority of its harvest. The Indian government has been promoting industrial growth in the region as the country seeks to further integrate the borderland economy of Jammu & Kashmir, which is India’s only special autonomous region. The manufacturing and service sectors in the state have also been steadily growing as a result of India’s efforts to strengthen the local economy.
Despite the growth of the industrial and service sectors in Jammu & Kashmir, MSMEs came under pressure in 2012 when the Special Package of Industrial Incentive expired. The current five-year extension was put in place retroactively and takes effect from June 15, 2012, until June 14, 2017.
Industry advocates in Jammu & Kashmir have welcomed the extension.
“It was our long pending demand and [it] has finally been accepted. It will definitely help boost the industrial sector of the State,” said Zahoor Ahmad Bhat, the President of the Federation Chambers of Industries Kashmir.
Since the initiation of the Special Package of Industrial Incentive, Jammu & Kashmir has seen subsidy support reach Rs.158 crore, leading to the establishment of over 9,000 new industrial units in the state. Total investment into the region under the industrial package is currently Rs. 3183, with over 1 million new jobs created.
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