Punjab Government to amend Industrial and Business Development Policy 2017

Punjab Economy

Published on: 19-Oct-18
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In a bid to boost industrial development in Punjab, the state government has decided to amend the Industrial and Business Development Policy 2017.

Facts :

The state government going to amend the Industrial and Business Development Policy 2017 to give investment incentive by way of Net State Goods And Services Tax (SGST) on intrastate sale to promote business enterprises in the State.
Punjab state government has also given its nod to global tendering for the upcoming hi-tech Cycle Valley on a 100-acre industrial park in Ludhiana.
The Cabinet noted that since the Government could not give direct concessions to industry in matters of land acquisition, other incentives should be provided through amendment to the policy so that both the state and the industry get the best deal through measures such as global tendering.
The Cabinet observed that for effective implementation of the policy there was need to explicitly define and explain the term ‘Net SGST Incentive’.
According to the new formula, incentive amount would be calculated based on output IGST (or CGST+SGST), that would be called GST rate for formula.
Overall quantum and/or period for claim of incentives shall remain same as defined in IBDP-2017 (as amended from time to time) for the respective category.
Availing of incentives up to the overall ceiling i.e, 200% /125% /100% of FCI, as applicable, shall depend on the capacity utilization of the unit during the eligibility period.
The incentive under the present policy would only be applicable for such investment proposals where Common Application Form has been submitted by March 31, 2020.
In the case of a unit with multiple outputs having more than one GST rate, the incentive amount shall be calculated pro rata to the respective sales (value as defined in GST law) of eligible outputs.
If the amount calculated as above is less than 2.5% of the FCI in any particular year, the unit will be entitled to get such difference as the additional amount of incentive, subject to the fact that it has been able to achieve sales of three times of the FCI.
For example, if the GST incentive for a unit with FCI worth Rs 100 cr and sales of Rs 310 cr in a FY comes to Rs 1 crore in the FY, the unit shall be able to get an additional amount of Rs 1.5 cr as incentive.
With respect to the cycle valley to be developed in Dhananshu village of Ludhiana district, the Cabinet decided that the 100 acres of undeveloped land would be allotted through an objective, open, competitive and technical bidding process to a well-established company of international repute.
The selected project company would be responsible for the development of the entire industrial park in the allotted land. It would develop its own Anchor Unit in 50 acres and in the remaining 50 acres the Company would invite major national and international manufacturers as ancillary and/or vendor units.
Panchayat of Dhanansu village has handed over 300 acres of land for this purpose to the Punjab government.

Analysis :

Historically, industrial growth of Ludhiana city relies on Cycle and small scale manufacturing industry, and the idea behind the creation of the envisaged Industrial Park is to create an eco-system for hi-tech bi-cycles and engineering products, which will boost the Ludhiana cycle industry.
Hi-Tech cycle valley is first of its kind which will attract new industries not only from India but also abroad. Besides this, it will provide alternative business activities to the existing units running in the residential areas of Ludhiana city.
To further facilitate industry in Ludhiana, the state government would construct a 8.8 km road linking Hi-Tech Cycle Valley to the Chandigarh-Ludhiana highway.
This exclusive cycle valley, being setup by the Punjab State Industries Export Corporation (PSIEC), would script a new chapter in furtherance of business progress of Ludhiana and local industry as it is being setup on the vital Amritsar-Kolkata Industrial Corridor.
The main idea behind this project is to create an eco-system for hitech bi-cycle manufacturers which will give impetus for upgradation in technology thereby enabling cycle industry of Ludhiana to remain relevant and competitive in the world-wide scenario.
Apart from investment on laying infrastructure to develop cycle valley of around Rs. 300crores, the project would attract an estimated investment of Rs. 1000-1500 crores and would provide employment opportunities to thousand of youth directly and indirectly.
This cycle valley would provide developed industrial plots to the prospective investors at affordable prices equipped with modern amenities alongwith integrated support services covering banking, health, institutional, recreational, education etc.
Pertinently, the Punjab Small Industries and Export Corporation (PSIEC) has drawn an ambitious plan for implementing the project of Cycle Valley and the lay out plan of the project has already been finalised and approved by the competent plan approval committee.
The State Government has drawn up objective evaluation criteria to ensure fair and transparent selection of the big anchor unit and also to provide equal opportunity to the prospective bidders that would bind the successful bidder to comply with their commitments projected in their proposal.

Punjab Small Industries & Export Corporation limited (PSIEC) :

Punjab Small Industries & Export Corporation limited was setup in 1962 to assist small scale Industries in the State and is mainly engaged in distribution of iron and steel materials, development of infrastructure promotion of export from small scale industries and marketing of products manufactured by small scale units through a network of emporia.

The Corporation is involved in the following activities: