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Barring excise, sops may stay in hill states
Ruchika M. Khanna
Tribune News Service

Chandigarh, May 7
Industry set up in hill states will now have to pay central excise duty, though they can continue to enjoy income tax exemptions and capital investment subsidy. An indication to this effect was given by Union Minister of Commerce and Industry Anand Sharma here today.

“There was a sunset clause to the central excise exemptions for units based in the hill states in North India and the North East. This exemption will no longer be available after the sunset clause ended on Mach 31 this year,” Sharma said.

Under the area-based exemption scheme, investments in Himachal Pradesh, Jammu and Kashmir, Uttarakhand, Kutch area of Gujarat and all North Eastern states qualify for a 100 per cent excise duty exemption for 10 years and 100 per cent income tax waiver for the first five years and 30 per cent for the next five years. A 15 per cent capital investment subsidy (on land and building and other infrastructure) with a cap of Rs 30 lakh (for one unit) is also given to the industry set up in these states.

As a result of these incentives, the non tax-exempt states, especially Punjab and Haryana, which are land locked between the exempt states of HP, J&K and Uttarakhand, have seen a large migration of industry to these states, besides losing out on new investment. They have been demanding a level playing field and a rollback of these tax sops to hill states.

Sharma today said that the government was committed to promoting industry in traditionally backward hill states, and industrialisation there needed government support. “States like Punjab and Haryana should have no objection to extension of sops like income tax exemptions and capital investment subsidy. These exemptions will not impact industrial development or investment in Punjab and Haryana,” he claimed.

On the concerns of Punjab and Haryana towards extension of tax sops, Sharma said these states were being compensated in other ways. “We are launching a number of centrally-sponsored schemes. Both also stand to benefit with the commissioning of Delhi Mumbai Industrial Corridor and linking of Ludhiana to the Western Corridor.”