North East Industrial and Investment Promotion Policy (NEIIPP), 2007
With a view to give a further boost to industrialization in the North Eastern Region, the erstwhile North East Industrial Policy (NEIP), 1997 was revised and a new policy, namely North East Industrial & Investment Promotion Policy (NEIIPP) 2007, was notified w.e.f. 1.4.2007 which would remain in force upto 31.03.2017. Benefits under NEIIPP, 2007 have also been extended, for the first time, to select Service Sector units, Bio-technology units and Power Generating units (up to 10 MW), besides industries in the manufacturing Sector.
Scheme Objectives: – The objective of the scheme is to boost industrialization in North Eastern Region.
Coverage and eligibility
NEIIPP, 2007 covers the entire North East Region comprising States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim. NEIIPP, 2007 is applicable to all industrial units in manufacturing Sectors, select service sector, Biotechnology and Power Generating units (up to 10 MW) (barring the units producing tobacco and manufactured tobacco substitutes, pan masala and plastic carry bags of less than 20 microns, refineries, Calcined Petroleum Coke & Bitumen Emulsion and units engaged in peripheral activities like preservation during storage, cleaning operations, packing, re- packing, labeling or re-labeling, sorting, alteration of retail sale price etc.).
Neutrality of location:
Incentives will be available to all industrial units, new as well as existing units on their substantial expansion, located anywhere in the North Eastern Region. Consequently, the distinction between ‘thrust’ and ‘non-thrust’ industries made in NEIP, 1997 will be discontinued from 1.4.2007.
Incentives on substantial expansion will be given to units effecting ‘an increase by not less than 25% in the value of fixed capital investment in plant and machinery for the purpose of expansion of capacity/modernization and diversification’, as against an increase by 33½ % which was prescribed in NEIP, 1997.
Excise Duty Exemption:
100% Excise Duty exemption will be continued, on finished products made in the North Eastern Region, as was available under NEIP, 1997. However, in cases, where the CENVAT paid on the raw materials and intermediate products going into the production of finished products (other than the products which are otherwise exempt or subject to nil rate of duty) is higher than the excise duties payable on the finished products, ways and means to refund such overflow of CENVAT credit will be separately notified by the Ministry of Finance.
Income Tax Exemption:
100% Income Tax exemption will continue under NEIIPP, 2007 as was available under NEIP, 1997.
Capital Investment Subsidy:
Capital Investment Subsidy will be enhanced from 15% of the investment in plant and machinery to 30% and the limit for automatic approval of subsidy at this rate will be Rs.1.5 crores per unit, as against Rs.30 lakhs as was available under NEIP, 1997. Such subsidy will be applicable to units in the private sector, joint sector, cooperative sector as well as the units set up by the State Governments of the North Eastern Region. For grant of Capital Investment Subsidy higher than Rs.1.5 crore but upto a maximum of Rs.30 crores, there will be an Empowered Committee Chaired by Secretary, Department of Industrial Policy & Promotion with Secretaries of Department of Development of North Eastern Region (DONER), Expenditure, Representative of Planning Commission and Secretary of the concerned Ministries of the Government of India dealing with the subject matter of that industry as its members as also the concerned Chief Secretary/Secretary (Industry) of the North Eastern State where the claiming unit is to be located.
Proposals which are eligible for a subsidy higher than Rs.30 crores, will be placed by Department of Industrial Policy and Promotion before the Union Cabinet for its consideration and approval.
Interest Subsidy will be made available @ 3% on working capital loan under NEIIPP, 2007 as was available under NEIP, 1997.
New industrial units as well as the existing units on their substantial expansion will be eligible for reimbursement of 100% insurance premium.
The following industries will not be eligible for benefits under NEIIPP, 2007:-
(i) All goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which pertains to tobacco and manufactured tobacco substitutes.
(ii) Pan Masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).
(iii) Plastic carry bags of less than 20 microns as specified by Ministry of Environment and Forests Notification No.S.O. 705(E) dated 02.09.1999 and S.O.698 (E) dated 17.6.2003.
(iv) Goods falling under Chapter 27 of the First Schedule to the Central Excise tariff Act, 1985 (5 of 1986) produced by petroleum oil or gas refineries.
(v) Incentives for Service/other Sector Industries Incentives under NEIIPP, 2007 will be applicable to the following service sector activities/industries:-
(i) Hotels (not below Two Star category), adventure and leisure sports including ropeways ;
(ii) Medical and health services in the nature of nursing homes with a minimum capacity of 25 beds and old-age homes ;
(iii) Vocational training institutes such as institutes for hotel management, catering and food crafts, entrepreneurship development, nursing and para-medical, civil aviation related training, fashion, design and industrial training.
A number of tax concessions under the existing provisions of Section 10A and 10AA of the Income Tax Act are already available to the IT sector. However, one of the important impediments to the development of Software Technology Parks or IT related SEZs in the North Eastern Region is the non-availability of trained human resources in the North Eastern Region. Accordingly, tax benefits as is availed under Section 80 IC of the Income Tax Act would be extended to IT related training centers and IT hardware units.
Incentives for Bio-technology industry
The biotechnology industry will be eligible for benefits under NEIIPP, 2007 as applicable to other industries
Incentives for Power Generating Industries
Power Generating plants will continue to get incentives as governed by the provisions of Section 81A of the Income tax Act. In addition, power generating plants upto 10 MW based on both conventional and non-conventional sources will also be eligible for capital investment subsidy, interest subsidy and comprehensive insurance as applicable under NEIIPP, 2007.
In order to ensure genuine industrial activities in the North Eastern Region, benefits under NEIIPP, 2007 will not be admissible to goods in respect of which only peripheral activities like preservation during storage, cleaning operations, packing, re-packing, labelling or re-labelling, sorting, alteration of retail sale price etc. take place.
DIPP is the implementing agency of NEIIPP, 2007. North Eastern Development Finance Corporation Ltd. (NEDFi), Guwahati is the nodal agency for disbursal of subsidies under various subsidy schemes of NEIIPP, 2007.
Evaluation of the Scheme: – DIPP carried out an evaluation study of NEIIPP, 2007 to assess its impact through an independent agency. The Study Report was received in March, 2015 and the Study recommended as follows:
- Focus should be given to promotion of MSME Sector as they contribute more to employment generation
- Subsidies under the Policy to be limited to an investment of Rs.10 crore on Plant & Machinery
- Focus to be given to States like Nagaland, Manipur, Mizoram & Sikkim which received less benefits
- Steps should be taken by State Govts. of NER to establish Industrial Clusters
- Improvement in training of State Government officials and conduct of awareness generation activities among entrepreneurs
- Improvement in monitoring mechanism and conduct of periodic reviews
Based on the recommendation of the Study and other prevailing circumstances, some Schemes of the NEIIPP, 2007 have been revised and notified on 22.11.2016 as given in the salient features of the Policy.
Establishment of a monitoring mechanism for implementation of the NEIIPP, 2007:
In order to establish a monitoring mechanism for implementation of NEIIPP, 2007, a ‘High Level Committee’ / an ‘Advisory Committee’ under the Chairmanship of Secretary, Department of Industrial Policy and Promotion and comprising Secretaries of the Ministries/Departments of Revenue, Department of Development of North Eastern Region (DONER), Banking and Insurance, Representative of Planning Commission, CMD, NEDFi as well as major stakeholders including the industry associations of the North Eastern region would be constituted. In addition, an ‘Oversight Committee’ will be constituted under the Chairmanship of the Union Commerce and Industry Minister with Industry Ministers of NE States as its members.
Budget Availability / utilization
The budget allocation for schemes under NEIIPP, 2007 for the 12th Five year plan is Rs.700 crores, however, Rs.841.72 crore (including Rs.170 crore allocated at BE 2016-17) has already been released till 29.03.2017. Details of budget availability for the Policy during the last five years are as under: (Rs. in crore)
|Year||Plan Allocation||Plan Expenditure||Non-Plan Allocation||Non-plan expenditure|
2016-17: (Rs. in crore)
|Year||Plan Allocation||Plan Expenditure||Non-Plan Allocation||Non-plan expenditure|
Physical Progress against milestones till the end of 2015-16: – As per the information provided by the State Governments of North Eastern Region, the achievements in terms of Industrial units set up is 27644 units, Investment made is Rs. 11466.22 crores and Employment generated (in nos.) is 228224.
Benefits available under NEIIPP, 2007 are:
- Central Capital Investment Subsidy Scheme, 2007:-The Scheme provides for subsidy @ 30% of the investment in plant and machinery or additional investment in Plant and Machinery by way of substantial expansion to all new units as well as existing units which go in for substantial expansion. The scheme has been revised w.e.f. 22.11.2016 and the subsidy is now limited to Rs. 5.00 crore per industrial unit operating in manufacturing sector and Rs. 3.00 crore per industrial unit operating in services sector.
- Central Interest Subsidy Scheme:-The Scheme provides for interest subsidy @ 3% on the working capital loan availed by an eligible unit from scheduled banks or Central/State financial institutions for a maximum period of 10 years from the date of commencement of production. The scheme has been revised w.e.f. 22.11.2016 and now the interest subsidy will be available only on term loans of 5-10 years maturity taken to finance capital expenditure on setting up of industrial units or for capital expansion on substantial upgradation/ modernization. The interest subsidy will be limited to term loans up to Rs. 10.00 crore to subsidize cost of borrowing above Prime Lending Rate (PLR) to the extent of up to 3% p.a. so as to ensure that post-subsidy interest rate does not fall below the PLR of the concerned bank or financial institution.
- Central Comprehensive Insurance Scheme: – The Scheme provides for reimbursement of 100% insurance premium for a maximum period of 10 years from the date of commencement of production.
- 100% Income Tax exemption for a period of 10 years from the date of commencement of commercial production
- Excise Duty exemption on value addition basis.