NEW INDUSTRIAL POLICY FOR JAMMU & KASHMIR - PACKAGE OF INCENTIVES NOTIFIED

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The government has notified a comprehensive package of incentives for the State of Jammu & Kashmir as part of a New Industrial Policy for the State. The notification dated 14^th June, 2002 issued by the Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, states that "keeping in view the fact that the state of Jammu & Kashmir lags behind in industrial development, a need has been felt for structured interventionist strategies to accelerate industrial development of the state and boost investor confidence. The new initiatives would provide the required incentives as well as an enabling environment for industrial development, improve availability of capital and increase market access to provide a fillip to the private investment in the state".

The package provides major fiscal Incentives to new Industrial Units and substantial expansion of existing units whereby new industrial units and existing industrial units under expansion set up in growth centre, industrial infrastructure development centres and other locations like industrial estates, parks, Export Processing Zones (EPZs), commercial estates, etc., are entitled to 100% excise duty exemption for a period of 10 years from the date of commencement of commercial production. All New industries in the notified location would be eligible for capital investment subsidy @ 15% of their investment in plant & machinery, subject to a ceiling of Rs. 30 lakh. The existing units will be entitled to this subsidy on substantial expansion, as defined. An interest subsidy of 3% on the working capital loan would be provided to all new industrial units in notified locations for a period of 10 years after commencement of commercial production. This benefit would also be extended to existing units in notified locations on expansion, as defined, as well as to notified Thrust Industries. The insurance premium to the extent of hundred percent on capital investment for a period of 10 years would be extended by the Central Government to all new units and to existing units on substantial expansion. Further, the present income tax exemption would continue as per the existing dispensation applicable to Jammu & Kashmir. The State Government may consider extending Sales Tax exemption to the units which avail of concessions under this Policy.

The financing pattern for development of integrated industrial infrastructure will change from 2 : 3 between Government of India (GOI) and Small Industries Development Bank of India (SIDBI) to 4 : 1 and the GOI funds would be in the nature of a grant, so as to provide the required infrastructural support.

Other incentives include assistance for Design-cum-Resource Centre for Footwear & Leather Industry, Leather goods and shoes as well as items of fur are being manufactured in the Small-Scale Industry/Tiny sector traditionally in Srinagar and Jammu. The Central Government would make an initial contribution of Rs. 1 crore as grant for setting up a Design/Resource Centre and National Leather Development Programme (NLDP) would provide assistance for machinery, training and salaries of professionals. Under the National Leather Development Programme (NLDP), exclusive assistance would be provided to market finished leather products of the artisans of the state in the form of buyers-seller meets and exhibitions.

Ministry of Textiles will extend their package of assistance as applicable to the North Eastern Region, to the state of Jammu & Kashmir on the same terms and conditions.

According to the notification, Jammu & Kashmir Development Finance Corporation (JKDFC) will be set up by the Central Government with a one time provision of Rs. 50 crore on the lines of North East Development Financial Corporation. This Corporation will provide term loan, working capital and other infrastructural support in the state of Jammu & Kashmir in the lines of NEDFI in the North East. JKDFC would be designated as the Nodal Agency for routing the subsidies/incentives under various schemes notified under this Policy.

The above concessions/subsidies will be available to all new units/existing industrial units on their substantial expansion, in the notified industrial areas by the Central Government and thrust industries irrespective of location.

The thrust industries notified under the new policy are:

sl. No	Activity
1	Food Processing & Agro-based industries (excluding conventional grinding/extraction units) such as Sauces, Ketchup, etc. Fruit Juices & fruit pulp c) Jams, Jellies, vegetable juices, puree, pickles etc. d) Fruit Waxing, packaging, grading
2	Leather Processing & Leather goods
3	Tissue culture
4	Silk Reeling Yarn and Yarn spun from silk waste Woven fabrics of silk or silk waste
5	Wool & woven fabrics of wool
6	Woven fabrics of cotton
7	Floriculture
8	Medicinal herbs- processing
9	Green houses only Ladakh
10	Computer hardware/Electronics (integrated circuits & micro assemblies)
11	Sports goods and articles and equipment for general physical exercise
12	Auto Ancillaries
13	Eco-tourism Hotels, Houseboats, Resorts, adventure & leisure sports, amusement parks, cable car. Guest houses only Ladakh
14	Handicrafts
15	Precision engineering
16	Exploration of minerals

According to the notification, the ineligible industries under the policy are: Cigarettes/cigars of tobacco, manufactured tobacco and substitutes, distillation/brewing of alcoholic drinks and manufacture of branded soft drinks and its concentrates i.e., these industries are excluded for the purpose of concessions under this policy.