Punjab Govt Decides To Amend Industrial Policy To Give Investment Incentive On Intrastate Sale
In a bid to boost industrial development in the state, the Punjab Cabinet has decided to amend the Industrial and Business Development Policy 2017 to give investment incentive by way of Net SGST on intrastate sale, and has also given its nod to global tendering for the upcoming hi-tech Cycle Valley on a 100-acre industrial park in Ludhiana.
The decisions were taken at a meeting of the Cabinet, chaired by Chief Minister Captain Amarinder Singh.
The Cabinet noted that since the government could not give direct concessions to industry in matters of land acquisition etc, 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'. A series of meetings/consultations were held amongst departments of Excise & Taxation, Finance, Industries & Commerce and Investment Promotion. After deliberations, a detailed formula for different eventualities was finalized in the meeting under the chairmanship of the Finance Minister.
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.
The spokesperson said that this formula would be subject to various conditions. 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. The unit operating for a part of the year of the incentive period will get the amount on pro rata basis, with the requirement of sales being three times of FCI also applying on a pro rata basis.
With respect to the cycle valley to be developed in Dhananshu village of Ludhiana district, as per an earlier decision of the state government, 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 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, according to the official spokesperson.
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.
Pertinently, the 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. 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.
Giving details of infrastructure to be created for the industrial park, the spokesperson said that 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.