Karnataka plans to amend its industrial policy to offer extra concessions and incentives to make it attractive for the companies to invest in the State.
The amendments will be made to industrial policy 2009-14 and to industries (facilitation) act, 2002 to offer extra concessions for attracting companies.
Key amendments likely to be introduced are rate of concessions and incentives to be offered ‘over and above' stated in the policy on case-by-case basis for projects over Rs 250 crore investments and a strict deadline for clearing proposals or term it as ‘deemed cleared'.
The commerce and industries department has cleared the both the proposals and has sent it to the finance ministry for its concurrence.
Both the amendments are likely to come up during the State's Budget session, said Mr K Jothiramalingam, principal secretary commerce and industries.
Addressing the CII meet on ‘Karnataka competitiveness – Has time come for an image makeover?', Mr Jothiramalingam said, “In the wake of many State governments offering additional incentives to attract companies, Karnataka felt it should not lag behind.”
“To address the key issue of concessions and incentives, a cabinet sub-committee headed by the chief minister will be headed to determine the quantum of incentives to be offered to the company on case-by-case basis,” he added.
Concessions and incentives are with regard to VAT, stamp duty and registration of lands.
Mr Jothiramalingam quoted the recent example of additional incentives offered to Honda Motors.
Recently Honda Motors was offered additional incentives like treating 40 per cent of value added tax (VAT) payable by the company as interest-free loan for up to 10 years.
The company is expected to start repaying the loan from the 11{+t}{+h} year and the cabinet has also cleared 95 per cent reimbursement of CST for a period of five years. In addition the State government has offered to wave off 100 per cent of land registration cost as well.
Facilitation Act
The State government which is also concerned over the delay in implementing projects cleared during 2010 Global Investors Meet is now planning to tweak the Karnataka Industries (facilitation) Act, 2002 to bring in deadline clause for speedy clearance and implementation.
Mr Jothiramalingam said proposals once cleared by single window at district level committee (deputy commissioner); State level (minister concerned) committee and State high level committee (chief minister) was getting stuck at different departments.
“In order to streamline the clearances at different departments, a strict time-frame or deadline is being set otherwise the proposals will be ‘deemed cleared' and the concerned officer will be held responsible,” he added.
The department is also amending quantum of investment to come up before the district level single window committee to Rs 15 crore (from existing Rs 3 crore), State level committee to Rs 250 crore (between Rs 3 crore to Rs 50 crore) and State high level committee to over Rs 250 crore (Rs 50 crore).