Industry Promotion Policy 2004 and Action Plan Announced

With a view to achieving double digit economic growth in Madhya Pradesh for
making the state prosperous, the state cabinet has approved new Industry
Promotion Policy 2004 and Action Plan on Sunday. The Industry Promotion Policy
would be effective for five years from April 1, 2004.

The principle objectives of the new policy are to create industry-friendly

administration, to maximize employment opportunities, to tackle industrial sickness,
rationalize rates of commercial taxes and enlist participation of private sector in the
efforts of industrialization. The strategy envisaged under the new policy focuses on


• Establishment of Madhya Pradesh Trade and Investment Facilitation

Corporation.
• Enacting an Industrial Facilitation Act and to change rules of business with a
view to making single window system effective, strong and result oriented.
• Developing infrastructure for identified clusters.
• Reviving closed down sick industrial units by granting special packages.

Under the action plan prepared for implementation of the Industry Promotion Policy
following institutional arrangements would be made.

1. Constitution of Industry Advisory Council : - Under the Chief Minister an

Industry Advisory Council would be constituted for giving suggestions and advices
for expeditious industrialization of the state. The Minister for Commerce and
Industry would be the vice-chairperson of the Council, which would include Ministers
for Energy, Finance, Commercial Taxes and Housing and Environment.
Representatives of leading industrial houses of the state and Chief Secretary would
also be its members. Renowned economists, industrialists and other experts of the
country would be special invitees in the advisory council. The Principle Secretary
Commerce and Industry would be the member secretary and Principle Secretary to
Chief Minister would be member of the council.

2. Creation of Madhya Pradesh Trade and Investment Facilitation

Corporation: - In order to properly implement effective single window system and
to encourage investments, the Madhya Pradesh Trade and Investment Facilitation
Corporation would be constituted. This corporation would be created from Madhya
Pradesh Export Corporation. The Corporation would function independently as a
Secretariat for implementation of single window system.

3. Formation of empowered committees for single window clearances :- By

bringing about amendments in the rules of business and through enactment of
Industrial Facilitation Act, empowered committees would be created for granting
single window clearances to industrial and other investment projects. These
committees would also be empowered to encourage time-bound investments in
their respective areas of jurisdiction by taking appropriate decisions.

The empowered committees would be at three levels :-

• District level investment promotion empowered committee- This committee

 under the District Collector would grant clearances for projects of up to Rs. 3
crores.
• State level investment promotion empowered committee- This committee
would be formed under the Minister for Commerce and Industry and would
grant clearances and give directions for investment projects involving
investments in the range of Rs 3 crores to Rs 25 crores.
• Apex investment promotion empowered committee- This Committee would
be headed by the Chief Minister and would grant clearances to investment
projects of over Rs 25 crores. The committee would also lay down strategy
for attracting investments and give other appropriate directions.

4. For addressing the problem of financial constraints in the development of

industrial infrastructure, an Industrial Infrastructure Development Fund would be
created, for which Rs 10 crores would be provided every year for the next five
years. This amount would be used as revolving money for infrastructure
development.

5. Double system of taxation would be abolished in the industrial areas and the
industrial development centers. Public participation and autonomous committees
would be responsible for maintenance and upkeep of industrial areas and industrial
development centers. Relevant amendments would be made in Madhya Pradesh
Municipal Act 1961, Madhya Pradesh Municipal Act 1956 and Panchayat Act 1993 for
transferring powers and responsibilities pertaining to property tax, duty on transfer
of properties, sewage, building control public services etc. to these committees.

6. For competitive advantages, industries and ancillaries would be developed in

clusters keeping in view the availability of raw materials, skilled labour and market
potential. Following hubs of the clusters have been identified :-

Pharmaceutical, textile, food processing, information

Indore
technology, auto-components
Engineering, Fabrication, Biotechnology, Herbal Products,
Bhopal
Information Technology, Food Processing.
Garment, Mineral, Forest and Herbal based industries, Food
Jabalpur
Processing.
Electronics, Information Technology, Fast Moving Consumer
Gwalior
Goods and Commodities, Light Engineering, Food Processing
Rewa Refractories, Lime Stone and Forest based industries.

7. The State Government would give priority for completion of initial development
works at following industrial parks

Apparel Park, Gem and Jewelry Park, Software

Indore-Pithampur
Technology Park and Herbal Park
Bhopal Life Sciences Institute
Jabalpur-Katni Apparel Park and Stone Park
Rewa-Satna Herbal Park
Tikamgarh-Sagar-
Granite Park
Chhatarpur

Industry Promotion Policy 2004 and Action Plan Announced

 8. Special packages would be prepared for sick industrial units. Packages for
revival through acquisition and purchase of sick units would also be available.
Revival scheme for sick small industry would also be offered.

9. Pradhan Mantri Rojgar Yojana and other employment oriented schemes are
being implemented for educated unemployed youth of lower income families. For
the families with annual income of up to Rs 1.50 lakhs, Deendayal Rojgar Yojana
would be launched for providing assistance to unemployed youths for starting self-
employment ventures. This scheme would be implemented in the place of existing
scheme of providing unemployment allowance to the unemployed person. The State
Government has already created Madhya Pradesh Employment Board for
supervision of all employment and self-employment oriented schemes and
suggesting policy interventions for increasing employment.

The new policy would provide following concessions and grants to

industries commencing production after April 1, 2004 :-

1. Industrial Investment Promotion Subsidy :-

• For industries with permanent capital investment in the range of Rs one

crore to Rs 10 crores, 50 percent amount of the commercial tax and central
sales tax deposited by the unit (excluding commercial tax on the purchase of
raw material) would be given as industry investment promotion subsidy. This
subsidy would be adjusted in the tax payable for the next year. Provision for
this purpose would be made in the departmental budget. This would be
available for three years in advanced districts and for five years in backward
districts. The subsidy amount will not be more than the permanent capital
investment.
• For units making permanent capital investment of over Rs 10 crores, 75
percent amount of the deposited commercial tax and central sales tax would
be given as industry investment promotion subsidy (excluding the
commercial tax on purchase of raw material). This amount would be adjusted
in the tax payable for the next year. Separate provision in the departmental
budget would be made for this purpose.

Permanent Capital Duration of

S.No. Category of District
Investment subsidy
1. Advanced District Rs 25 Crore 3 Years
2. Backward District A Rs 20 Crore 5 Years
3. Backward District B Rs 15 Crore 7 Years
4. Backward District C Rs 10 Crore 10 Years

Subsidy amount will not be more than permanent capital investment

• For information technology industries the above subsidy would be available

only in IT Parks.

2. Exemption in Stamp Duty and Registration Charges :-

a) Industries that obtain loan for new units, expansion, diversification or

modernization would eligible for exemptions in stamp duty and registration charges
in the legal documents at following rates :-

Stamp Duty Registration Fee

Category Of Major and Major and
districts Small Industry Medium Small Industry Medium
Industry Industry
100% Re 1 per 50% of general
Backward B 50% exemption
exemption thousand rate
100% 100% Re 1 per Re 1 per
Backward C
exemption exemption thousand thousand
100% 100% Re 1 per Re 1 per
N.I.B.
exemption exemption thousand thousand

b) Stamp Duty and Registration charges would be levied on stipulated premium

rates by the industry departments for lease deeds of land and shed in industrial
areas and development centers.

c) The industry department would charge stamp duty and registration fee on the
basis of transfer fee in cases of land transfer. Blood relations
(Husband/Wife/Mother/Father/Son/Daughter/Brother/Sister Grand Daughter/Grand
Son) would not be included in the transfer category for ownership or partnership
units. In such cases no transfer fee would be charged. Appropriate amendments in
the lease deed would be make for which Rs one thousand as stamp duty and Rs one
hundred as registration fee would be charged.

d) Stamp Duty and Registration Fee would be fully exempted for the industrial units,
which have been closed down and acquired by the financial institutions and banks or
referred to BIFR or liquidator for disposal.

e) Full exemption in stamp duty and registration fee for sale and transfer of closed
down industrial units would be given, which fall in the ambit of sickness defined by
the Reserve Bank of India.

f) Stamp duty and registration charges would be not more than Rs 10 lakhs, in
those cases where the management of an industrial unit had run the unit at 50 per
cent of the capacity for three years in last five years and with a view to better
utilizing the capacity the unit is being amalgamated or merged as an on going
concern.

Industry Promotion Policy 2004 and Action Plan Announced

3. Interest Grant : - In the backward districts of A category industrial unit

would be entitled to interest grant of 3 per cent subject to a ceiling of Rs 10 lakh, in
backward districts of B category the interest grant would be at the rate of 4 percent
with an upper limit of Rs 15 lakh and in backward districts of C category 5 percent
grant with upper limit of Rs 20 lakh would be provided as interest grant for 5 to 7
years.
 4. Grant on Investment : - Investment grant at following rate would be
given to small scale industries

District Category Percentage of Grant Maximum Amount

Backward A 15 Rs 5.0 lakh
Backward B 15 Rs 10.0 lakh
Backward C 15 Rs 15.0 lakh

5. Special provisions for entrepreneurs belonging to scheduled caste and

scheduled tribes and women entrepreneurs

• For woman entrepreneurs and those belonging to scheduled caste and

scheduled tribes, interest grant would be available without any upper limit or
category of districts for five years at 5 percent rate.
• Investment grant at the rate of 15 percent of the capital investment with
ceiling of Rs 5 lakh would be given in advanced districts.
• Upper limit for investment grant in the backward districts of A, B, C category
would be Rs 6 lakh, Rs 12 lakh and Rs 17.5 lakh respectively.

6. Concessions to mega projects in allotment of land :- Industrial units

involving permanent capital investment of over Rs 25 crores excluding working
capital would be treated as mega projects. Five to 20 acres land at concessional rate
of 25 per cent of the stipulated premium rate would be made available to such
projects.

7. Concessional package for mega projects and projects of special

importance: - Mega Projects or projects of special importance with infusion of
modern technology and management could be given special financial or other
concessions by the apex investment promotion empowered committee headed by
the Chief Minister on case by case basis, keeping in view the requirements of such
projects and resources of the state government. Industrial units in food and agro
processing, milk products, herbal and forest based products would be treated as
Mega Projects for this purpose if permanent capital investment is over Rs 10 crores.

8. For import of agricultural produce as raw material from the outside the
state, the food processing industry would not be charged Mandi Tax.

9. Captive power projects to be commissioned in Madhya Pradesh would be

exempted from electricity duty.

10. With a view to encouraging food-processing industry, reimbursement of up

to Rs one lakh or 10 percent of actual expenditure made for obtaining quality
certification and research work would be allowed. Food processing industry, which is
in the small-scale category, would also be eligible for marketing grant. Efforts for
brand building of food processing industry in the small-scale sector would also be
encouraged. For this purpose reimbursement for establishing stall in national level /
state level, exhibition/ seminars or giving advertisement would be made, on the
basis of actual expenditure. In the first year Rs 75 thousand in the second Rs 50
thousand and in the third year Rs 25 thousand could be reimbursed.
 11. Agricultural produce used as raw material in the industries set up in the
food parks would be exempt from Mandi Tax.

12. The new policy contains special packages for textile, medicinal and herbal
industries and automobile component industry.

13. Special package for acquisition/purchase of close down sick industries for
reviving them has also been given. Policy package 2004 for sick industrial units of
the state has also been provided in the policy, which would be available to large and
medium industries. Revival scheme for sick small-scale industries has also been
approved.