RULES REGARDING GRANT OF INCENTIVES,
INDUSTRIAL UNITS
IN HIMACHAL PRADESH, 1999.
1. SHORT TITLE AND COMMENCEMENT :
These rules shall be called “Rules Regarding Grant of Incentives, Concessions and Facilities to Industrial Units in Himachal Pradesh, 1999” and shall come into force w.e.f. the first day of April, 1999, hereinafter referred to as the appointed day.
2. OBJECTIVES :
The objectives of the incentives, concessions and facilities scheme, 1999 are :-
i) To achieve the objectives as announced by the Government in the Industrial Policy Guidelines, 1999
ii) To spell out the extent to which the State Government proposes to provide benefits, incentives, concessions and facilities to existing industrial units and units to be set up in the State.
3. DEFINITIONS :
Under these rules unless the context otherwise requires :-
(a) “Commencement of commercial production” means the date on which the new industrial unit actually commences commercial production as certified by the Director of Industries/General Manager, District Industries Centre/ Member Secretary, Single Window Agency.
(b) “Electricity duty” means the electricity duty levied by the State Government from time to time.
(c) “Existing Industrial unit” means an industrial unit which has commenced commercial production before the appointed day.
(d) “Expansion/diversification” means additional fixed capital investment by a unit of at least 25% of its existing fixed capital investment for the production of any additional item(s), or increase in production of existing product(s) by at least 25% of the installed/licensed capacity.
(e) “100% Export Oriented Unit” means such unit(s) as defined by the Government of India from time to time.
(f) “Feasibility Report” means a report on the economic and technical feasibility of an industrial project prepared by a consultant or an agency approved/recognised by the Director of Industries/the Financial Institution financing the project.
(g) “Financial institution” means all scheduled commercial banks; Himachal Pradesh Financial Corporation (HPFC); Himachal Pradesh State Industrial Development Corporation (HPSIDC); I.F.C.I; I.C.I.C.I; I.D.B.I; S.I.D.B.I; NABARD;Co-operative Bank(s) in the State of H.P; State KVIB; KVIC or any other institution declared to be a “financial institution” by the Government of India under the relevant statute. It will also include corporation(s)/institution(s) set up by the State/Centre Government specifically to assist and extend loan assistance to specific categories of entrepreneurs such as women, SCs/STs, ex-servicemen, physically handicapped, backward classes.
(h) “Fixed Capital Investment” (FCI) means actual investment made in land, building, plant and machinery by an industrial unit and includes additional fixed capital investment made by a unit undergoing expansion or diversification.
(i) “Generating set” means a moveable captive power plant installed by an industrial unit(s).
(j) “Government” means the Government of Himachal Pradesh.
(k) “Industrial Area” means an area developed/earmarked by the government for the establishment of industrial units including any developed plot(s) of land.
(l) “Industrial Estate” means an area comprising sheds constructed by the Government for allotment to entrepreneurs for setting up of industrial units.
(m) “New Industrial Unit” means industrial unit located within the State of Himachal Pradesh, which commences commercial production on or after the appointed day.
(n) “Non Resident Indian”(NRI) shall have the same meaning as defined by Government of India from time to time.
(o) “Power Tariff” means rate of electricity per unit and shall not include electricity duty and any other charge/surcharge/peak load exemption charge/winter charge/ fuel adjustment charge etc. levied by the competent authority.
(p) “Priority Sector” means the parameters as listed in Annexure-I to these Rules.
(q) “SSSBE”, “Tiny”, “Small”, “Ancillary”, “Medium and Large” industrial units shall have the same meaning as defined by the Government of India from time to time.
(r) “Village Industry” means an industrial unit set up in rural area with the assistance of H.P. Khadi & Village Industry Board/KVIC.
4. ELIGIBILITY :
4.1 All existing and new industrial units unless otherwise explicitly provided in these rules and subject to fulfilment of such requirements as may be specified by the Directorate of Industries from time to time.
Provided that the industrial units as defined in rule 4.1 above, located in industrially developing areas and industrially backward areas shall be eligible for incentives and concessions only if it employs atleast sixty five percent and eighty percent of its total manpower employment from amongst the bonafide Himachalis respectively. However, in the self -employed ventures where the owner is running the unit without employing any manpower, employment condition shall not be applicable.
Provided further that the unit shall be eligible for grant of incentives and concessions only if it is registered under the registration scheme of Government of India in case of Village Industry, tiny, SSSBE, Small and Ancillary unit and acknowledged/registered by the Director of Industries in case of unit in medium and large scale sector.
4.2 The incentives under these rules are provided under the discretionary powers of the State Government. They do not create any claim against the Himachal Pradesh Government enforceable in any court of law. The State Government in its wisdom may decide to amend, alter, delete or revise any or all of the incentives notified under these rules and no claim on account of such a decision will be entertained.
5. CATEGORISATION OF THE STATE :
The entire State is industrially backward except some development on the periphery of the State. The State has been classified basically into two categories namely “Industrially developing areas” and “Industrially backward areas”. The development blocks of Paonta Sahib and Nahan in district Sirmour and Nalagarh, Dharampur & Solan in district Solan, excluding backward panchayats as notified by the Government of Himachal Pradesh from time to time would fall in the category of “industrially developing areas.” The rest of the State including backward panchayats in the industrially developing areas referred to above will be --in the category of “industrially backward areas”. Tribal areas of the State, as notified from time to time have been treated as tax free industrial zones.
6. ALLOTMENT OF LAND IN INDUSTRIAL AREAS :
6.1 Land/shed in industrial areas/estates developed/ acquired and transferred to the Department of Industries shall be allotted by the Department of Industries on lease hold/rental basis for the establishment of industrial unit(s) at subsidised premium/rent in industrially backward areas and reasonable premium/rent in industrially developing areas, to be fixed by a committee consisting of Secretary Industries to the Government of H.P., Director of Industries & M.D.,HPSIDC. Adequate land appropriately located may be set apart for development of social infrastructure and public utilities such as banks, post offices, educational institutions, medical institutions, recreational facilities, shops etc on commercial basis. For the purpose of industrial housing for workers, land can be provided at concessional rate. A separate set of guidelines shall be issued by the Government for allotment of land for these purposes. Land in industrial areas shall be allotted on lease hold basis by the Director of Industries, or any other officer authorised by him/her, for a period of 95 years subject to a maximum area of 10,000 sq.meters and in case of area exceeding 10,000 sq.meters, the same shall be allotted with the prior approval of the Secretary (Industries) to the government of Himachal Pradesh. 30% of the premium of land shall be payable at the time of allotment and balance in 5 equal annual instalments. The interest chargeable on delayed payment would be 18% or as fixed by the Government from time to time. However, if any party intends to make the entire payment in lump sum it may be accepted by commuting the instalments but the terms and conditions of the allotment shall remain the same.
6.2 The application for allotment of plot(s)/shed(s) for industrial purposes shall be made to the concerned General Manager, District Industries Centre/member Secretary, Single Window Agency on a prescribed form alongwith earnest money in the shape of a bank draft. The earnest money shall be equivalent to 10% of the premium of land in the case of plot and Rs.10,000 in case of built up shed, which shall be refundable within three months in the event of non allotment of plot/shed.
6.3 The land/shed for industrial purposes shall be allotted by a committee constituted for the purpose on first come first serve basis unless the committee for reasons to be recorded in writing decides otherwise. However, land for units in priority sector may be allotted on out of turn basis. The plot/shed will be provisionally allotted for a period of two years and possession handed over to the applicant after entering into an agreement to lease out/rent out. The allottee shall take steps to set up the unit within the stipulated period of 2 years before a regular lease deed/rent deed is entered into between the Department and the allottee.
6.4 In case an allottee fails to take effective steps for the setting up of the unit within the stipulated period, the provisional allotment shall be cancelled and the possession of the plot/shed shall be resumed. The earnest money alongwith premium /rent paid by the allottee shall be forfeited. The Director of Industries may, however, if satisfied extend the period of the provisional allotment on the merits of each case.
6.5 Any plot resumed in industrial areas of Paonta Sahib, Kala Amb, Chambaghat, Baddi and Barotiwala shall be re-allotted through open auction/inviting bids from general public for industrial purposes.
7. INCENTIVES & CONCESSIONS :
The Incentives & Concessions to the industrial units subject to their eligibility are as under:-
7.1 Sales Tax Concessions :
7.1.1* Village Industries/Tiny units: New Village industries with fixed capital investment upto Rs.10 lakhs and financed wholly by HPKVIB/KVIC shall be exempted from payment of sales tax for a period of 8 years in industrially backward areas and in priority sector, and for a period of 5 years for units in industrially developing areas. In respect of other new village industries and tiny units, sales tax shall be leviable at a concessional rate of 25% of the applicable rate on the sale of products upto Rs.60.00 lacs per annum for a period of 8 years in industrially backward areas & in priority sector; and up to sales turn over of Rs. 45 lacs per annum for a period of 5 years in industrially developing areas. This concession will not be admissible to the produce of breweries/distilleries, non fruit/vegetable based wineries and bottling plants(both for Country Liquor and Indian Made Foreign Liquor).
7.1.2 Units in SSI/Medium and Large Sector. In case of units in SSI/medium and large sectors,deferment of General Sales Tax for a period of 8 years on the goods other than produce of breweries, distilleries, non-fruit/vegetable based wineries and bottling plants (both for Country Liquor and Indian Made Foreign Liquor) manufactured by the new industrial units set up in the industrially backward areas and in priority sector; and for a period of 5 years for units in industrially developing areas subject to furnishing of security/bank guarantee to the satisfaction of the Excise & Taxation Department of Government of Himachal Pradesh. The tax deferment during Ist 8 years or 5 years as the case may be shall become due for payment after a period of 5 years from its collection. This means that the tax collected in the Ist year shall be payable in the 6th year, second year in the 7th year and so on.
7.1.3 The eligible existing units shall have an option either to opt for the General Sales Tax Concessions as provided in paras 7.1.1 and 7.1.2 above for the unexpired period and subject to their continuing eligibility under the previously applicable rules or to continue to avail these concessions as per those rules. Such an option shall have to be exercised by the 31st July, 1999 failing which they shall be covered by the previously applicable rules.
7.1.4* The GST on the raw material, processing and packaging material except timber,shale and limestone used by the existing and new industrial unit(s) for captive manufacturing within the State shall be leviable at a concessional rate of 1% upto 31-03-2009.
7.1.5* Central Sales tax at a concessional rate of 1% shall be leviable on the goods manufactured by new and existing industrial units except produce of breweries, distilleries, non-fruit/vegetable wineries and bottling plant (both for country liquor and Indian Made Foreign Liquor) upto 31-03-2009.
7.1.6* Period of these concessions in case of new industrial unit(s) shall commence from the date of commencement of commercial production or from the date of notification issued by the Department of Excise & Taxation in this regard, whichever is later. In case of existing unit(s), these concessions would be available from the appointed day or from the date of notification, whichever is later.
7.2 Power Concessions :
7.2.1 New industrial unit(s) in priority sector shall be exempted from payment of electricity duty for a period of 8 years in the industrially backward areas and for 5 years in industrially developing areas.Period of this concession will commence from the date of commencement of commerical production or from the date of notification of Department of MPP and Power, whichever is later.The existing unit(s) availing this incentive shall continue to avail the same under the previous rules for the unexpired period of its/their eligibility.
7.2.2 The existing eligible units availing power tariff freeze subject to their continuing eligibility under the previously applicable rules shall continue to avail the concession as per those rules.
7.2.3 No electricity duty will be charged from any industrial unit, new or existing, on the power generated from its captive power generation set(s)/hydel plant(s).
7.2.4 The industrial units employing atleast 50 workers may be permitted on case to case basis to build residential complexes for industrial workers within the campus. The rate of power tariff to such residential complexes both new and existing shall be as applicable to domestic consumers.
7.3 Interest Subsidy to Tiny & Small Scale Units in Priority Sector located in Industrially Backward areas :
7.3.1 Subsidy in the rate of interest on term loan taken by tiny and SSI units from financial institution(s) shall be given @ 4% subject to a ceiling of Rs.2.00 lac per unit per year for priority sector units set up in industrially backward areas for a period of 6 years provided that the unit pays a minimum of 8% interest after availing interest subsidy. In case rate of interest after subsidy falls below 8%, the rate of subsidy shall be reduced accordingly. This concession shall also be admissible on term loan taken from financial institution for expansion/ deversification. The subsidy shall be disbursed through the concerned financial institution. This subsidy shall not be admissible on defaulted/rescheduled installment(s) and the period of default shall be counted for determining the period of eligibility.
7.3.2 The existing unit(s), availing this incentive irrespective of their status, shall have an option either to opt for this concession under these rules for the unexpired period and subject to their continuing eligibility under the previously applicable rules or to continue to avail this concession as per those rules. Such an option shall have to be exercised by 31st July, 1999 failing which they shall be covered by the previously applicable rules.
7.4 Capital Investment Subsidy :
Tiny units in priority sector and coming into commercial production after the appointed date in industrially backward areas shall be given a capital investment subsidy @ 10% of fixed capital investment subject to a ceiling of Rs.2.5 lacs per unit. This subsidy will be admissible on the creation of new assets only. The sanction/ disbursement shall be governed by the erstwhile C.I.S. Manual.
7.5 Price Preference :
The products of tiny/SSI units manufactured in H.P. may be given a price preference of upto 15% in the process of finalisation of rate contract(s) in respect of purchases affected by the Government Departments, Semi-Government Organisations, Corporations and Boards. For large and medium industries, the price preference may be upto 3%.
7.6 Subsidy on the cost of preparation of feasibility report :
New industrial unit(s) in tiny and small scale sector will be eligible for subsidy on the cost of preparation of feasibility report @ 50% of its cost subject to a ceiling of Rs.10,000/- in case of tiny unit(s) and Rs.20,000/- for SSI unit(s).
7.7 Facility for quality, productivity, technical upgradation & Pollution control devices :
Government may provide common effluent treatment plant(s)/ pollution control devices and common testing facilities in Industrial Areas/Estates/Growth Centres or in a cluster of industries as a part of infrastructure.
8.* SPECIAL PACKAGE OF INCENTIVE TO FRUIT, VEGETABLE AND MAIZE BASED UNITS CONSUMING ATLEAST 60% OF THEIR TOTAL CONSUMPTION FROM LOCAL PRODUCE PER ANNUM AND LOCATED IN INDUSTRIALLY BACKWARD AREAS (EXCEPT PRODUCE OF BREWERIES, DISTILLERIES, NON-FRUIT/ VEGETABLE WINERIES AND BOTTLING PLANT BOTH FOR COUNTRY LIQUOR AND INDIAN MADE FOREIGN LIQUOR)
*Notwithstanding anything contained in the preceding paras, the fruit, vegetable and maize based units consuming atleast 60% of their total consumption from local produce per annum and located in industrially backward areas (except produce of breweries, distilleries, non-fruit/ vegetable wineries and bottling plant both for country liquor and Indian Made foreign liquor), shall be eligible for the following incentives.
8.1 Land/shed shall be allotted on out of turn basis at a nominal price /rent to be determined by the Government from time to time. While considering allotment, such unit(s) shall get precedence even over units in priority sector.
8.2.* GST exemption for a period of 10 years will be admissible to new industrial units.
8.3.* The GST on the raw material, processing and packaging material except timber, shale and limestone used by the existing and new industrial unit(s) for captive manufacturing within the State shall be leviable at a concessional rate of 1% upto 31-03-2009.
8.4.* Central Sales Tax at a concessional rate of 1% shall be leviable on the goods manufactured by new & existing industrial units upto 31-03-2009.
8.5 Such new industrial unit(s) shall be exempted from the payment of electricity duty for a period of 10 years. No electricity duty shall be charged on the power generated from D.G.set/hydel plant.
8.6 Such new industrial unit(s) shall be exempted from the payment of State excise duty for a period of 7 years.
8.7 Period of these concessions as provided in Rule 8.2 to 8.6 above will be available to new industrial unit(s) from the date of commencement of commercial production or from the date of notification issued in this regard, whichever is later. In case of existing unit(s), these concessions, as eligible, would be available from the appointed day or the date of notification, whichever is later.
8.8 Such new industrial unit(s) shall be eligible for a subsidy of 10% in the rate of interest on term loan for a period of 6 years subject to a ceiling of Rs.10.00 lacs p.a., provided that the unit pays a minimum of 6% interest after availing the interest subsidy. In case the rate of interest after a subsidy of 10% falls below 6%, the rate of subsidy shall be reduced accordingly. This subsidy shall not be admissible on defaulted/rescheduled installment(s) and the period of default shall be counted for determining the period of eligibility.
8.9 Such new industrial unit(s) will be entitled to an investment subsidy @ 25% on cost of plant and machinery installed subject to a ceiling of Rs. 25.00 lacs. The sanction/disbursement shall be governed by erstwhile C.I.S. Manual.
8.10 The incentives of price preference and subsidy on the cost of preparation of feasibility report as provided under rule 7.5 and 7.6 shall also be available to such unit(s).
8.11 The existing units under this category, unless specifically provided otherwise, shall continue to be governed by the previously applicable rules.
9. INCENTIVES AVAILABLE TO UNITS IN TAX FREE ZONE :
Any new industrial unit(s) except breweries, distilleries, non-fruit/vegetable based wineries and bottling plants (both for Country Liquor and Indian Made Foreign Liquor) in the tribal areas of the State, as notified from time to time, shall be exempted from payment of any State taxes and duties (excluding levies in the shape of cess, fees, royalties etc.) for a period of 10 years from the date of commencement of commercial production or the date of notification by the concerned department(s), whichever is later. As regards other incentives, unit(s) in these areas shall be treated at par with the unit(s) in industrially backward areas.
Note:- The quantum & duration of package of incentives, concessions & facilities to various categories of units are given in Annexure-II to V to these Rules.
10. SCHEME FOR SICK UNITS :
10.1 The Director of Industries, H.P. may carry out or get carried out by any suitable consultancy organisation(s) diagnostic and rehabilitation studies of the identified sick unit(s), with a view to chalking out a rehabilitation programme for such unit(s) on its/their request, provided that expenditure on such studies will be restricted up to a maximum of Rs.5000/- per unit.
10.2 The Department of Industries will provide an interest rebate of 4% on any additional loan involved in the revival proposal to be administered through financial institution(s) during the nursing period as specified in the rehabilitation plan. This reimbursement will be made to the financial institution and subject to a ceiling of Rs. 1 lac spread over a period of three years on a declaration that no penal interest has been charged from the unit in question during the period for which the claims are made.
10.3 The units selected for rehabilitation would be taken on parallel rate contract under the State Purchase Programme, without participation in tenders, for a period of three years, on the recommendation of the Director of Industries for item(s) that they manufacture, provided that there is a rate contract for such item(s).
10.4 The margin money scheme for sick units, wherein margin money of up to Rs.50,000 is being provided to such sick unit(s) would be available to tiny/small scale unit(s).
11. PROJECT SPECIFIC SPECIAL PACKAGE :
11.1 Notwithstanding anything contained hereinbefore, the Government may grant project specific special package to any new medium and large industrial unit proposed to be set up in the State which has potential for substantial employment gneration, both direct and indirect, ancillarisation etc. on case to case basis, in the public interest.
12. POWER TO AMEND AND/OR RELAX/REPEAL ANY OR ALL PROVISIONS OF THE RULES :
12.1 Notwithstanding anything contained in any of the provisions of these Rules, the State Government may at any time.
i) make any amendment to these Rules, or repeal them;
ii) make any relaxation in applying the provisions of these Rules on merits of each case, as the State Government may consider necessary and appropriate;
iii) impose any condition in addition to the provisions of these Rules or restrict the incentives on a case to case basis, as the State Government may consider necessary and appropriate.
12.2 In case of any dispute arising out of interpretation of these Rules, the matter will be referred to the Secretary (Industries) to the Government of Himachal Pradesh, whose decision shall be final and binding on all. In any special case(s), the Government may set up a committee and refer any particular dispute to it for final decision.
13. REPEAL AND SAVINGS :
Rules Regarding Grant of Incentives, Concessions and Facilities to Industrial Units in Himachal Pradesh, 1991, 1992 and 1996 notified vide notifications No. 9-4/73-SI(Rules)-4 dated 27-3-1991,31-7-1992 and notification No. Udyog (Chh)6-96/81-IV dated 22-8-1996 and all other incentive rules notified earlier as amended from time to time and orders, direction issued thereunder shall upon the commencement of these rules, save as otherwise expressly provided in these rules, stand repealed/revised.
*Provided that such repeal shall not affect the operation of the incentive rules in respect of the claims, matters and issues pertaining to the period prior to 1.4.99 and the same shall be governed by the rules applicable at that time. Provided further that Empowered Committee as constituted under previous rules will continue to function in respect of matters to be settled under the previous rules in respect of units coming into production upto 31-03-1999.