No new industrial policy for Northeast yet

Guwahati: Industry in the Northeast that had picked up momentum may slow down as the North East Industrial Policy, which is expiring in a few days, has still not been notified.

The fears have been voiced by a parliamentary committee that stated that further delay in notification of the new industrial development scheme for the northeastern region may slow down the momentum gained in the industrialisation of the region as new industrial units are not eligible to avail benefits under the erstwhile schemes.

The North East Industrial Development Scheme, 2017 was notified on 12th December 2018 and came into effect from 1st April 2017 for a period of five years i.e. till 31st March 2022. Under the scheme, industrial units are provided benefits namely, Central Capital Investment Incentive for Access to Credit (CCIIAC), Central Interest Incentive (CII), Central Comprehensive Insurance Incentive (CCII), Income Tax (IT) Reimbursement, Goods and Services Tax (GST) Reimbursement, Employment Incentive (EI), and Transport Incentive (TI).

The Department-Related Parliamentary Standing Committee on Commerce in its 180th report placed in the Parliament on March 24 has recommended to the commerce department to formulate and notify a new industrial development scheme without further delay.

In response to the Committee’s query, the Department informed that a series of meetings have been held with State governments and other stakeholders under the chairmanship of Minister of State (Commerce and Industry), Secretary, DPIIT and Secretary, DoNER to formulate a new industrial policy for the region.

The Department further informed that the evaluation of the North East Industrial Development Scheme (NEIDS), 2017 by the Development Monitoring and Evaluation Office (DMEO), NITI Aayog is ongoing and the final report is awaited. Based on the results of the evaluation study and consultation with all stakeholders, a considered decision will be taken.

The Committee was informed that 858 industrial units have been registered for availing benefits under the scheme and 77 cases are under consideration.

Speaking at the third North East Dialogue- an interactive meet with North East Members of Parliament on December 15 last year in New Delhi, Union Minister of Law and Justice Kiren Rijiju, also the chairman of NE MPs Forum, said he understands the growing need for new and better policy and how it can impact the growth and development of the region. He assured of full commitment and support to the NE MPs Forum to push for a better policy and other development agenda for the Northeast.

A number of representations have been made by FINER on the need for a new industrial policy for the Northeast but it seems that it has not made an impact.

The result is that the share of investment in the NE under the North East Industrial and Investment Promotion Policy( NEIIPP) 2007, which was 8.3 percent in 2017, has slipped to 0.13 percent in 2021. The LEADS Report 2022 has placed the majority of the North Eastern States in the category of the lowest performers.

As regards the increase in allocation at Budget Estimates 2023-24, the Department informed that 858 industrial units have been granted registration under the Scheme. As a result of the increase in registration, the number of claims filed by eligible industrial units is expected to shoot up during 2023-24. Further, apart from fresh Capital Investment Incentive for access to credit (CCIIAC) claims, claims by the industrial units under other components are also anticipated. In view of these anticipated increases in the disbursement of claims, the enhanced allocation has been made in budget estimates for 2023-24.

The Committee notes that the budgetary requirement for clearing the 1,100 claims of subsidy expected to be received during 2023-24 is Rs 600.00 crore. The Committee also notes that an allocation of Rs 400.00 crore have been made in Budget Estimates  2023-24, thereby witnessing a shortfall of Rs 200.00 crore. 

The Committee opines that such a shortfall in allocation might impact the timely settlement of claims due to budgetary constraint and has recommended that additional requirement for the Scheme is promptly met through additional allocation at the Revised Estimates stage.

On the industrial development of backward and remote areas, the Committee notes that various schemes introduced under the Industrial Development of Backward and Remote Areas are effective for a period of five years.

Further, it also notes that most of the Schemes have ended on March 31, 2022, with the implication that new industrial units are not eligible for registration after the aforementioned date. The Committee feels that the Scheme’s effective period of five years is too short in view of the time taken by the Department for framing operational guidelines and initiation of registration.

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