SEZ need of the hour for state

Ambika Sharma

Tribune News Service

Solan, February 26

With major incentives of the Central industrial package having lapsed in March 2010, new investment has been reduced to a trickle and investors are awaiting announcement of sops in the Budget which could lure them to stick to Himachal.

The state has attracted investment worth Rs 18,500 crore with 40,000 small investors and 505 medium and large industries. As many as 2.9 lakh youth have been employed in the industry which received a major boost after the 2003 package.

Investment down

A steep decline in investment and revenue is, however, witnessed after the lapse of the package which adversely affected the employment in the state.The industry contributes 15 per cent to the state’s GDP.

Various industry-friendly initiatives were taken by the state government to sustain the existing industry which included the simplification of the Section 118 of the HP Tenancy and Land Reforms Act 1972, freezing power tariff for five years, reducing electricity and stamp duties. The Chief Minister also convened the first-ever investor meet in various cities in November last year to invite investors.

No speedy clearances

The industry, however, failed to benefit much as red tape marred speedy clearances. Despite measures such as introduction of 41-page single application introduced to facilitate approvals in the initial stages have failed to prove helpful due to the lengthy formalities. The much-hyped speedy clearances within 90 days too has remained a mere political rhetoric.

The fund-starved state exchequer could ill-afford any additional incentives and though the industry is vouching for reduction in VAT and roll back of entry tax on certain goods, the likelihood of such liberal sops is less. Issues such as double taxation like entry tax and additional goods tax on certain goods failed to be resolved despite several representations from various industry associations.

Transport unions monopolise the freight in various industrial areas, thus reducing the state to a disadvantage as investors have to invest additional costs on transporting raw materials and finished goods. The power is no longer cheaper though its ready availability is a positive feature.

The lapse of the package is leading to exodus of industries with many transforming their units into export-oriented units. Since several states continued to enjoy the Central incentives, industrial units, which had their sister concerns in such states, were shifting their products to these states and this sealed the prospects of expansion though TVS Motor, Vardhman Textile, Torrent Pharmaceutical, etc, came forward to expand their operations.

Industry’s demand

“The creation of special economic zone to boost investment is the need of the hour after lapse of the package in the state. Issues such as enhancement of the audit limit for small and medium enterprises (SME) and redefining its limit are the other key demands from the Budget” saidd Vipul Ghai, president, Laghu Udyog Bharti’s Sirmaur unit.

Expecting an early announcement of the bulk drug policy, Sanjay Suri, Morepen Lab, Chief Executive of Global Generics, said incentives for promoting formulation units and removal of bulk drugs from the negative list would help promote the pharmaceutical industry and reduce the dependence of raw materials on China.

He added that it was also in sync with the Modi government’s “Make In India” programme and should be included in the Budget.

The introduction of a uniform Goods and Service Tax (GST) regime is the need of the hour, opined Rakesh Bansal, an entrepreneur from Parwanoo.

With grading of small entrepreneurs by financial institutions making it difficult to secure loans, Arun Rawat, Chairman of Himachal chapter of the Confederation of Indian Industries, said there should be an early roll out of the policy for SMEs which was announced by the Modi government in its last Budget. He said the exit and entry of business should also be hassle-free, contrary to the present rigorous procedures.

He said the first generation entrepreneurs should be specially promoted and SMEs undertaking innovation in research should be the focus of the new policy. Gaps in skills required by the industry should be readily identified so that the youth can be trained in certified courses even in the private sector.