Customised package failed to woo investors

Accounting for more than 40 per cent of the state’s Gross Domestic Produce, the industrial growth has been sharply hit in the state in the absence of a financial package.

Facing geographical disadvantage, the state faces other disadvantages too like dearth of industrial raw material and higher freight which dissuades investors. The state, however, did see India’s first active pharmaceutical ingredient (API) fermentation unit at the Plassara Industrial Area of Nalagarh tehsil begin production. Set up under the centrally-sponsored Production Linked Incentive Scheme 1.0 with an investment of Rs 860 crore, it will meet around 60 per cent domestic demand for specific APIs.

Customised package was extended to two industries in 2022 where exemptions were provided in stamp duty, registration fee and power duty for five years. However, it failed to yield any result as no industrial activity has been initiated despite the lapse of more than two years. SMPP Ammunition Private Ltd is one of these units which was supposed to fetch an investment of Rs 3,000 crore and employ 5,000 persons directly and indirectly. The other unit granted this relaxation was Indo Farm Equipment Limited, Baddi. The group was supposed to set up an automobile components factory for tractors and cranes, etc. where 30 to 40 ancillary units were supposed to be set up.

The state was, however, rated as the Aspirer State under the centrally-rated Ease of Doing Business initiative, besides being recognised as the best performer in the State Startup Ranking 2023. It topped nationally in the centrally-sponsored Pradhan Mantri formalisation of micro food processing enterprises where it provided Rs 64.56 crore to 972 cases under the credit-linked subsidy and Rs 50.31 cr to 13,427 women self-help groups under the seed capital component.

The setting up of bulk drugs park at Haroli in Una and medical device park at Nalagarh have been delayed as the state government has decided to build them on their own and return central funds.

The Industries Department did experiment further by permitting the creation of industrial parks in the private sector but the move did not yield the desired results. Though the provision of setting up private industrial zones did figure in the state’s industrial policy, it found no takers.

No Central scheme was announced for Himachal since the Centrally-sponsored Industrial Development Scheme (IDS) 2017, was rolled back in 2020. Though the industry did demand a scheme on the lines of the New Central Sector Scheme, that catered to Jammu and Kashmir, from the Union Finance Minister but the Centre has not paid heed to this demand.

The lack of fresh investment has affected the sale of industrial plots. No allotment of industrial plots was done in the state this year by the Industries Department.

Higher rate of electricity duty of 13 pc and state-specific levies like Certain Goods Carried by Road (CGCR) tax and Additional Goods Tax burden an investor. So, the industry demanded that the CGCR and AGT should be subsumed into the GST but the cash-strapped state government was in no position to let go of revenue.

The state government has, on the contrary, enhanced the electricity tariff as well as stamp duty thus hitting profit margin putting on hold expansion plans of existing industrial units.