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J&K to be tax-free zone for 10 years

Gaurav Raghuvanshi

With an eye on the forthcoming elections in Jammu and Kashmir, the Centre is set to announce a special package involving converting the state into a tax-free zone for 10 years and providing 15 per cent capital subsidy, and a 3 per cent interest subsidy on working capital for all industrial units in the insurgency-hit region.

The proposed policy, cleared by the Planning Commission, also entails setting up of a J&K Development Finance Corporation with a one-time grant of Rs 500 million as seed capital and a corpus of Rs 1 billion for reviving sick industrial units, official sources told Business Standard.

A draft note on a new industrial policy for J&K would be taken up at the next meeting of the Cabinet Committee on Economic Affairs.

The CCEA was to meet on Tuesday, but the meeting had been postponed, officials said.

The Jammu and Kashmir government had demanded a special package for the development of industries in the state on the lines of incentives announced for the Northeast, officials said.

Under the proposed scheme, the state would be converted into a tax-free zone for 10 years for the purpose of corporate tax and excise duty, they said.

The package also involves subsidies to kick-start industrial investment. While investments in plant and machinery will get a capital subsidy of 15 per cent subject to a ceiling, industrial units will get an interest subsidy of 3 per cent on working capital loans for 10 years after the start of production.

To revive sick industrial units, the package seeks to provide Rs 1 billion to the proposed new development finance corporation.

The JKDFC will work out a revival package in consultation with the department of industrial policy and promotion under the commerce ministry and provide assistance to sick units.

The new package also seeks to enhance central assistance under the Growth Centre Scheme.

The assistance would be increased from Rs 100 million for each centre to Rs 150 million in the form of grant to the state government, the officials added.

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