J&K – The issues around the state

[pib] New Industrial Development Scheme for Jammu & Kashmir (J&K IDS, 2021)


From UPSC perspective, the following things are important :

Prelims level: JK IDS, 2021

Mains level: Development of JK region

The Union Govt. has formulated the New Industrial Development Scheme for Jammu & Kashmir (J&K IDS, 2021).

Tap to read more about: Reorganization of J&K

J&K IDS, 2021

  • It is a new Central Sector Scheme for the development of Industries in the UT of Jammu & Kashmir.
  • The main purpose of the scheme is to generate employment which directly leads to the socio-economic development of the area.

Incentives available

  • Capital Investment Incentive at the rate of 30% in Zone A and 50% in Zone B on the investment made in Plant & Machinery (in manufacturing) or construction of the building is available.
  • Capital Interest subvention: At the annual rate of 6% for a maximum of 7 years on loan amount up to Rs. 500 crore for investment in plant and machinery (in manufacturing) or construction of the building.
  • GST Linked Incentive: 300% of the eligible value of actual investment made in plant and machinery (in manufacturing) or construction in building for 10 years.
  • Working Capital Interest Incentive: All existing units at an annual rate of 5% for a maximum of 5 years. Maximum limit of incentive is Rs 1 crore.

Key features:

  • The scheme is made attractive for both smaller and larger units.
  • Smaller units with an investment in plant & machinery upto Rs. 50 crore will get a capital incentive upto Rs. 7.5 crore and get capital interest subvention at the rate of  6% for a maximum of 7 years
  • The scheme aims to take industrial development to the block level in UT of J&K, which is the first time in any Industrial Incentive Scheme of the GoI.
  • The scheme has been simplified on the lines of ease of doing business by bringing one major incentive- GST Linked Incentive- that will ensure less compliance burden without compromising on transparency.
  • It is not a reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the UT of J&K face

Major Impact and employment generation potential:

  • The scheme is to bring about a radical transformation in the existing industrial ecosystem of J&K with emphasis on job creation, skill development and sustainable development.
  • It is anticipated that the proposed scheme is likely to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons.
  • Additionally, because of the working capital interest subvention, the scheme is likely to give indirect support to about 35,000 persons.

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