Maharashtra is counted as one of the wealthiest and developed state among Indian states. It has long been on global trading map due to being a costal state. Over the years, it has positioned itself as an investor friendly state. Its share in India’s total industrial output stood 25% during 2010-11, and 23.2% of GDP. Its per capita income US$1800 is 40% higher than national average, which makes it one of the richest states in India.
The better connectivity both at national and international level and excellent infrastructure are the main reasons why the foreign investors over the years have chosen this coastal state. Since the economic liberalization in 1990s, the state government has focused more on attracting bigger players and industries than promoting small industries. From time to time, the industrial policies were moulded to achieve this objective. Today, Maharashtra has maximum number of industries followed by Punjab and Tamil Nadu. However, the presence of big industries have a very small impact on the overall employment prospective as more than 60% of the population is still employed in the agricultural and its allied sectors. At the international level also for example, China which has experienced a phenomenal industrial growth is due to its emphasis on promotion of small scale industries. Hence it becomes imperative for states to forge a policy not only for big industries but also for small and medium scale industries. Realizing this the government is keen on promoting small scale industries.
The Maharashtra Industrial Policy 2013 has given a special attention to encourage small scale industries. For financial stability of MSMEs (Micro Small and Medium Enterprises) , the state government will provide fiscal incentives and support to less developed areas, and the major highlights of Package Schemes of Incentives (PSI) apart from Industrial Promotion Subsidy have been listed below:
- Under the PSI 2013 scheme specific number of industries operating in Maharashtra have been chosen such as information technology, bio-technology, cold storage, and food processing industries.
- The state government has divided the taluks (areas) into 7 groups and more thrust has been given to less developed areas.
|1. A (Developed areas)||Mumbai, Pune, etc.|
|2. B‹A (Less developed than A)||Alibagh, Dhanu, Nashik, etc.|
|3. C (Less Developed than B)||Bhivandi, Ratnagiri, Baramati, etc.|
|4. D (Less developed than C)||Aurangabad, Satara, Nagpur, etc.|
|5. D+ ( Less developed than D)||Pithan, Barshi, Kagal, etc.|
|6. No Industries Exist||Gadchiroli, Hingoli, etc.|
|7. Areas affected by Naxalism||Gondia, Kinvat, Chandrapur, etc.|
What are the fiscal incentives?
- 75% reimbursement of cost of water and energy admissible.
- Stamp Duty Exemption: 100% stamp duty exemption within investment period for acquiring land and for term loan purposes.
- Electricity Duty Exemption: Exemption from payment of electricity duty to eligible new units in C, D, D+, and also where the industry doesn’t exist.
- Power Tariff Subsidy: INR 1/- per unit consumed to eligible new units located in Gondia, Kinvat, Chandrapur, etc.
In which form financial incentives can be utilized?
Financial incentives are available in the form of Industrial Promotion Subsidy (IPS), Interest Subsidy, Electricity duty exemption, Waiver of Stamp Duty, Power Tariff Subsidy, etc. Up to 70 lacs can be utilized in the various ways discussed above. The most beneficial among all is Industrial Promotion Subsidy, which is receivable in cash as a specific percentage of net VAT and CST.
Existing units can also be benefited under this scheme provided that they make 1) minimum investment in capital assets of 25%; 2) same increase in production capacity; and 3) minimum 10% increase in employment. For example, in a case of INR 1 crore capital investment, an existing unit will get INR 52 lacs as financial incentive.
How to start?
- Firstly, the Industrial Unit has to get registered with District Industries Centre (DIC).
- Provide all the details of capital investment.
- Thereafter, the Eligibility Certificate (EC) will be issued.
- The incentive will depend on the amount of investments and assets.
- The Industrial Unit has to make capital investment in the specified period mentioned in EC.
- Business must be operational up to the period mentioned in EC otherwise incentive can be cancelled and penalty may be levied.
For more information on how to register visit at: http://www.doingbusinessinmaharashtra.org/Starting_a_Business_in_Maharashtra.aspx