JKIDS to provide capital investment incentives, interest subsidy

JKIDS to provide capital investment incentives, interest subsidy

The newly announced Jammu and Kashmir government’s Industrial Development Scheme (JKIDS) offers capital investment incentives and interest subsidy to industries and service unit holders in the state.

Unit holders in J&K will be provided ‘central capital investment incentive for access to credit’, central interest subsidy and central comprehensive insurance subsidy, reads the draft of the scheme

As per the clause 6 of the IDS which has been vetted by the state cabinet in its recent meeting “…all eligible new industrial units in the manufacturing and service sector located anywhere in J&K will be provided central capital investment incentive for access to credit (CCII) @ 20% of the eligible investment in plant and machinery with an upper limit of Rs 5 crore.”

“The project cost will need to be appraised by a scheduled commercial bank or financial institution/corporation before the proposal is approved by the Empowered Committee of DIPP,” reads the copy of IDS, adding, “absolute amount of total assistance shall be indicated in the Government sanction. 10% of Government assistance will be allowed to be used for project financing in the beginning but the balance 90% will be kept in an escrow account.  The interest earned on the amount kept in escrow account will also be credited in the same account.”

It adds that government assistance will be reduced pro-rata in case the project is completed at a lesser cost.  Full assistance will be released after commissioning of the plant and machinery.

Under Central Interest Subsidy clause, all eligible new industrial units located anywhere in the Jammu and Kashmir shall be given an interest subsidy of 3 percent.

“It will be on working capital credit advanced by the scheduled banks or central/state financial institutions.  It will be applicable for first 5 years from the date of commencement of commercial production.  The subsidy will be so restricted as to ensure that subsidized interest rate is not below the Marginal Cost of funds based Lending Rates (MCLR) of the lending institution.  This subsidy will be limited to total eligible investment in plant and machinery.

For the purpose of this Scheme, the working capital requirement of a unit shall be capped at @ 25 % of their annual turnover.

Under central comprehensive insurance subsidy, all eligible new Industrial units located anywhere in the state  will be eligible for reimbursement of 100% insurance premium for  insurance of  premises and Plant & Machinery.  It will be  applicable for a  maximum period of 5 years from the date of commencement of commercial production.

The document reads that IDSJK scheme requires that all eligible industrial units before taking effective steps for setting up an industry would have to pre-register under the scheme with department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Govt. of India, through the portal www.dipp.nic.in.  In this regard, an online application process shall be developed under which the applicants have to submit applications with DPR for the project they propose to execute.The Department of Industrial Policy and Promotion would separately issue detailed instructions for the use of online portal for IDSJK.