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3/2/2011 A B Consultants

A PRESENTATION BY :

Akhil Suri

MBA 4th Semester

376-MBA-09

Incentives and

Subsidies in J&K

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MSME - Definition Ministry of Small Scale Industries created in 1999

Ministry ofMicro, Small andMedium Enterprises createdinMay 2007

(A)MANUFACTURING ENTERPRISES

Micro : The investment in plant and machinery does notexceed Rs.25 lakhs

Small : The investment in plant and machinery is morethan 25 lakhs

Medium : The investment in plant and machinery is more

than Rs. 5 crores but not exceeding Rs.10 crores.

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MSME - Definition

(B) SERVICEENTERPRISES

Micro : The investment in equipment does not exceed Rs.

10 lakhs.

Small : The investment in equipment is more than Rs.10

lakh but does not exceed Rs.2 crores.

Medium : The investment in equipment is more than Rs.

2 crores but does not exceed Rs. 5 crores.

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Changing nature ofMSME in India

World class professionals taking risk to

become entrepreneurs

Quality of entrepreneurs on rise

Globalization has opened several newopportunities forMSMEs

MSMEs looking at scales, global markets,

tie ups, multi location units

In the current globalized business scenario, IndianMSMEs have a large untapped growth potential and

need access to risk capital for investing in newtechnologies and business methods to realize it.

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Challenges faced byMSME

Limited access to risk / growthcapital and resulting leveraging

Operate in fragmented markets

Vulnerable to market fluctuations Limited access to technology and

product innovations

Lack of awareness of global best

practices MSMEs require high level of

handholding

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Incentives and Subsidies

Definition

Incentives, is a general term which includes

concessions, subsidies and bounties. A thing that

encourages somebody to do something.

Concession, a reduction in price for particular

categories of people.

Subsidy, denotes a single lump sum given by thegovt. to an entrepreneur to cover the cost. It is

granted to an industry which is considered to be

essential in the national interest.

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Objectives of Incentives

To stimulate and motivate an entrepreneur to set

up new ventures.

To encourage entrepreneurs to take action and

decisive decisions.

To encourage entrepreneurs to set up their

ventures in rural and backward areas.

To increase the ability of the entrepreneur to facecompetition.

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J&K Scenario

Land locked

Locational disadvantage

Remoteness & poor connectivity Hilly terrain

Poor infrastructure

Shallow markets

Poor Law & order situation

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FISCAL INCENTIVES:-

100% SUBSIDY ON PURCHASE OF NEW DIESEL GENERATING SETS

100% SUBSIDY ON PROJECT REPORT & QUALITY TESTING EQUIPMENT

75% SUBSIDY ON RESEARCH & DEVELOPMENT

5% REBATE ON INTEREST ON TERM LOANFOR TECHNOCRATS

SPECIAL INCENTIVE FOR BRAND PROMOTION AND MODERNISATION

LAND & POWER AT CONCESSIONAL RATES

TAX INCENTIVES:-

TOLL TAX EXEMPTION ON IMPORT OF RAW MATERIAL & EXPORT OFFINISHED

PRODUCTS

CST EXEMPTION ON FINISHED GOODS FOR INTERSTATE SALE

VAT REMISSION ON INTRA STATE SALE OFFINISHED GOODS

STAMP DUTY EXEMPTION

STATE PACKAGE OF INCENTIVES FOR INDUSTRY IN J&K

AS PER NEW INDUSTRIAL POLICY - 2004

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FISCAL INCENTIVES :-

30% SUBSIDY ON CAPITAL INVESTMENT ON PLANT & MACHINERY

3% INTEREST SUBSIDY ON WORKING CAPITAL

100% INSURANCE COVER TO INDUSTRIAL UNITS

90% TRANSPORT SUBSIDY ON RAW MATERIALS FROM THE NEAREST DESIGNATED

RAILWAY STATION AND FINISHED GOODS INTRA STATE

TAX INCENTIVES:-

100% EXCISE EXEMPTION RESTRICTED TO VALUE ADDITION

INCOME TAX EXEMPTION

CENTRAL PACKAGE OF INCENTIVES FOR

INDUSTRY IN J&K

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It is the endeavour of all industries to employ local

people but 90-10 clause is not practically possible

to implement which needs to be discussed.

Need to do seminars / workshops with support

from State Government on issues like Energy

Audit, Carbon Credits, etc.

Local entrepreneurs lack excess and exposure tothe latest trends and innovations for which State

Govt. should take delegations of Industrialists to

industrially advanced states and countries.

The Way Forward

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Govt. should help in encouraging Joint ventures

between local and outside entrepreneurs , between

local entrepreneurs & Govt. for which serious

interaction with Govt. & associations be initiated.

FurtherMinistry of non conventional energy

resources be impressed to develop & implement

project for Industrial Estates for street lighting on

solar power which will cut down the power

consumption and same power can be used for

industrial purposes.

The Way Forward

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Relief from the Inspector Raj

Even today the single-man unit is subjected to aminimum of37 inspections, 52 laws and 116 forms

and registers. The govt. should try to frame a single

legislation for the small scale sector which would

reduce procedural hassles and do away with theInspectorism.

The Way Forward

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Cross- LOC Trade

For achieving dual goals ofEconomic Development and peace

building using a market development intervention, we

strongly suggest that all goods manufactured in J&K be

brought into the ambit of LOC Trade in addition to any point

on LOC close to Border e.g. Pallanwala - Chhambh and

Nowshehra Mirpur be opened as a trade point as this wouldfacilitate Trade at extremely competitive prices & new

market shall become available to local industry. Subsequently

the other issues of financial transactions also be resolved with

banking facilities

The Way Forward

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Er. Akhil Suri(suriakhil86@gmail.com)

Thank YouThank You