Situated on the west coast of India, Gujarat is one of the leading industrialized states in the country. Its geographical area of about 2 Lakhs sq. km. accounts for 6% percent of the total area of India. With a coastline of 1600 km, it is well connected to all the major port in all continents and countries.
Gujarat Industrial Policy 2015 has come to an end as on 31st December 2019. It was further extended up to the date of release of new policy. The New Gujarat Industrial Policy 2020 has been formed to further consolidate this momentum and enhance the current growth rate.
Focused efforts have been made for supporting jobs, value addition across sectors, adoption of state- of-the-art technology, increase productivity with Industry 4.0 manufacturing, innovation driven ecosystem with focus on research and development so as to propel the state further towards “Atmanirbhar Gujarat”. This will enable the shaping of a Modern Gujarat that spearheads the vision of a Modern India.
GUJARAT [A Growth Engine for New India]
- Gujarat stands first in India in terms of Industrial Output with ~17% of India’s output
- The state has been recognized as Best Performer State in State Startup Ranking 2018 by DPIIT, Govt of India.
- Ranked No. 1 in the Logistics Performance Index and LEADS Index by Ministry of Commerce, Government of India in year 2019.
- Gujarat saw the highest national increment of 240% in FDI inflows from previous year as against a growth of 14% in FDI in India.
- While India saw an increase of 48% in proposed investments (IEMs) in 2019, Gujarat recorded a growth of 333% over previous year.
- In FY 2019-20; Gujarat also has the lowest unemployment rates in the entire country @3.4% as per survey report by National Statistical Office, Govt. of India.
Gujarat has been constantly achieving double digit growth rate. In the last 5 years, the state registered an average growth rate of 10.14% at constant price.
Gujarat has witnessed 13% growth in GDP at current prices in 2019-20 over previous year. If we look at subsidy amount, it has increased almost 3 times in the last five years showing an exponential growth. Considering similar growth patterns, it is expected that the average annual outlay for the New Gujarat Industrial Policy 2020 will be upto INR 8,000 crore
Gujarat- Sweet Home for MSME
The number of MSMEs in Gujarat grew by 60% from 2014-2015 and currently, Gujarat is home to over 3.5 million MSMEs which are a major source of employment and also form an important part in the larger industrial ecosystem. Gujarat stands 1st in terms of nos. of IEMs (Industrial Entrepreneurship Memorandum) filed & actual investment reported for 2019 with ~51% share of IEMs filed in India in terms of value with a proposed investment of USD 49 Bn as per the data released by DPIIT, Govt of India.
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GUJARAT INDUSTRIAL POLICY, 2020
Aug, 20
INTRODUCTION
Situated on the west coast of India, Gujarat is one of the leading industrialized states in the country. Its geographical area of about 2 Lakhs sq. km. accounts for 6% percent of the total area of India. With a coastline of 1600 km, it is well connected to all the major port in all continents and countries.
Gujarat Industrial Policy 2015 has come to an end as on 31st December 2019. It was further extended up to the date of release of new policy. The New Gujarat Industrial Policy 2020 has been formed to further consolidate this momentum and enhance the current growth rate.
Focused efforts have been made for supporting jobs, value addition across sectors, adoption of state- of-the-art technology, increase productivity with Industry 4.0 manufacturing, innovation driven ecosystem with focus on research and development so as to propel the state further towards “Atmanirbhar Gujarat”. This will enable the shaping of a Modern Gujarat that spearheads the vision of a Modern India.
GUJARAT [A Growth Engine for New India]
> Gujarat stands first in India in terms of Industrial Output with ~17% of India’s output
>The state has been recognized as Best Performer State in State Startup Ranking 2018 by DPIIT, Govt of India.
> Ranked No. 1 in the Logistics Performance Index and LEADS Index by Ministry of Commerce, Government of India in year 2019.
> Gujarat saw the highest national increment of 240% in FDI inflows from previous year as against a growth of 14% in FDI in India.
> While India saw an increase of 48% in proposed investments (IEMs) in 2019, Gujarat recorded a growth of 333% over previous year.
> In FY 2019-20; Gujarat also has the lowest unemployment rates in the entire country @3.4% as per survey report by National Statistical Office, Govt. of India.
> Gujarat has been constantly achieving double digit growth rate. In the last 5 years, the state registered an average growth rate of 10.14% at constant price.
> Gujarat has witnessed 13% growth in GDP at current prices in 2019-20 over previous year. If we look at subsidy amount, it has increased almost 3 times in the last five years showing an exponential growth. Considering similar growth patterns, it is expected that the average annual outlay for the New Gujarat Industrial Policy 2020 will be upto INR 8,000 crore
Gujarat- Sweet Home for MSME
The number of MSMEs in Gujarat grew by 60% from 2014-2015 and currently, Gujarat is home to over 3.5 million MSMEs which are a major source of employment and also form an important part in the larger industrial ecosystem. Gujarat stands 1st in terms of nos. of IEMs (Industrial Entrepreneurship Memorandum) filed & actual investment reported for 2019 with ~51% share of IEMs filed in India in terms of value with a proposed investment of USD 49 Bn as per the data released by DPIIT, Govt of India.
LARGE ENTERPRISE
Thrust Sectors
15 Thrust Sectors have been conceptualized with a view on global investment trends, the need for strengthening the integrated value chains, exports, policies by government of India, NITI Aayog etc. The thrust sectors have been categorized in two major groups i.e Core sectors & Sunrise Sectors
| Core Sectors |
|
| Sunrise Sectors |
|
Since GST has been implemented, companies were being compensated as per “Net SGST” on goods sold within the state. There were several complexities in calculation of the tax of goods consumed within the state. There were several complexities in calculation of the tax of goods consumed within the state. Hence, Gujarat is the first state to undertake a bold decision to de-link incentives from SGST. Upto 12% of Fixed Capital investment will be given to large industries for setting up manufacturing operations in the state in the form of capital subsidy.
| Taluka Category | General Sectors | Thrust Sectors (15) |
| Category 1 | 10% of FCI | 12% of FCI |
| Category 2 | 8% of FCI | 10% of FCI |
| Category 3 | 4% of FCI | 6% of FCI |
- This benefit will be given over a period of 10 years subject to annual ceiling of INR 40 Crore.
- If the eligible cash subsidy could not be disbursed within period of 10 yeras due to upper ceiling of Rs. 40 cr per annum, for such unit the eligible period of 10 years will be extended upto additional 10 years with the condition that annual ceiling will remain Rs. 40 cr per annum.
- If the eligible cash subsidy is not disbursable within period of 20 years due to upper ceiling of Rs. 40 cr per annum, the total entitlement of cash subsidy will be disbursed in equal installments of 20 years without any upper ceiling
- Besides this, new industries will continue to get exemption from Electricity Duty for 5 years.
- With this, Gujarat will be giving significantly high incentives to industries as compared to other states.
INCENTIVES FOR MSME’s
MSME definition will be in alignment with the Government of India definition so that a large number of units may take advantages of the provisions under MSME policies.
The policy focuses to promote MSMEs with an aim to make domestic MSMEs globally competitive. Government will support MSMEs in upgradation of technologies, adopting globally accepted certifications and in marketing their products internationally.
Capital Investment Subsidy
> Capital Investment Subsidy @ 25% of eligible loan amount with the maximum amount of INR 35 Lakhs
> Additionally, if the eligible fixed capital investment is above INR 10 crores, the unit will be eligible for an additional capital subsidy upto INR 10 lakhs.
Interest Subsidy
> Interest Subsidy of 7% with the maximum amount INR 35 Lakhs p.a. for a period of 7 years
> 1% Additional Subsidy for SC/ST, Physically challenged and Women entrepreneurs
> 1% Additional Subsidy for Young Entrepreneur below the age of 35 years on the date of sanction of loan.
Service Sector MSMEs
> Service sector is a major contributor to the national GDP. Many services are key inputs for facilitating other primary and secondary industries.
Inclusion
> MSMEs in the state including those engaged in
> Financial Services Healthcare Services
> Audio Visual services
> Construction related engineering services
> Environmental services etc.
Interest Subsidy
The New Gujarat Industrial Policy 2020 will offer interest subsidy upto 7% upto INR 35 lakhs per annum for a period upto 7 years to these service sector MSMEs in the state including those engaged in
Simultaneously, the state is working on a Service sector policy for large enterprises.
Acquisition of foreign technologies by MSMEs
The government for the first time, will provide support upto 65% of the cost of acquiring foreign patented technologies. (Maximum support upto INR 50 lakh). This will help raise the manufacturing powers of our MSMEs making them globally competitive.
Market development assistance to MSMEs
To encourage MSMEs to market their products at a national & international level, the new Industrial Policy will provide fiscal assistance to MSMEs
> @75% of stall rent upto INR 2 lakh for exhibitions in India and
> @60% of stall rent upto INR 5 lakh for exhibitions Outside India.
Encouraging MSMEs to use Solar Power
With an aim to further ease the process of utilizing rooftop Solar Power in MSMEs, the power cycle for calculation of consumption of units has been increased from 15 minutes to 7 AM – 6 PM.
Also, for purchase of surplus solar power from MSMEs, the price has been increased from INR 1.75/unit to INR 2.25/unit. Additionally, existing industries who switch to Solar Power, Interest Subsidy will be provided on term loan
Other Benefits
> Implementation of Enterprise Resource Planning [ERP],
> Information & Communication Technology [ICT],
> Obtaining quality certifications including ZED certification,
> Patent filing,
> Service line
> Power Connection charges Rent assistance etc.
INCENTIVE TO START-UPS
| Particulars | New Policy | Earlier Policy |
| Seed support | INR 30 lakh | INR 20 lakh |
| Sustenance Allowance [per month per startup for one year] | INR 20,000 | INR 10,000 |
| With 1 Woman co-founder | INR 25,000 | — |
Separate Start-up Fund
a separate fund shall be created under Gujarat Venture Finance Limited (GVFL) for mid-level Pre-Series A funding of start-ups. Besides this the start-ups will get additional 1% Interest subsidy (i.e. upto 9% on term loans.
Impact on society.
Grant of upto INR 10 lakh for start-ups with significant impact on society.
Enrolment for national/international recognized acceleration programs Fiscal support upto INR 3 lakh per start-ups will be provided to enrol for national/international recognized acceleration programs.
Soft skill assistance
Funding of upto INR 1 lakh per start-ups for trainings specific to “Managerial Training, Soft Skills, Marketing skills, Fundraising, Finance” on reimbursement basis
Mentoring assistance
Mentoring assistance of INR 1 lakh per start-ups will be given to recognized Nodal Institutes (maximum INR 15 lakh per annum per institute)
RELOCATION INCENTIVES
In light of CoVID-19, several industries are planning to relocate their operations and/or diversify supply chains. Gujarat will offer Special Incentives to such companies planning to relocate from other countries.
BALANCED REGIONAL DEVELOPMENT
Government Land to be given on long term lease basis
In order to further give a thrust to a balanced regional development in the state, the government will facilitate industries in getting “Government Land” on long term lease upto 50 years (further extendible as per prevailing policy) to industrial enterprises @6% of the market rate. The industries will be able to mortgage the land.
Incremental benefits
To promote a balanced regional development in the state the incentives to all MSMEs as well as large industries have been categorized based on industrial development in respective talukas. Incremental benefits will be given to industries setting up operations in industrially less developed talukas
RESEARCH & INNOVATION
> The policy will provide support upto INR 5 crore to private companies/institutions for setting up R&D and product development centres
> Assistance for Contract/Sponsored research work from any industrial enterprise/Industrial association to recognized R&D institution / technical collages approved by AICTE, will be considered @ 50% of project cost, excluding cost of land and building, subject to maximum INR 50 Lakhs
DEVELOPMENT OF INDUSTRIAL INFRASTRUCTURE:
Private Industrial Parks
> Policy will provide incentives to private developers for setting up Private Industrial Parks in the state @25% of Fixed Capital Investment upto INR 30 crore.
> In case of Vanbandhu Talukas, the policy will support setting up of industrial parks @50% of Fixed Capital Investment upto INR 30 crore. This will support industrial infrastructure creation & developing last-mile connectivity.
Stamp Duty Reimbursements
Stamp duty reimbursements will be given to Developers (100% of Stamp Duty) and Individual units (50% of stamp duty).
Clusters Development
In order to promote clusters, financial assistance of up to 80% of the Project Cost upto INR 25 Crore for set up of Industrial Infrastructure such as construction and up gradation of roads, warehousing facilities, fire stations, underground utilities, etc. will be provided.
Dormitory Housing for Labourers
The policy will provide 80% of financial assistance upto INR 25 crore for Dormitory Housing in manufacturing clusters to provide better living conditions for labourers in industrial clusters.
SUSTAINABLE MANUFACTURING & ENVIRONMENT INFRA
Zero Liquid Discharge plants
50% of capital subsidy upto INR 75 lakhs will be given to industries practicing at least 50% waste recovery through Zero Liquid Discharge as certified by GPCB.
Assistance for Cleaner Production Measures
The policy will give Incentives to MSMEs @35% of cost of Plant & machinery and to large units @10% of cost of Plant & machinery (maximum: INR 35 lakh) for Implementation of cleaner production technology in place of existing process such as substitution & optimization of raw material, reduction in water consumption or energy consumption or waste generation
Common environment infrastructure
Support for Common environment infrastructure facilities increased from existing 25% to 40% of the project cost upto INR 50 crore
Development of Green Estates
Assistance of up to 25% of project cost upto INR 25 crore for set up/ relocation / retrofitting of existing polluting industrial units into Green Industrial Estates
Common Boiler Project
Common Boiler Project by SPV constituted by minimum 10 MSME’s will receive incentives upto 50% of fixed installation cost upto INR 2 crore.
OTHER BENEFITS / SUPPORTS
Skilling and Training Support
The state will undertake a gap analysis of Skill requirement of industries & available workers across various sectors in the state. This will help create a roadmap for training local population in relevant skills and thus bridge the gap. State will also give fiscal support in setting up Skill development Anchor institutes, specialized skill development centres, Skill upgradation centres etc.
Besides this, the policy will give incentives for skill enhancement upto INR 15000 per person per training.
“GARUD”
A dedicated organization “GARUD” has been formed by the state government to ensure easy movements of goods inter & intra state and increase exports. The infrastructure created under this authority will support industries to incur less production costs and therefore will have a competitive edge against other developing economies.
Dedicated “Relationship Managers”
Dedicated “Relationship Managers” will be nominated by Industrial Extension Bureau (iNDEXTb) for investors as single point of contacts for all government related queries & approvals.
Investor Facilitation Portal (IFP) – Mega Online Permission [one application for 26 different approvals]
To further strengthen the Ease of Doing Business Environment in the state, a framework for “Mega Permission” is being prepared, which requires investor to submit only one application form for 26 different state related approvals and compliances to be processed in an expedited manner.
Centralized Inspection System
The state has also initiated the process for streamlining Central Inspection System to further bring transparency and facilitate ease of doing business.
Pipeline enterprises
New projects which are already under various stages of implementation, will be eligible under the previous policy (Gujarat Industrial Policy 2015). Such manufacturing projects will need to commission within 1 year and common infrastructure projects will need to commission within 2 years from the date of release of New Gujarat Industrial Policy 2020.
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Disclaimer
Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. It is notified that neither the publisher nor the author or seller will be responsible for any damage or loss of action to any one, of any kind, in any manner, there from. It is suggested that to avoid any doubt, the reader should cross-check all the facts, law and contents of the publication with original Government publication or notifications. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Author Bio
Dear Sir,
This article is very informative.
Pls tell how much electricity duty exemption is available and how to claim it.