Karnataka
Clears Special Incentives Scheme for ESDM Sector
The Karnataka cabinet on Thursday
gave its approval to the "Special Incentives Scheme" for Electronics
System Design and Manufacturing (ESDM) sector in the state, through which it
expects investment of over Rs 5,000 crore and 43,000
direct employment in 5 years.
The incentives announced
for investment in the ESDM sector include- capital investment subsidy of 25 per
cent on land and 20 per cent on plant and machinery, also 100 per cent reimbursement
of stamp duty and registration charges, and 100 per cent reimbursement of land
conversion fee.
It provides for power
tariff reimbursement of Rs 1 per unit for 5 years
from the month of commencement of commercial production, and 100 per cent
exemption from electricity duty for 5 years from the month of commencement of commercial
production.
The government will also
give a production linked incentive for new investments as well as expansion of
1 per cent of annual turnover during the policy period of five years.
Under the scheme 25 per
cent capital investment subsidy on land will be eligible to those industries
which are setting it up in areas other than Bengaluru Urban and Bengaluru Rural
districts, an official release said.
Capital investment subsidy
on land will be provided for land area up to and not exceeding 50 acres and on
actual procurement cost if procured from Karnataka Industrial Areas Development
Board (KIADB) or any other agencies of state government, it said.
Subsidy for land procured
from other sources will be as per the guidance value of land at the time of
procurement, it added.
As per the scheme, 20 per
cent capital investment subsidy on plant and machinery will include expenditure
on used/second hand/refurbished plant, machinery, and equipment, whether imported or procured domestically,
not exceeding 20 per cent of the total eligible plant, machinery and equipment.
Production linked
incentive will be based on annual sales turnover (includes sales within the
state, inter-state and exports), as evidenced by annual audited
accounts/audited balance sheets, it said.
Incentives will be
provided only to new investments or for capacity expansion, and will not be
applicable for existing companies, it clarified.
Stating that the total
quantum of incentives sanctioned to a manufacturing/assembly unit under this
package shall not exceed 100 per cent of the value of fixed assets created by
the unit, the government said the scheme will be applicable for new investments
or investments in expansion of existing units for a period of 5 years from the
date of its announcement.
The state's incentive
scheme can be availed in addition to incentives and subsidies provided under
any of the policies of Government of India (GOI). However, industries availing
this package of incentives cannot avail incentives under any of the other policies
of the Karnataka government.
Products/activities
eligible for incentives include- manufacturing and design of electronics
products, semiconductor manufacturing and design, electronic manufacturing
services, solar cells manufacturing, LED, and any other electronics
verticals/products covered by the national policy on electronics.
The release notes that
incentives are over and above the schemes notified by GOI encompassing the entire
range of products and activities under ESDM and not limited to only certain
products as in central schemes. According to the release, the government is
also subsidising the land procurement under the
special incentive scheme. "An investment of over Rs
5,000 crore is expected to the State through this Scheme, with a potential to
generate 43,000 direct employment over next 5 years," it added.