Govt extends NMP benefits to industry clusters in India

Seeking to boost manufacturing sector, Govt has extended the benefits of the National Manufacturing Policy (NMP) throughout the country wherever industry can organise itself into clusters and adopt a self regulatory model.

Issuing the guidelines on Friday, the Department of Industrial Policy and Promotion (DIPP) said all the incentives provided to the National Investment and Manufacturing Zones (NIMZs) will be available to such clusters.

“Besides the NIMZs, the policy is also applicable to manufacturing industry throughout the country wherever industry is able to organize itself into clusters and adopt a model of self-regulation as enunciated in the policy.

“All such benefits/dispensations except NIMZ specific benefits/dispensations as available under the policy are also available to manufacturing industry clusters,” the guidelines said.

Cluster as per the guidelines will be a concentration of manufacturing industry units located within a clearly demarcated geographical area notified by the state government.

It further said that the state government has to constitute a special purpose vehicle (SPV), to be headed by a government official, to manage each cluster.

As per the NMP 2011, aimed at raising the share of manufacturing to 25 percent of GDP by 2022 from the current 16 percent, the government had proposed to set up NIMZ, a mega integrated industrial townships.

The policy also aims to create 100 million additional jobs over the next decade.

These zones were accorded benefits like exemption from capital gains tax, simplified procedures and easier exit norms.

The guidelines further said the SME units in the clusters will get access to technology acquisition and development fund and greater access to institutional finance.

There would be a provision for suitable representation of the industrial units on the Board of the SPV.

“The SPV will be responsible for facilitating the clearances required to set up units in the cluster and/or for running the units. The SPY will also facilitate the filing of periodic returns by the units III the cluster through an appropriate single window mechanism,” it added.

It also said that the units in a cluster will be able to access the incentives under NMP for manufacturing equipment or technologies used to produce energy from sun, wind, geothermal, clean coal technology and carbon sinks management.

“These incentives shall consists of – 5 per cent interest reimbursement of the nominal interest charged by lending agency; 10 per cent capital subsidy,” it added.

To encourage the private sector participation in skill development, the government will provide a weighted standard deduction of 150 percent of the expenditure (other than land and building) if the private sector units in the cluster undertake a PPP project for skill development in coordination with the National Skill Development Corporation (NSDC).

Dashing hopes of recovery, industrial production contracted by 2.1 percent in November, the lowest in six months, mainly due to poor performance of manufacturing sector.

The manufacturing sector, which constitutes over 75 percent of the index, declined by 3.5 percent in November as against a contraction of 0.8 percent a year ago.

The guidelines said that in order to improve access to finance for SMEs in the manufacturing sector, the NMP provides some dispensations which would also be applicable to SMEs in the clusters.

NMP provides benefits such as liberalisation of IRDA guidelines to provide for investments by insurance companies in Venture Capital Funds with a focus on SMEs in the manufacturing sector.

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