- State government aims to provide an average outlay of INR 8,000 crores annually for the next five years
- Eligible units will be provided interest subsidy up to 7% of the interest levied on the term loan
- Interest subsidies will cover MSMEs even in Financial, Healthcare, Audio Visual, Construction & engineering, and environmental services etc.
The Gujarat Chief Minister, Vijay Rupani announced the ground-breaking New Industrial Policy 2020 on August 7, 2020. The new policy replaced the earlier industrial policy of 2015, which was due to expire on December 31, 2020, and extended twice before the release date. While announcing the policy, Chief Minister Rupani said that the formulation of this policy is to boost the growth rate of the state. As the previous policy was a huge success, the new one is also expected to show a similar kind of results. With the new policy, the state government aims to provide an average outlay of INR 8,000 Crores annually for the next five years.
CM Shri @vijayrupanibjp announces Gujarat Industrial Policy – 2020 aimed at boosting industrial growth in the state to realize the dream of ‘Atmanirbhar Gujarat’https://t.co/dt9uDD4H9z
— CMO Gujarat (@CMOGuj) August 7, 2020
During the announcement, CM Rupani also mentioned that all the multinational companies looking forward to laying industrial units other than China and other countries would be welcomed in India. He further mentioned that the Government of Gujarat is already in talks with Japan, the United States, UK, and Germany.
Subsidy is not a Solution; Government should empower MSMEs
Machine Maker spoke to some entrepreneurs about the New Industrial Policy 2020. Manish Kothari, Managing Director of Rhino Machines Pvt Ltd said, “The new policy is just like a painkiller. The subsidy will be not of any help with the markets. The government should work on the root cause of the MSMEs. It should try and gain access to different markets for the businessmen.”
Along with the announcement the CMO of Gujarat took it to his official twitter account to spread awareness about the policy. From the small MEME owners, common users, to the industry associations took to Twitter to acknowledge the step. The TCIL Group appreciated the move and congratulated CM Rupani. They also lauded him for this innovative example in policymaking. PiyushTamboli, CMD-Investment & Precision Casting Ltd & Chairman-CII Gujarat talking about the new move lauded the step and said that it is a very progressive and highly incentivized policy for super vibrant Gujarat.
The New Industrial Policy, 2020 will also give a potential momentum to the MSMEs in the state. The state of Gujarat has seen a steady rise in the MSMEs with over 3.5 million MSMEs. In the year 2014-15, there was a 60% rise in the number of MSMEs. According to the national statistics, Gujarat accounts for over 17% of total output and stands first in India in the production sector. The state’s average growth rate is at 10.14% in the GDP at a constant price.
Incentives for MSMEs
The State Government has re-defined the concept of MSMEs in the lines of the Central Government to bring equality in the sector and provide better for the larger units, as well. The incentive provided under the policy is mentioned below.
Gujarat has always led by example and Welspun lauds Hon. CM @vijayrupanibjp for launching a comprehensive #GujaratIndustrialPolicy2020. https://t.co/L3PwtCN4vd
— Welspun Group (@TheWelspunGroup) August 29, 2020
The Government will provide capital subsidies up to 25% to the units of the eligible loan amount, subject to a ceiling of INR 35 Lacs. An additional INR 10 Lacs capital subsidy would be provided to the units having FCI over INR 10 Crores.
According to Shankar Tekwani of Spectrum cable-Tech, “It is a welcome move. Since the government has increased the capital and interest subsidy it accounts for great concessions. It will prove to be a positive move for those who want to expand their operations. Plus, the Government has simplified the process of relocating units, that’s good news. This policy is going to benefit the MSME owner in the Gujarat state either directly or indirectly.”
Eligible units will be provided interest subsidy up to 7% of the interest levied on the term loan if the loan is subject to INR 35 Lacs per annum. An additional 1% of the interest subsidy will be provided to the physically challenged, start-up, women, SC, and ST entrepreneurs.
Interest subsidy will also be provided to the service sector MSMEs, those engaged with healthcare, engineering, financial, audio-visual, and environmental services, etc. Eligible MSMEs will receive 65% off the total cost of acquiring technologies from a foreign land, subject to INR 50 Lacs.
If the eligible units are marketing their products in national as well as international exhibitions then they will be aided with Fiscal assistance of 75% (subject to a ceiling of INR 2 Lacs) of the stall rent in India and 60% (subject to a ceiling of INR 5 Lacs) of the stall rent outside India. With the intent to encourage the use of rooftop solar power, the Government will pitch in 50 paise more for every unit of solar power bought from MSMEs. Plus, the companies switching to solar power will receive interest subsidy on the term loan.
CMO Gujarat also participated in an interactive session addressed to the industrialists of the state to enlighten them about the New Industrial Policy, 2020. The session was conducted on August 31, 2020. The session was a big success and there were a lot of positive reactions on twitter. People are really happy with CMO’s efforts to give entrepreneurs of Gujarat the right kind of support and opportunities.
#ASSOCHAM Sr VP @agarwalvineet congratulated Gujarat CM @vijayrupanibjp on behalf of the Chambers and its members, for the ‘New Industrial Policy 2020’. He highlighted how #GujaratIndustrialPolicy2020 will give a new structure to industrial framework of the state. pic.twitter.com/FsKBfrkCc6
— ASSOCHAM #WearAMask (@ASSOCHAM4India) August 29, 2020
Along with the policy, the interactive session also impressed the people a lot. There were many appreciative posts on twitter. A Twitter user said that he has really high hopes for Gujarat’s future after the policy is implemented. Another twitter user Nikhil Sahni expressed gratitude and said that the policy is a way to boost sustainable manufacturing. Among the different tweets, some users also advised on how to develop other sectors.
Other Key Highlights of the New Industrial Policy 2020
The policy has de-lined the incentives from SGST. It provides a 12% Fixed Capital Investment (FCI). The seed supported increased to 30 Lacs from 20 Lacs. The private developers will get 25% of Fixed Capital Investment with a ceiling of 30 Crores. Along with this the policy also covers 15 different trust sectors, which are further divided into three core sectors – green energy, electric vehicle, and waste management projects.
