By Annapurna Sinharay
The Union Cabinet has sanctioned the North East Industrial Development Scheme (NEIDS), 2017 with a financial outlay of Rs 3000 crores up to March 2020. The government will make necessary allocations for the remaining period of the scheme before March 2020. NEIDS is the successor of two lapsed schemes combining their incentives at a much larger disbursement.
Aims and objectives of the scheme
Eager to goad development and job creation without upsetting the regional ecological balance, the government has prepared a new industrial policy for the North Eastern region incentivising the MSME Sector primarily. The government is also offering a specific incentive through the scheme to create employment. All eligible industrial units, which are getting benefits of one or more components of other schemes of the Government of India, will also be considered for benefits of other components of this scheme.
Eligible industrial units
We will provide subsidies to people who will set up units under these activities. Sectors which could harm the ecology of the region will be a low priority in the scheme, a senior government official had said earlier in May 2017. Industries which are environmentally sustainable such as agro-processing, horticulture, floriculture and plantation crops are likely to feature on the list of eligible industrial units.
Inner workings of NEIDS
Under the Scheme, entrepreneurs in the northeastern states, including Sikkim, will get incentives like Central Capital Investment Incentive for Access to Credit, amounting to 30 percent of the investment in plant and machinery with an upper limit of Rs 5 crore on the incentive amount per unit. Also, they will receive the Central Interest Incentive amounting to three percent on working capital credit advanced by eligible banks/financial institutions for first five years from the date of productions commencement.
There will also be the Central Comprehensive Insurance Incentive, for full reimbursement of insurance premium on insurance of building and plant and machinery for five years from commencement of production, Goods and Service Tax (GST) reimbursement to the extent of Central government share of CGST and IGST for five years from the same date, Income-Tax (IT) reimbursement of Centres share of tax for first five years, Transport Incentive (TI) of 20 percent of the cost of transportation including the subsidy currently provided by Railways/Railway PSU for movement of finished goods by rail, 20 percent of cost of transportation for finished goods through Inland Waterways Authority of India and 33 percent of cost of transportation of air freight on perishable goods (as defined by IATA) from the airport nearest to place of production to any airport within the country.
There will also be an Employment Incentive, where the government shall pay 3.67 percent of the employer’s contribution to the Employees Provident Fund (EPF) in addition to bearing 8.33 percent Employee Pension Scheme contribution of the employer in the Pradhan Mantri Rozgar Protsahan Yojana.
Impact of NEIDS and the importance of driving MSMEs
The brand new scheme is expected to promote industrialisation in the states of the northeastern region and will boost employment and income generation. MSMEs are responsible for over half of employment worldwide. This sector will continue to be an important segment of the Indian economy. Continued growth and expansion of MSME sector are dependent on a hypothetical framework integrating entrepreneurship and investment, on the side of the business, and an enabling policy on the part of Government. At the startup stage and at a certain level, there is a requirement of financial support in terms of subsidy from the Government. This is what the Centre seeks to achieve through effective implementation of NEIDS. It also aims to prevent few large industries cornering most of the benefits of the scheme.