The five-year excise duty holiday to the industries in the earthquake-ravaged Kutch district of Gujarat will not result in a substantial revenue loss to the government.
Prime minister Atal Bihari Vajpayee had announced this benefit for the industries in Kutch during his recent visit to the earthquake affected areas.
The state government has also declared a five-year sales tax holiday to promote industries in the area.
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Sources said that Kutch was not an industrial belt and excise duty contribution from the region was insignificant.
They added that the revenue department would notify the excise exemption after receiving directives from the PMO in this regard.
Sources said that the benefit was unlikely to bring any major industrial activity to the area, as in the past also such benefits to a particular area had failed to produce the expected results.
They added that the northeast region was one such example for which a ten-year excise holiday was in place. However, any significant industrial activity is yet to pick up in the region.
Sources said business propositions and not tax incentives attract industrialists to a particular region.