UP industries find better options in Uttaranchal

Industries in Uttar Pradesh are moving into Uttaranchal, thanks to tax holidays and adequate power being offered by the state.

Ninety entrepreneurs based in Kanpur are already considering shifting or expanding their production base into the newly created state. This has created the second phase of de-industrialisation in UP.

Unlike the first phase, during which the state saw many industries closing shop after new economic policies were introduced in 1991, this phase has been induced by an entirely new set of factors.

The creation of Uttaranchal and the many incentives that it provides has severely hit industries in western UP. Many west-based entrepreneurs are relocating their factories to Uttaranchal.

Relocation is not restricted to Uttaranchal alone. Industry is also shifting base to Hardwar. P C Kuerelle, of Kuerelle group of industries and divisonal chairman of the Indian Industries Association (IIA), a body of small and medium-scale entrepreneurs.

And Khetrapal, vice president of the local unit, said that ninety Kanpur-based units, have already made an initial down payment for plots in the newly created Kashipur industrial area of Hardwar.

"There are plenty of reasons for the shift," says Kuerelle.

"In Uttaranchal power is guaranteed at Rs 2.15 per unit as against Rs 4.50 per unit in UP. Even at this high rate we do not get power regularly, hence we have to run our generators. Then there is the income tax exemption for five years. The proposed ten-year exemption from excise duty and sales tax, on which negotiiations are still on is a further reason for relocation," he said.

"We have met the chief secretary of the state , Mr. RS Tolia and the ST concessions will shortly be finalised. already we have been assured ten year sales tax deferment upto Rs.25 cr. All of us have given 25% of the initial money for plots".

About 100 units have already migrated from the western UP districts like Muzaffarnagar ndsaharapur , who are located very close.The entrepreneurs have not changed their residence. they live in UP and go to their factories which are barely 40-50 km away.

There is huge difference in taxation as well.the CST in UP is of 4% and in Uttaranchal it is only 1% . UP cannot compete and the cumulative difference turns out to be huge, they point out.

Asked if UP can also give subsidy ?They assert that due to WTO rule UP cannot give subsidy. Asked about the power, they say that Uttaranchal has plenty of power based on Hydro -electric and UP has thermal. The former is giving power now and the latter says it will be given only after four years.

Lastly the industrialists are despondent about UP's future.They say it is going the Bihar way. Even to get an innocuous NOC you have to spend lot of time and put up with insults.U is going the Bihar way.

There is no comparison with either Andhra Pradesh or with Gujarat where due to competenet political leadership things happen very quickly.