MP to amend industry policy mid-way

There's bad news for corporate houses planning to expand or invest in Madhya Pradesh.

The state government is learnt to be amending the existing Industrial Promotional Policy 2004, launched by the then chief minister Uma Bharti, although the policy is meant for the period 2004-2009.

A sub-committee has been formed to review the policy. The amended version of the policy is likely to come soon from the Shivraj Singh Chouhan government. The government has sought suggestions from industry associations in the new policy, which is likely to be declared after the review.

The existing policy offers sops to sick units, concessions for companies with expansion plans in sales tax (now VAT), and power subsidies to sick units. But the state is losing large amounts because of this.

"A sub-committee formed recently will review the existing industrial promotion policy. The committee has Power and Public Works Department Minister Kailash Vijayvergiya, Finance Minister Raghavji and Commercial Tax and Industry Minister Babulal Gaur. The committee is likely to do away with some concessions and sops," a government insider told Business Standard.

The main points of the industry policy plaguing the state government are exemptions on power bills to units which are either declared sick by the Board of Industrial and Financial Reconstruction (BIFR) or are slated to be taken over and on revival of sick small-scale segment. Further, the industry policy offers exemptions from mandi tax to the food-processing industry on purchase of raw material, and finally a set-off of 2 per cent offered to the textile unit on yarn purchase from the state.

"In first case, the industrial units are taking undue advantage of power bills. The energy department has also denied waiving off power bills of crores of rupees to sick unit in absence of budget. Energy department does not industry department's recommendations on power bill exemptions.

A separate budget of Rs 4 crore has been allocated to the department of industry to meet the industry demand on power bill exemptions but the amount is not sufficient. In the second case of mandi tax exemptions soya crushers are taking advantage on high capacity. And lastly the set-off of 2 per cent on yarn purchase for textile units has pushed the ailing Burhanpur powerloom sector into deep red."

The previous government utilized mandi tax fund in road construction. But the power bills of sick units are going higher day by day. The concessions varied from sector to sector and industry-to-industry. As a result small scale and big industries are dragging the state government in litigations on power issue.

Though BJP had mentioned in its manifesto to revive sick units and attract new investment by introducing new package to make smoking cheaper.

"The policy had been prepared under sever pressure. The then chief minister Ms Bharti did not allow officials to speak and seek suggestions from industry associations, now the amendment policy will incorporate all valuable suggestions from corporate houses," the source said," a frequent overhaul in the policy will infuse a fatigue factor in investors."

In fact the policy already has sloppy rules. It does not speak of store and purchase rules, textile sector has been given thrust, and only 20 acres of land has been offered for mega units. Despite tall claims of the government industry policy has hardly attracted any investment.