NE trade body out to woo investors

If investment figures in the North Eastern Region in the past 9 years are anything to go by, then it is beyond anyone's doubt that the 1997 North East Industrial Policy (NEIP), which was expected to bring a sea change in the economic scenario of the region, could not deliver.

Investments in the region came only in trickles, with just Rs. 1,200 crore in the last five years.

To project north eastern states as a promising destination for the investors, the Federation of Industries and Commerce of North Eastern Region (FINER) has come up with a new idea of making the eight north eastern states a single economic unit.

With similar excise benefits available for three other industrially backward states of Uttaranchal, Himachal Pradesh and Jammu and Kashmir, the eight North Eastern states, given their geographical disadvantage, have become far less attractive, nullifying the very objective behind NEIP.

The region still remains non-rewarding for investors, with vast resources still lying unexploited and unharnessed.

Uttaranchal, Himachal Pradesh and Jammu and Kashmir, due to their geographical proximity to the national capital and mainland India, attracted investment of Rs 4,000 crore, Rs 18,000 crore and Rs 2,000 crore respectively.

The central government has recently extended the deadline for excise duty exemptions by another four years for Uttaranchal, Himachal Pradesh and Jammu and Kashmir.

NEIP is due to expire on March 31, 2007.

The north-eastern states and industry associations of the region are clamouring for an earliest extension of the industrial policy with a fixed term, and with new incentives and subsidies to make the region look lucrative.

Official assurance from the central government hasn't yet come in any categorical terms.

FINER believes it will also increase the bargaining power of the north eastern states, vis-à-vis, central government.

"The 8 north eastern states have to be made a single economic unit and policies and packages should be drafted accordingly", said R S Joshi, vice-president of FINER to Business Standard.

"We talk of free trade agreements and SAFTA with other countries, why not a free trade zone within the region in the country", added Joshi.

Making the north eastern region a single economic unit would result uniformity of taxes throughout the states, thus ending trade barriers and movements within the region.

This would surely make the whole region more investment conducive and ensure even distribution of investment projects, said Joshi.

He said FINER would soon take up the issue and try to impress upon the chief ministers and political leaders of the eight north eastern states to work on creating a single economic unit.

Further he said, if given incentives and tax benefits, as given to manufacturing sector under the NEIP, the services sector has ample scope to grow in this region.

Contribution of services sector to the regions' economy is far lower compared it's contribution to the national economy, he said. "Only incentives and tax benefits can bring it at par with the national level", he said.

Currently, The rate of service tax is very high in this region.

Health and tourism, if declared as industries have enormous potential to spin money for this region, he said.

Giving adequate transport subsidy to create a level playing field, exemption of industries of the region from paying Minimum Alternative Tax (MAT), which nullifies the idea behind waiver of taxes for industries, and timely disbursement of subsidies are some of the demands that FINER has been demanding for some time to make the region look more attractive and enable it to compete with Himachal and Uttaranchal.

In addition, loans and credits at concessional rates and to develop a capital market and strengthening of Guwahati Stock Exchange are direly needed for the industries of this region, said Joshi.

Industries of the region which are mainly SMEs, find it hard to raise capital from capital markets outside the region.

A FINER delegation will be in the national capital shortly to impress upon the central government to extend NEIP with various concessions.

They are also expected to meet the MPs of the north eastern region to initiate dialogue on creating a single economic unit.