Punjab’s new industrial policy, to be announced shortly by the Shiromani Akali Dal-BJP government, is likely to lift the sagging business sentiments and the diluting demand, which have put various sectors in a jeopardy.
Industrialists have demanded that the upcoming policy should have provisions like a dedicated land bank for industries, a freight subsidy, abolition of entry tax and rationalisation of taxes, better infrastructure, among others.
The faulty tax structure of the state is the cause of concern for all the stakeholders. High rate of taxation in the form of infrastructure cess, rural development fund, market fee, rationalisation of power tariff are the issues the industry expects the state government to address.
Speaking to Business Standard, SC Ralhan, regional chairman of the Engineering Export Promotion Council, said: “The government must create land bank for the industries and create new focal points. In the absence of land bank, the industries are coming up in a haphazard manner.
Moreover, the land is too expensive which prohibits the industrialists to set up their bases in Punjab.”
He added: “Punjab has a disadvantage of location, so the government must introduce fright subsidy to facilitate the manufacturers. Also, the government must reduce VAT on commercial gas from 12.5 per cent to 4 per cent.”
Further, to encourage the usage of gas in industries the government should offer them a capital subsidy of Rs 5 crore, Ralhan said.
“Besides, timely refund of VAT is also one of our key agenda which should be taken care of in the industrial policy, he added.
The food processing industry, the backbone of Punjab’s agrarian economy, has also been reeling under the tax structure that makes it unviable. According to AP Sharam, former president of the Solvant Extractors Association of India, “The food processing industry survives on the wafer thin margins. The revision of infrastructure cess on the inputs, which was from 1 per cent to 2 per cent in 2007, and to 3 per cent in September 2008, has severely undermined our bottom lines,” he said.
VK Goyal, chief executive, Vardhaman Spinning & Ginning Mills (Ludhiana) said: “The government must abolish the entry tax on cotton which is being charged at 4 per cent. Also, Punjab charges an 8.5 per cent tax on cotton excluding entry tax, which makes our product costlier than that of other states.”
The upgradation of infrastructure Power, Roads air connectivity and formation of group of eminent industrialists to consistently review the competitiveness of the industries is also one of the demand of the industrialists.
As the global meltdown had seriously impacted exports of textiles, handtools, garments, hosiery and steel products from the State, the government must focus aggressively to boost these sectors.
Apart from these demand, Industrialists demanded and suggested that is need for PPP in the building of roads and airports, focus on food processing sector, crop diversification, backward linkages with the farmers, vocational industrial training, reforms in governance, strengthening of delivery mechanisms, reduction in transport costs, abolition of mandi tax, and accent on health and education sectors.
It is worth noting that The UNIDO review report would form the basis of the new industrial policy. The review report had cited high land prices as one of the biggest obstructions in the state’s industrial growth. Dr. Isher Judge Ahluwalia said the report identifies the main ingredients for industrial take-off in Punjab as natural resource development, infrastructure development to overcome the locational challenge, human resource development and creation of a investor-friendly business environment.
Some of the major thrust areas mentioned in the Report are: synergy between agriculture and industry – textiles, agro-processing, synergy between small scale and large scale sector, rejuvenating the small scale sector – auto-components, garments, leather, attract investments in large scale sector – automotive, textiles, food processing, which will build links with small scale sector and / or agriculture, promoting knowledge-based industries, Biotechnology, IT and IT-related sectors etc.
