Trade Commerce and Industries of Uttarakhand

 

Blessed with almost all agro-geo climatic zones, Uttarakhand has immense potential forhorticulture and floriculture-related business. The state has 175 rare species of medicinal and aromatic plants.

Forest area covers about 68.4% of the state. The state’s forest revenues increased at a growth rate of 9.50% between 2004-05 and 2013-14 to reach $61.58 million in this period. Uttarakhand is being developed as an ‘energy state’ to tap the hydropower electricpotential of over 25,000 MW. About 76.85% of the capacity owned by state utilities is based on hydropower.

The state is located at the foothills of the Himalayas. The presence of several hill stations, wildlife parks, pilgrimage places and trekking routes make Uttarakhand an attractive tourist destination. Flow of tourist arrivals in the state grew at a rate of 12.54% in 2014-15 from the previous year (2013-14).

Uttarakhand has witnessed massive growth in capital investments due to a conduciveindustrial policy and generous tax benefits. Therefore, this hill region is one of the fastest growing states in India. The state’s GSDP increased at a growth rate of 15.32% between 2004-05 and 2014-15 to touch $23 million. Per capita GSDP stood at Rs 2,233 as against the all states’ average of Rs 1,389.61 in 2014-15.

Industrial distribution

The tertiary sector’s (services) share in GSDP was 50.10% in 2014-15. Trade, hotels and restaurants are the largest subgroups of the sector, and registered strong growth compared with the previous year. The secondary sector (manufacturing) had the fastest growth of 18.7% followed by the tertiary sector (15.5%) and primary sector (9.5%) between 2004-05 and 2014-15.

The share of the secondary sector in the GSDP was 35.97% in 2014-15; its growth was mainly driven by the manufacturing sector. However, agriculture and handicrafts are the traditional vocation for the majority of people in Uttarakhand.

Sugarcane, wheat, rice and potato are the key agricultural products of the state. In 2014-15, the total food grain production in Uttarakhand was around 2.07 million tonnes. Sugarcane is the major crop in the state with production of about 7 million tonnes in2014-15

. The production of oilseeds and pulses during 2014-15 was estimated to be 36,000tonnes and 62,000 tonnes respectively. The state government aims to set up cold chain storage warehouses in every district by 2022.

Exports from the state reached $1.41 billion in 2014-15, reflecting a growth of 8.1% in comparison to 2013-14. The state government has a planned expenditure of $5,448.9 million for various industrial, social and infrastructure sectors during 2015-16.

Major initiatives to boost growth

Uttarakhand has been successful in attracting long-term investments because of its key industrial and sector-specific policies. The state offers a wide range of benefits in terms of interest incentives, financial assistance, subsidies and concessions.

The state has a robust social and industrial infrastructure, virtual connectivity, over 38,680.92 km of road network, two domestic airports, 345 km of rail routes and an installed power capacity of 3,177.27 MW.

Directorate of Industries is the state-level office responsible for implementing the policies and programmes for industrial development in the state.

Some of the major initiatives taken by the government to promote Uttarakhand as an investment destination are:

 The state is being developed as an ‘energy state’ to tap the hydropower electric potential of over 25,000 MW.

 The state government is planning to launch a rail project between Rishikesh and Karanprayag. The length of the railway track would be around 12 km.

 In 2015-16 budget, the government has announced plans to invest $16.77 million for industrial development.

 With the setting up of the Software Technology Parks of India (STPI), the earth station at Dehradun now offers high-speed connectivity.

There are more such earth stations planned at other locations. Facilities by BSNL and Reliance are also available in the state.

 The state government has decided to set up a marketing board to boost horticulture products in the state.

 The state government aims to set up cold chain storage warehouses in every district by 2022

.  The state plans to utilise and leverage biotechnology for accelerating the economic development by converting its bio-wealth into economic wealth.

 The single-window facility is available under a two-tier system – the District Industrial Centres (DIC) at the district-level and State Infrastructure and Industrial Development Corporation of Uttarakhand Ltd. (SIDCUL) at the state-level.

These centres are responsible for providing information and escort services to entrepreneurs. They also maintain a data bank. Industrial hub in making The state is being transformed from an essentially agrarian and services driven economy into a hub of industrial activity. Following are the industrial estates in Uttarakhand:

 Four integrated industrial estates (IIEs) in Haridwar, Pantnagar, Sitarganj and Kashipur.

 Pharma city at Selaqui.  IT park at Sahastradhara Road (Dehradun).  Growth centre at Siggadi (Kotdwar). Some of the other initiatives towards increasing industrial activity include:

 Under the special integrated industrial promotion policy (2008), the government’s incentives include exemption from stamp duty, rebate of up to 90% on value added tax, rebate on power tariffs and transport subsidy.

 The government expects to attract ventures in eco-tourism, adventure sports and service sectors through this policy.

 Proposed strengthening of the single-window – contact, information and facilitation mechanism.

 Provision of arranging financing through a consortium of banks and financial institutions.

 Provision to facilitate expeditious land availability for setting industrial venture and infrastructure projects.

In 2013-14, the state government of Factories: announced plans to invest $833.3 million in the next three-five years towards infrastructure projects. Under the Special Mega Industrial Policy 2013, investments worth more than $12.4 million are expected under various sectors attracting concessions. These mega industrial units would enjoy a host of concessions including 25% exemption on land premium at base price; 50% reduction in stamp duty; central sales tax at 1% and 50% exemption on electricity duty for captive generation for seven years.

Major Industries

Floriculture and Horticulture

Uttarakhand has almost all the different agro-geo climatic zones making it particularly conducive to commercial horticulture and floriculture. Floriculture is being developed in a big way in order to meet the demand of both – the domestic as well as the foreign markets. The climate is ideal for growing flowers all round the year. Hence, it is proposed to establish floriculture parks with common infrastructure facilities for sorting, pre-cooling, cold chain, processing, grading, packing and marketing facilities. Horticulture is also being promoted in a big way through adequate incentives and facilities to the industry.

Agro and Food Processing Industries

The state government provides assistance in establishing small and medium size agro parks, food parks etc., which in turn are expected to provide common infrastructure facilities for storage, processing, grading and marketing. Four Agri Export Zones (AEZs) have already been declared under the AEZ scheme of Government of India for leechi, horticulture, herbs, medicinal plants and basmati rice.

Uttarakhand has been included in difficult area category by the Ministry of Food Processing Industry (MFPI) and hence units being set up in Uttarakhand will be eligible for higher incentives under the scheme of MFPI. The state government is also providing matching subsidy for projects under various schemes of Agricultural and Processed Food Products Export Development Authority (APEDA), National Horticulture Board (NHB), Ministry of Food Processing Industry (MFPI) and the Natural Medicinal Plant Board (NMPB).

Biotechnology

Biotechnology (BT) is poised to make significant contributions in agriculture, human and animal health care, environment management and process industries. Rare species of plants and animals found in the state, add to its natural advantage in this sector.A high level Biotechnology Board is also being setup under the Chairmanship of the Hon’ble Chief Minister. The proposed strategy of the state with respect to the biotechnology sector is:

 Units coming up in this sector, including the R&D units in this field, shall be accorded industry status and the provisions made for the IT sector shall be made applicable to this sector as well.

 Establish an internationally competitive business infrastructure and environment for the biotechnology industry in the state.

 Develop Uttarakhand as a centre of excellence in biotechnology by providing necessary education and training facilities for the creation of a large pool of multi-skilled, technically competent manpower and organizations for state of the art biotechnology research in the state.

 A biotechnology park will be developed near Pantnagar to achieve the vision of the government. The proposed Biotechnology Park will integrate resources and provide amongst others, a focused institutional set up for accelerated commercial growth of Biotechnology and Bio-Informatics.

Information and Communication Technology

The state is naturally endowed and has all prerequisites for developing as a preferred destination for IT & ITES along with hardware production. IT & ITeS have been accorded the status of Industry. Several initiatives have been taken to promote IT and ITeS industry in Uttarakhand. Uttarakhand offers high-speed connectivity with the establishment of an STPI earth station at Dehradun and proposed earth stations at other locations. Facilities by BSNL and Reliance are also available in the state. A dedicated IT park is already coming up in Dehradun and others are in the pipeline. Also, stamp duty concessions are proposed for units located in IT parks.

Hydro power

The state has untapped potential for generating hydropower, which is both cheap and clean. Nearly 15000 MW of hydropower can be generated in the state. The government has identified 47 small hydro sites (upto 25 MW) for allotment to the private sector. Also, 17 major hydro sites (25-100 MW) have been taken up for development.

Forest Products-

Herbs and Spices Since a significant part of the state is under the forest cover (almost 70 percent), there exists excellent potential for the development of forest resources basedindustries. In addition, there is ample scope to develop industries based on forest and agro wastes such as lantana, pine needles and plant & vegetative fibers. Uttarakhand is also a storehouse for a rich variety of herbs, medicinal and aromatic plant species. With a view to utilize these resources, a medicinal and aromatic plants export zone has been set up covering seven districts of Uttarakhand and specialized herbal parks are in the offing.

Tourism

Tourism industry has been accorded the status of a thrust sector in the state and the state government has set up statutory Uttarakhand Tourism Board as an apex body for development of tourism in the state. Several areas of Uttarakhand are already established as centres of pilgrimage tourism. Huge investment potential exists in the tourism sector including:  Development of facilities for providing spiritual lessons, reiki, and other rejuvenating courses.  Eco- tourism hotels, spa, resorts, amusement parks and ropeways.  Winter sports at places such as Auly, which have the requisite terrain for the purpose.  Adventure tourism A detailed and separate tourism policy has also been formulated under which a multitude of incentives have been provided to boost the industry:  New tourism units will be allowed rebate/deferment facility in respect of luxury tax for a period of five years from the date of commencement.  New ropeways installed in the state will be exempt from payment of entertainment tax for a period of five years from the date of commencement.  New amusement parks set up will be exempt from entertainment tax for a period of five years from the date of becoming fully operational.

Industrial policy

Objectives:

 To create high quality world class infrastructure facilities in the State and enhance connectivity to the National Capital Region (NCR) and other leading markets.  To provide single window facilitation in the State to expedite project clearances and provide an investor friendly climate.  To provide and facilitate expeditious land availability for setting Industrial ventures and Infrastructure projects.  To promote and encourage private sector participation in the development/management of Industrial Estates/Areas, Growth 3 Centers, IIDCs, Special Economic and Commodity Zones and Parks, Theme Parks, Tourism infrastructure, development of new tourist destinations, Airports/Helipads/Airstrips, Roads, generation, transmission and distribution of power, and projects in the area of Horticulture, Floriculture, Bio-technology etc.  To provide assured, good quality, uninterrupted and affordable power for industries.  To simplify and rationalize labour laws and procedures in tune with the current day requirements  To promote Small scale, Cottage and Khadi and Village Industries and Handicrafts Silk and Handloom sectors  To address problems of sickness and incipient sickness in Industry, SSIs and facilitate required restructuring and rehabilitation, etc.  To promote Industries based on local resources particularly in the Areas of Agriculture, Horticulture, Agro & Food Processing and Floriculture.  To promote planned and scientific exploitation of the mineral resources of the State and maximize value addition within the State.  To promote leading edge technologies and sunrise industries in the State in the areas of Information Technology and Bio-Technology.  To promote public/private sector involvement in generation of power and strengthening of the transmission and distribution network.  To promote Tourism as a focus area and develop Uttaranchal as a premier global tourism destination.  To provide special attention for setting up industries in remote areas.  To develop and strengthen air, road, rail and other connectivity.  To develop Uttarakhand as a premier education and research centre.

Salient Features:

 Single Window Contact, Information and Facilitation by District Industries Centres and SIDCUL.

 Single Window Clearance Mechanism

 Time Bound Deemed Clearances.

 Establishment of Udyog Mitra.

 Development and Promotion of Industrial Estates by providing Land/Plots to Entrepreneurs.

 Encouraging Private Sector Participation.

 Professional Advice to the Projects for developing infrastructure by U-DEC

 Mega Projects Over 50 Crores will be considered for grant of further concessions.

 State Government and SIDCUL will provide financial credit to the entrepreneurs.

 Enhancement of Current Power Production of State.

 Simplification of Labour Laws.

 Development of Remote and Hilly Powers

 Emphasis on Khadi and Village industries

 Development of Handicrafts, Handlooms, Wool Based Industry, Agro and Food Processing Industry, Floriculture etc.

 Special attention to the Tea Industry and Forest Based Industry.

 Schemes for IT industry, Biotech Industry and Industry Based on Herbal & Medicinal Plants.

Benefits:

 100% Central Excise exemption for 10 years on items other than those mentioned in the negative list in the Concessional Industrial Package announced by the Central Government.

 100% Income Tax exemption for first 5 years and 30% for next 5 years for the Companies and 25% for others.

 Capital Investment Subsidy @15% with a maximum of Rs. 30 Lakhs. (Rs. 3 million)

.  Exemption from entry tax on Plant & Machinery for setting up Industry or undertaking substantial expansion and modernization.

 Land use conversion and development charges and regime will be rationalized.

 Stamp duty concessions will be provided in respect of land in specialized commodity parks, including I.T. parks.

 For the purpose of Interest Incentive, Substantial Expansion shall mean additional investment of not less than 25% of the undepreciated book value of plant and machinery of an industrial unit.

 For revival/rehabilitation of sick SSI units, interest incentive @ 3% with a maximum of Rs. 2 lakhs per annum shall be provided on the loan taken under fully tied up revival and rehabilitation package from financial institutions, banks etc.

 In the case of sick non-SSI units, Government will sympathetically consider measures required under revival/rehabilitation package drawn by Operating Agency/Financial Institutions/Banks.

 100% exemption on Entertainment tax will be allowed for Multiplex projects in the State for a period of three years, and for all new amusement parks and ropeways for five years.

 75% of the Total Expenditure subject to a maximum of Rs.2 lakhs incurred in obtaining national/internationally approved quality marks such as ISO series certificate etc., shall be reimbursed to the entrepreneurs provided that the reimbursement / grant availed for this from all sources should not exceed the total expenditure on this head.

 75% of the cost subject to a maximum of Rs. 2 lakhs shall be made available to the entrepreneurs in the shape of assistance for registering their patents, provided that the total reimbursement/grant availed for this from all sources should not exceed the total expenditure on this head.

 For educated unemployed youth, financial loan assistance for projects upto Rs. 2 lakhs in case of Manufacturing/Service Industry and projects upto Rs. 1 lakh in business sector

 Industries generating employment opportunities shall be encouraged.

 Purchase preference and price preference will be given to State SSIs in State purchases. Purchase preference shall be accorded to Non-SSI units within the State vis-avis units outside the State.

 Matching State subsidy on approved projects of National Horticulture Board (NHB), Agricultural & Processed Food Products Export Development Authority (APEDA), National Medicinal Plant Board (NMPB) subject to a maximum of Rs. 20 Lakhs and subject to a total subsidy not exceeding over 50% of the project cost.

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