Governmental Incentives and Subsidies for Manufacturing Companies in India.

 

The webinar “Take What You Get: Governmental Incentives and Subsidies for Manufacturing Companies in India” was conducted by the Indo-German Chamber of Commerce on July 9, 2021. The speaker Mr.  Anand Khetan has 14 years of experience and is working with Rodl & partner since 2013.

He provided brief overview of PLI or Production-linked incentive; the state industrial policies of Gujarat, Maharashtra and Tamil Nadu; and the incentives provided under the foreign trade policy.

The government has introduced a number of initiatives to attract foreign investment and turn India in to a manufacturing hub. The biggest reason is to ensure that the country does not suffer from supply chain disruptions. More investment will also lead to an increase in the employment.

The product linked incentives have been rolled out and are currently in various stages of completion. 

Application window open - Pharmaceutical drugs

Application window closed - Solar PV Modules, IT hardware and food processing

Pending cabinet approval - Automobiles & Auto components

For the sector pf pharmaceutical drugs, the main objective is technology transfer and reduction of royalties that need to be paid. A company is selected on the basis of:

·       Annual R & D expenditure

·       Own manufacturing plants

·       Gross manufacturing investment

The incentive provided for each year is calculated on the basis of increment in sales of the current year as compared to the base year.

All the state policies had similar overall aims to attract investments, create employment and increase the annual growth rate. The thrust sectors were also similar revolving around electric vehicles, Industry 4.0, IT-enables services and Agro & food processing.

The state industrial policies have clearly defined categorisation on the basis of amount of investment, the number of years, gestation period etc. The incentives and subsidies provided (on the basis of these categories.):

Maharashtra - Interest Subsidy, Electric Duty Exemption, Stamp Duty Exemption, Power Subsidy, Investment Promotion Subsidy

Tamil Nadu – Capital Subsidy, Stamp Duty Exemption and SGST Reimbursement

Gujarat – Interest Subsidy, Capital Subsidy

Gujarat has also removed any upper limit to the amount of incentive that can be provided.