The world?s largest steel makers, ArcelorMittal and South Korean steel giant Posco, are likely to get bumper sops for their proposed mega integrated steel plant projects in Karnataka.
?As per the existing state industrial policy, standard incentives are available. In addition to these, for mega projects investing more than Rs 1,000 crore, special incentives can be given,? VP Baligar, principal secretary, commerce & industry, Karnataka government, told FE. ?They (Arcelor Mittal and Posco) did not ask us, but the government will offer them possible incentives,? he added.
Baligar also said the government would consider giving tax incentives like refund of tax and that the government would decide the period and volume of concession based on the investment. ?The higher the investment, the higher the concession,? he said.
The state government had last month formally cleared the steel plant proposals of Posco and ArcelorMittal. Posco would invest Rs 32,300 crore to establish a steel manufacturing facility to produce 6 million tonne per annum (mtpa) while ArcelorMittal would invest Rs 30,000 crore for a 6-mtpa capacity plant in Karnataka.
While the state government had earlier allotted 4,000 acre in Bijapur district to Arcelor Mittal, the state had later increased the allocation to 4,900 acre at Kudithini, Bellary district. Arcelor Mittal, on its part, was keen on securing land in the iron-rich Bellary district.
A special package of incentives, over and above the standard package, will be offered to mega projects, based on the recommendations of a state high-level committee, headed by the chief minister, said an official in the Karnataka Udyog Mitra, the government-owned single window agency promoting industries in the state, requesting anonymity. The chief minister will announce the special packages for the ArcelorMittal project during the global investors? meet, to be held in Bangalore in the fist week of June, the official added.
ArcelorMittal and Posco are the two largest projects (in the above-Rs 30,000-crore category) coming to Karnataka after the state government had announced its 5-year industry policy in 2009.
According to the Karnataka Industrial Policy 2009-14, the government offers concessions and incentives by dividing each taluk in the state into four zones. Kudithini village in Bellary taluk, where ArcelorMittal had been allotted land, comes under Zone 3 category?under the backward taluk class, the Udyog Mitra official said.
ArcelorMittal?s project would get 100% exemption from payment of entry tax on plant, machinery and capital goods for an initial period of 3 years from the date of commencement of the project. The entry tax exemption on raw materials, component parts and consumables is offered for a period of five years from the date of commencement of commercial production. In addition, any project with an investment of more than Rs 3,000 crore and with over 1,250 employees in zone 3 (Bellary taluk) would get an interest-free loan on VAT. In this case, it would be 25% of assessed gross VAT for the initial 12 years, subject to a maximum of 50% of the total value of fixed assets. The loan should be repayed in in five annual installments after 12 years.
In the case of Posco, the company has not yet chosen the land. However, the government expects the South Korean steel major to select a site in any one of the districts like Bellary, Koppal, Bagalkot, Haveri, Gadag and Raichur. Taluks in all these districts are categorised either under the backward or the most backward classes?and this will mean a higher benefit for manufacturing projects.