Seems like the impact of the global economic meltdown has hit Himachal Pradesh, the hill state that enjoyed special concession including tax holiday, making it a preferred destination for investment.

A major attraction in Himachal Pradesh has been the exemption from income tax, which will be available up to 2013. Since the grant of the Union government special package in 2003, the high-powered single-window authority has cleared investment proposals worth Rs 35,667 crore with a potential to generate 4.08 lakh jobs. In all, 11,404 new units and 321 expansion projects have been approved.

However, a January survey by the department of industries, government of Himachal Pradesh, says ?In Himachal Pradesh, investment plans have been put on hold over the past few months and only projects worth about Rs 5,000 crore were actually put under implementation. It is clear that total investment following the grant of industrial package will come to only around Rs 10,000 crore against the expected Rs 35,000 crore.?

There has been a decline of up to 40% in domestic tourists into the state in the last six months, and a 60% fall in foreign tourists in the same period. This is a cause of worry for Himachal Pradesh Tourism Development Corporation, which had set a profit target of Rs 5 crore during 2008-09.

Alarmed, the PHD Chamber of Commerce and Industry has suggested exploring the possibility of developing a bigger airport near Shimla to facilitate the landing of bigger aircrafts and attracting high-end tourists. Dhian Chand, chairman HP Committee of PHDCCI, in a memo to the chief minister Prem Kumar Dhumal, has sought relief for the power, tourism and biotechnology sectors.

The Chamber is worried is because no major industrial proposal has been received in the recent six months and those submitted earlier have been cleared by December 2008. The lack of demand and the reluctance of the financial institutions to provide funds are the major factors discouraging companies from implementing new projects.