The finance, labour and environment ministries are acting in tandem to give effect to the key features of the national manufacturing policy (NMP) announced in last October. While the Budget has taken a slew of measures to spur investments in SME manufacturing units, including a tax waiver for capital gains from residential property sale if invested in SMEs, the labour and environment ministries have now agreed to put in place the lenient regime for units in the proposed national investment and manufacturing zones (NIMZs).
Official sources said industry department secretary PK Chaudhery recently met with the labour secretary Mrutyunjay Sarangi where they agreed to resolve all outstanding issues and decided on having a common forum for addressing labour compliance issues with respect to NMIZs. The idea is to reduce the paperwork and reduce the statutory-compliance cost for the units.
Also, it has been decided by the two ministries that mining will also be considered a manufacturing activity eligible for the special dispensation. The matter will now be taken up with the mining ministry.
Presenting the Budget, finance minister Pranab Mukherjee said that for SMEs, the turnover limit for compulsory tax audit of accounts as well as for presumptive taxation is proposed to be raised from R60 lakh now to R1 crore. SMEs, he said, were the building blocks of the economy.
The proposed NMIZs (which could be 5-7 in number) including the ambitious Delhi-Mumbai Industrial Corridor (DMIC) are expected to jointly create 100 million new jobs by 2022.
Besides fiscal sops, the NMP also provides for certain relaxations in regard to labour and environment norms with in-built safeguards.
Units in these zones will enjoy single-window clearance, a liberal exit policy, incentives including exemptions from capital gains tax, and incentives for green manufacturing and technology acquisitions, which was the area of conflict between industry and environment ministries. The policy said that once the land for an NMIZ was cleared by the environment regulator, each unit in the zone won?t need individual clearances.
Reacting on this, the official said, ?An agreement has also been reached with the environment ministry where an advisory to the States has been sent to notify single window clearance norms at the earliest.?
The NMP seeks to raise share of the manufacturing sector in the Gross Domestic Product (GDP) to 25% from the present 15-16% in the next decade. NMP also envisages facilitation by the government in infrastructure development and improvement of the business environment through rationalisation and simplification of the regulatory framework.