Voicing concern over the extension of industrial concessions to the two states, which has led to industries in Punjab shifting their bases there, Badal said, The extension of industrial package to these neighbouring states disturbs the level-playing field among states in the spheres of development and economic growth. Due to these incentives, there is a growing incidence of flight of industries from Punjab to the neighbouring states.
Regular concessions to Himachal Pradesh and Uttarakhand without giving the same package to Punjab acts as a deterrent to economic growth of Punjab, Badal said.
The industrial package to Himachal Pradesh and Uttarkhand allows exemption from excise duty for investment in these states. The exemptions were to lapse in March but the commerce ministry has now recommended the extension of industrial package to these states until 2013.
Punjab deputy chief minister, Sukhbir Singh Badal told FE, The exodus of business houses can be stopped if such a package is also alloted to Punjab.
The period of exemption is 10 years from the start of the date of commercial production. All investments made up to March 31, 2013, will thus enjoy the benefits for 10 years even if the 100% excise holiday is allowed to lapse on this date. As a result, collection in Punjab has taken a hit with tax exemptions in other states making investment avenues there more lucrative.
In 2002-03, collection of central excise in Punjab was Rs 2,654.86 crore. It went up to Rs 2,786.46 crore in 2003-04.
However, in 2004-05, when industry started shifting from Punjab to these states, revenue from excise in the state came down to Rs 1,896.99 crore. In 2005-06, it fell to just Rs 819.21 crore.
An official spokesman of central excise told FE, The excise duty collections have reduced by 30%, 59% and 34% in Chandigarh, Jalandhar and Ludhiana zones of central excise, respectively. Interestingly, none of the centre falling in Chandigarh zone was able to achieve the target of excise revenue in 2008-09.
MP from Ludhiana, Manish Tewari told FE, A delegation of the industry has also sent a memorandum to Prime Minister Manmohan Singh seeking his intervention in extending same concessions to Punjab similar to Himachal Pradesh and Uttarakhand to ensure that industry did not suffer in Punjab.
Enquiries reveal that several industrial units mainly in pharma sector had moved to Himachal Pradesh and Uttarkhand apparently to avail of the tax holiday.
Haridwar, Roorkee, Dehradun and Rudrapur are the main hubs of pharmaceutical firms in Uttarakhand while Baddi, Nalagarh and Kala Amb in Himachal Pradesh house such units.
Dabur, Alembic, Dr Reddy Lab, Alkem, Mankind, Torrent, Lupin, Cadila, Ind-Swift Lab, Unichem, Morepen, Klitch, Ranbaxy, Nector Life Sciences, Surya, Cachet, Indchemie, Galpha are some of the major pharma companies that have set up units totaling over Rs 5,000 crore investment in the recent years.
Rajeev Bindal, a cabinet minister in Himachal Pradesh said, There are more than 700 pharmaceutical industries in Himachal Pradesh and Uttrakhand and today 30% demand of pharma production of the country was being catered by these two states only.