When Punjab deputy chief minister Sukhbir Singh Badal told FE about eliminating the state?s disadvantages in making it an investor-friendly destination, we were suitably impressed with the state having as many as five airports, better road infrastructure, being power surplus, etc. This was before the state announced its new industrial policy on June 3, with incentives for new industry that are being described as ?historic? and ?phenomenal?.

Badal?s carrot stick for the industry could not be juicier?the more you spend, the more concessions you get. Sample this: for investments over R500 crore, get as much as 80% off in terms of value added tax and central sales tax exemptions on the fixed cost of investment. And even on investing as little as R1 crore, one could get benefits as much as half of the investment.

Hopeful of attracting investment of R2 lakh crore in three years, Badal claims these incentives will even prompt an exodus of industry from states such as Gujarat and Madhya Pradesh to Punjab.

Ambitious plans for attracting industry have been in the works for quite some time now. After winning a second term in last year?s Assembly polls, the SAD-BJP government has got another five years to execute its plans. Badal decided to focus on the weaknesses of the state and provide what the industry is looking for?clear and industry-friendly policies, peaceful environment, cheap power, no red-tapism and good infrastructure.

Accordingly, the new policy promises a single-window clearance system, online applications and approvals, self-attestation of documents, third party certification of building plans and payment gateway for online payments. The Punjab Pollution Control Board has already made its procedures online.

?A lot of research has gone into the new industrial policy. We want to simplify things for the business community to set up shop in Punjab,? secretary-cum- director, department of industries and commerce, Vikas Pratap tells FE, adding, ?We have had private investment to the tune of R22,000 crore in the past five years, and expect more to flow in with the new policy.?

Under the new policy, the small and medium scale sector gets waiver of electricity duty, stamp duty, property tax (urban areas), purchase tax, mandi fee, rural development and infrastructure cess (agro processing industry), besides a 50% incentive of total fixed capital investment. ?If we think Punjab can grow without MSMEs, we would be completely wrong. Small industries are the engine of growth and the new policy lays emphasis on providing them a suitable environment,? says SM Goel, joint director, department of industries and commerce, Punjab. The manufacturing sector, which consists mostly of MSMEs, contributes 20% to the state?s domestic production, whereas the agriculture sector contributes 23%. At present, Punjab has 1,55,000 production units, including 21,300 export units.

The IT and knowledge industry will not only get 100% exemption in terms of VAT and CST, albeit restricted to Mohali and Amritsar districts, it will also enjoy round-the-clock power supply.

Pre-policy planning

To counter the state?s disadvantage of being landlocked, the government is focusing on improving connectivity and work is on to connect all major cities in the state with four or six-lane highways. This, Badal explains, will not only shorten travel time, but also make remote areas more accessible for industry.

And if Tamil Nadu and Gujarat have ports, Badal wants airports. The state will have three international airports at Mohali, Amritsar and Machhiwara near Ludhiana, besides airports at Bathinda and Pathankot. A sixth airport has been proposed for Jalandhar.

To ensure that land acquisition is not an issue, the state government has created a land bank by acquiring unused land for quick allotment whenever required. This will enable project deadlines to be met and avoid cost over-runs.

Also making the most of what they have, the state wants to use its huge overseas diaspora to its advantage. ?We are in talks with our diaspora to provide them the best business environment. We are reserving 10% of our industrial plots for NRIs, besides publicising Punjab in a big way in countries with a substantial NRI population,? says Pratap.

Punjab already has a first-of-its-kind department for investment promotion, which is headed by Sukhbir Badal and is located at Kapurthala House in Delhi. There?s also a sub-committee on investment promotion that includes leading business personalities such as Sunil Kant Munjal, Rakesh Bharti Mittal, Onkar Kanwar, Malvinder Singh, Atul Punj, Manoj Gaur, Pramod Bhasin, Gautam Thapar and Analjit Singh. ?The state?s ambassadors?, as Badal calls them!

With the added incentive of harmonious industry-labour relations, unlike neighbouring Haryana, Punjab feels it has what it takes to be a preferred investment destination. And while the Opposition Congress has termed the new policy a disaster and there are grumbles from existing industry representatives, the bigger question is: will the industry bite? But that?s a story for later.