New policy may link incentives with job creation in factories

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New Delhi | Updated: Oct 19, 2015 7:07 AM

Sectors to include auto, textiles and leather, which provide employment to over 23 million currently.

textileThe government is working on offering ‘special incentives’ to manufacturing companies that provide ‘employment to a certain number of people’.

The government is working on offering ‘special incentives’ to manufacturing companies that provide ‘employment to a certain number of people’.

A senior official told The Indian Express that the ministry of commerce and industry and the NITI Aayog have started finalising the contours of the “new policy that will link incentives for the manufacturing units in some sectors in proportion to the direct employment generated by them”.

“A working group was earlier constituted for dwelling on the issues pertaining to employment generation by manufacturing units. The report should be in the public domain by the end of the month,” the official added. The sectors that are likely to be a part of the new policy include auto, textiles, and leather, which provide employment to over 23 million people in the country.

States including Maharashtra and Andhra Pradesh have already put in place industrial policies linked to direct employment generation. For example, according to the Package Scheme of Incentives 2013 of Maharashtra, micro, small and medium manufacturing enterprises that employ over 1,500 persons, termed as mega projects, are eligible for industrial promotion subsidy. However, all such projects based on employment criteria are required to maintain the qualifying direct employment throughout the year and 75 per cent of such employees have to be local persons. “If the employment criteria is not maintained in any month of the year for which Industrial Promotion Subsidy is claimed, then industrial promotion subsidy shall not be admissible for such year,” the policy says.

Similarly, as per the Industrial Development Policy 2015-2020 of Andhra Pradesh, projects with an investment of at least Rs 500 crore or direct employment generation of 2,000 will be accorded mega industry status and the state government will extend tailor-made benefits to them to suit particular investment requirements on case to case basis based on, among other things, its ability to generate large scale employment for people or revenues for the state.

“We are studying these schemes along with international practices too. Many incentives are being looked at including tax incentives for them. For creating infrastructure, we are also looking at giving a few sectors concessions in customs duty,” the official said.

In his Independence day speech, Prime Minister Narendra Modi had said that the investment coming to the country in the manufacturing sector should be offered assistance based on new parameters including provision of employment to maximum persons.

“… an investor who comes with an enterprise which provides employment to maximum persons would be eligible for a different kind of economic package,” he had said adding that the government would formulate new schemes for new units linking it with employment and assistance of the government.

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