NEW INDUSTRIAL POLICY 1993 AND PACKAGE OF INCENTIVES AND CONCESSIONS 1993-98

1.0 Introduction

Government have been pursuing. a progressive industrial policy and have also modified the policy from time to time to meet the changing needs of a dynamic and growing economy. The recent policy resolution of the Government, adopted in the year 1990, laid an equal emphasis on promotion of tiny, small, medium and large scale industries and particular attention was directed towards employment generation through industrial development to meet the increasing demand. An attractive package of incentives was also announced along with the new policy. After announcement of the new policy, substantial progress has been achieved. More than 500 letters of Intent, Industrial Licences, SIA & DGTD Registrations and Industrial Memoranda have been filed during- 1990-93 with the total investment potential of around Rs.7,000 crores. In the Small Scale Sector also 31840 units with total investment of Rs.502.38 crores have been established during the period 1990-93.

The average annual growth rate of industrial production in the State over the ten years period 1981-82 to 1990-91 was around 6.4% as against 7.9% in the country. The secondary sector in the State accounts for nearly a quarter of State's income in real terms or total output in the economy. Within the Secondary Sector manufacturing Sector accounts for more than 70% of the output. However, during the year 1992-93 there has been a slight decline in industrial production as also the overall growth rate of the economy at an estimated 4.2%. Considering the growth recorded in the State during 1991-92 (7.4%) and also the Eighth Plan target (5.6%), the growth achieved in the year 1992-93 is low.

2.0 It would be therefore our endeavour to improve our ranking in the industrial map of the country and become one of the foremost industrialised States by the turn of the century.

Karnataka has certain unique features which can stimulate industrial growth. These are:

(a) The traditional industrial heritage dating back to the times of Engineer Statesman Sir M. Visvesvaraya;

(b) Abundant mineral resources;

(c) Wide and varied agri-horticultural resources; 

(d) A well developed network of R & D organisations in Key Sectors;

(e) A host of technical and professional institutions and a reservoir of technical and

scientific manpower;

(f) A strong and vibrant Small Scale Industrial Sector;

(g) Long coastal line with rich marine resources and also all-weather ports at

Mangalore and Karwar;

(h) Excellent law and order and industrial relations conducive for growth of

industries;

(i) A responsive and pro-active administration;

j) A strong industrial and infrastructural base for high technology industries in

Electronics, Telecommunication and Informatics Sectors; and

(k) Commitment of the State to provide highest priority for further development of the Industrial Sector.

3.0 Having regard to the above and keeping in view the liberalised economic, industrial and trade policies enunciated by the Government of India over the last two years period, Government of Karnataka resolves to adopt the following policy initiatives:

(a) - Package of Incentives and Concessions will be restructured to promote development of industrie.s in all sizes namely tiny, small scale, medium and large industries;

• Non-polluting, high technology industries in the tiny, small, medium and large scale sectors alone shall be encouraged within Bengaluru South Taluk and North Taluk including Bengaluru Urban Agglomeration Area
• In order to attract entrepreneurs and develop backward areas, and also keeping in mind that licensing is removed for most industrial products, most of the taluks in Karnataka have been identified as 'Developing Areas', and eligible for incentives and concessions.

- A special thrust will be given for promotion of mega projects which have scope for development of ancillaries and downstream industries. Projects of Rs.100 crores and above will be given tax concessions and facilities on the merits of each case.

- Capital investment subsidy shall be offered to tiny/SSI units. Sales Tax exemption/Sales Tax deferral shall be offered for tiny/small/medium and large scale industries.

(b) Special emphasis will be laid for improving and strengthening infrastructural facilities for the industrial sector. To achieve this a Nodal Authority will be created to manage and maintain Industrial areas and estates in important locations and this authority will take care of improving and strengthening power, water supply and telecommunication facilities in these industrial areas/industrial estates. In other estates nodal agencies will be identified for the benefit of entrepreneurs.

(c) Infrastructural development agencies of the State namely, KSSIDC, KIADB and KEONICS will develop specialised industrial estates/areas, with full complement of infrastructural facilities, in important Growth Centres of the State. In particular the following projects will be completed in the next three years time:

i) Growth Centres at Hassan, Raichur & Dharwad; ii) Electronics Cities at Mysore & Dharwad;

iii) Powerloom Complex, Hosiery Complex and an Automobile Industries

Complex;

iv) Stone Cutting Estate and Jewellery Industrial Estate;

v) Pharmaceutical Industrial Estates; vi) Exclusive Industrial Estate will be set up for SC/ST; vii) Export Promotion Industrial Park;

(d) Private sector participation in development of infrastructure including establishment of industrial estates with active/Government participation shall be encouraged.

(e) Sanction and release of investment subsidy to the tiny, SSI units and medium and large scale units will be channelised through KSFC and KSIIDC who have sanctioned financial assistance for these industrial units. In respect of other industrial units, the Directorate of Industries and Commerce would continue to sanction and release the eligible subsidy. It is hoped that this would help the industries considerably enabling completion of projects within specific time schedules.

(f) For registration of land and sheds, after the expiry of the lease period, allotted by the Government promoted agencies namely, KSSIDC, KIADB & KEONICS, stamp duty will be leviable on the original allotment price. Suitable amendments will be incorporated to the Karnataka Stamp Act to facilitate this. 

g) Conversion of agricultural land to industrial land in identified industrial zones of the respective Municipalrrown Planning Authorities will henceforth need no prior approval of the Government. For conversion of agricultural lands in other areas, the district level SWA headed by the Deputy Commissioner will be empowered to grant approvals. Approvals to be given would be subject to general guidelines prescribed by the Government and on payment of the prescribed fee.

(h) Government proposes that procedure for obtaining exemption under the Urban Land Ceiling in respect of grant of land by the infrastructure agencies like

KIADB, KEONICS, KSSIDC., as also where land is obtained by the indust"

separately, should be simplified. It is proposed that in respect of proposals cleared by Single Window Agency at the District Level, the Deputy Commissioner of the District and in respect of proposals cleared by Single Window Agency at the State Level, the Commissioner for Industrial Development and Director of Industries and Commerce, be delegated with powers of grant of urban land ceiling exemption. Suitable enabling provisions would be provided.

(i) The Land Revenue Act has been recently amended providing for purchase of agricultural land for industrial use upto 2 units. This ceiling will be enhanced to 10 units by bringing in suitable amendments to the Act and the powers to permit purchase of agricultural land upto this limit would be delegated to the Deputy Commissioners of the Districts.

For specified agro-processing industries which require agricultural land, proposals would have to be made to Government for consideration on merits of each case. Such enabling powers would be given to Government through

suitable amendments to the relevant statute. Care would be taken to ensur" that this relaxation is not misutilised and would not negate the primary objectives of the Land Reforms Act.

0) Ancillary development shall be encouraged in the private sector/public sector

in order to develop local entrepreneurship and local industries.

(k) Power generation shall be given top priority. Towards the same concessions

shall be offered to private sector who undertakes projects for captive power generation.

(I) To strengthen and streamline the Single Window Agency (SWA) mechanism, Karnataka Udyoga Mitra (KUM) will henceforth act as the secretariat for the SWA. All Government Departments and agencies involved in Industrial Development will designate a Contact Officer at a fairly senior level to co-ordinate and liaise with the KUM to ensure that the decisions taken by the SWA is implemented within the stipulated time frame.

At th-e District level, Deputy Commissioner of the District will be the Chairman of the SWA which would be empowered to sanction incentives and concessions as also infrastructural facilities for the tiny and small scale industries.

SWAs both at State level and District level are Empowered Committees for approvals and hence no further clearances are required from departments connected with industries.

At the" Taluk level, Extension Officer (Industries) of the Industries Department will function as an Escort Service Officer for new industrial units and closely liaise with the General Manager, DIC/SWA to ensure that all clearances are sanctioned within the stipulated time frame.

4.0 In order to increase the productivity in Industries sector, simplification of Rules and Regulations will be incorporated in regard to filing of returns, inspection by various authorities, maintenance of registers by the industrial units in Karnataka. To prevent avoidable inspection of units now and then by various officials, a declaration by the units will be sufficient regarding following of the various acts applicable. In case of doubts inspections may be carried out.

5.0 Bengaluru has grown to be an important industrial centre particularly for high technology industries. At the same time it is the duty of the Government to preserve and maintain, the ecology and environment in the Bengaluru Urban Agglomeration Area. To achieve this, only non-polluting environment friendly industries in the Electronics, Telecommunication, Informatics, Ready-made Garments including leather Garments (but excluding tanneries), Precision Tooling/Tool Room Industries will be encouraged within the Bengaluru Urban Agglomeration Area, Bengaluru South and North taluks. All the other categories of Industries will be encouraged outside the areas mentioned above.

6.0 In order to utilise the industrial and infrastructural base of Bengaluru and to derive spin off benefits of these developments, industrial townships will be developed around Bengaluru region in Kanakapura, Ramanagara, Tumkur, Doddaballapura and Malur-Kolar.

7.0 Government have set up a number of Training Centres and also Training Institutes which are neither fully utilised nor do they have state-of-art equipment and facilities.

Government, therefore invites industry associations and groups to manage and operate these Training Centres and Institutes for their benefit. Available facilities could be leased out to interested industry groups and associations.

8.0 It has been observed that transport facilities to some of the major industrial areas and industrial estates are inadequate. Government will permit Private Sector to operate efficient transport services to industrial estates/industrial areas from urban centres and a suitable scheme will be evolved in this regard.

9.0 Government are committed to promote exports from the State in important sectors such as Electronics, Software, Readymade Garments including Leather Garments, Gem & Jewellery, Agri-horticultural products including processed foods, etc. achieve this the following measures will be initiated:

a) An Export Promotion Industrial Park will be set up near Bengaluru;

b) Visvesvaraya Industrial Trade Centre will be strengthened to function as an effective export promotion organisation;and

c) An Export Promotion Board (EPB) will be constituted at a high level including

leading exporters and Government of India agencies concerned.

10.0 In order to give a boost to the Artisan and KVI Sector, which would also serve the objective of rural industrialisation, all products manufactured in KVI sector, shall be exempted from payment of S.T.

11.0 In order to ensure that the local SSI units do not suffer due to competition from large and medium industries on the one hand and outside supplies on the other hand, directions issued by the Government with regard to preferential purchase of products manufactured by the local SSls shall be strictly enforced.