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India By State - Arunachal Pradesh - Taxation & Legalities




Taxation & Legalities

Policies & Incentives

Industrial policy 2008

The industrial policy of 2008 was introduced to try and develop the industrial infrastructure, promote growth, employment and investment in the state. The policy aims to:

  • Create an investment-friendly environment in the state for industrial growth in the private, joint and cooperative sectors for sustainable economic development of Arunachal Pradesh.
  • To generate more employment opportunities in the state
  • To try and make Arunachal Pradesh an attractive investment for outside investors.
  • The policy aims to encourage local entrepreneurs to set up enterprises based upon the abundantly available raw materials
  • To boost export orientated industrial units
  • To aid growth and development in the handloom and handicrafts industry
  • To encourage local investors to take part in joint ventures with outside investors
  • To promote industrial units producing high value products
  • To ensure fast track clearance of industrial proposals

To try and achieve these targets the policy offers a series of incentives to try and encourage the investment.

  • Entrepreneur(s) or a group of entrepreneurs or a consortium of industries to be allowed 100 per cent equity holding and/or ownership of their industrial unit(s) or enterprises for a second period of 50 years
  • Entrepreneurs or investors shall be allowed to hold the land on lease for a period of 50 years on a predetermined lease rent. The consideration for the lease of land may be in the form of the annual instalments, lump sum payments or equity participation.
  • Sales tax and/or VAT exemption of 99 percent to be given to the eligible industrial units on import of actual raw materials, machinery and equipment into Arunachal Pradesh as also on sale of finished goods in the state, for a period of seven years from the date of commencement of commercial production.
  • Trading licences to be issued to all entrepreneurs including outside investors, for the industries or enterprises with investment of minimum US$ 1.1 million in plant and machinery (for manufacturing companies) and US$ 434783 for companies in the services sector.
  • Price preference to be given to products manufactured by registered micro- and small enterprises in the state government departments' procurement bidding.
  • Preference to be given to the registered units or enterprises by state government departments, while purchasing the products manufactured by them.
  • Power subsidy to be given according to the provisions of the north east industrial and investment promotion policy (NEIIPP), 2007
  • Subsidy of 50 per cent to be given on the cost of quality testing equipment, procured by industrial units.
  • Exemption of stamp duty: Projects of approved industrial units and/or enterprises to be given exemption from payment of stamp duty, up to 80 per cent of the applicable amount in execution of deeds, for a period of five years.
  • Special incentives to be given to the eligible food-processing units as additional state capital investment subsidy at 20 per cent, subject to a ceiling of US$ 54,347.
  • Priority and time bound mandatory clearance to be given to large and heavy enterprises, particularly those using locally available natural resources.
  • Revamping financial institutions under the state government and streamlining the DICs and financial institutions to ensure smooth flow of credit to new projects, village industries, rural artisans and existing industrial units for modernisation, expansion and diversification.

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State Mega Hydro Electric Power Policy 2005

The state introduced the mega hydro electric power policy in 2005 to develop the available potential of power projects in the most eco-friendly and judicious manner.

The incentives on offer by the policy are:

  • Promotional incentives for detailed survey and investigation (DSI) and preparation of detailed project report in the form of grant-in-aids by the ministry of new and renewable energy, Government of India. For projects up to 1 MW, a grant would be given up to US$ 3,804; for projects between 10MW and 25MW, the grant would be US$ 10,869.
  • Capital subsidy would be given for a small hydro power projects (SHP), with up to 25MW station capacity for the following type of projects.

Arunachal Pradesh Incentive Shcemes

Small Hydro Power (SHP) policy, 2007

The state government of Arunachal Pradesh introduced this policy in 2007 to facilitate and promote the growth of small hydro power plants and, thereby, increase employment opportunities in the state. The policy aims to encourage private participation in development of SHPs with targeted incentives. The policy has been assigned the duty of formulation and notification of an action plan for SHP generation. The action plan is to provide programmes for capacity addition and determine the extent of involvement of various stakeholders of state government or agencies field.

The incentives introduced by the policy to help achieve the target are:

  • Facilitation by the state Government in obtaining subsidies, tax concession, etc., available from the central government for development of SHPs.
  • AUp to 50 per cent share of carbon credit benefit, as available from carbon trading under the clean development mechanism (CDM), under the Kyoto protocol.
  • Exemption from supplying free power to the state government, for indigenous tribal entrepreneurs, for projects up to 5 MW capacity.

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Agriculture Policy, 2001

The agricultural policy was created to achieve higher economic growth and create job opportunities for the rural unemployed through agriculture and allied sectors. The policy has outlined the key initiatives as being:

  • Top priority to be accorded on increasing farmers' income
  • Addressing problems related to shifting (jhum) cultivation.
  • Location-specific strategy development - area specific and differentiated strategy.
  • Convergence of allied activities by making a shift from a commodity to a system approach in agriculture.
  • Technology transfer
  • Supply of inputs such as seed, fertiliser, pesticides, agri-tools and implements, and credit to farmers at reasonable rates.
  • Facilitating private investment in agriculture, especially for establishing agro-based industries.
  • People's participation through formation of "self-help groups" and village committees at several levels.
  • Research and technology package for location-specific agricultural research based on Identified agro-climatic zone
  • Marketing infrastructure and techniques, especially for preservation, storage and transportation.
  • Priority on setting up agro-processing units in key production areas.
  • Market intervention scheme involving procurement by a notified agency to assure remunerative prices to farmers.

North East industrial and investment Promotion Policy (NEIIPP), 2007

In order to promote the Northeast region as an attractive investment region through concessions and incentives the state government, in 2007, put into action the North East industrial and investment promotion policy. The key features of the policy are:

  • Industries covered under this policy are eligible for incentives for a period of 10 years from the date of commencement of commercial production.
  • All new units as well as existing units that undergo substantial expansion (minimum 25 percent increase in fixed capital) and start production before 2017 world qualify for incentives.
  • Incentives would be available for all existing industrial units and upcoming units anywhere in the Northeast.
  • A high-level monitoring committee or advisory committee would oversee the implementation of the NEIIPP.
  • NEIIPP would not be applicable to peripheral activities such as preservation while in storage, cleaning, packing, re-packing, labelling or re-labelling, sorting, etc.
  • North East industrial development finance corporation (NeDFI) to act as the nodal agency for disbursal of subsides.
  • NEIIPP, 2007, has replaced the North East Industrial Policy, 1997.

The incentives and concessions the NEIIPP offers are:

  • 100 per cent excise duty exemption on finished products made in the Northeast region
  • 100 per cent income tax exemption for industrial units.
  • Capital investment subsidy increased from 15 to 30 percent for plant and machinery up to US$ 360 000 per unit. For units above US$ 360 000 and up to US$ 7.5 million, an empowered committee approves. For units above US$ 7.5 million, the Union cabinet approves.
  • Internet subsidy to be given at the rate of 3 per cent on working capital.
  • 100 per cent reimbursement of insurance premium.

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Doing Business in Andhra Pradesh

The list of approvals and clearances required for companies looking to start up in the state:

List of approvals and clearances required

Departments

Incorporation of company Registrar of companies
Registration, Industrial Entrepreneurs Memorandum (IEM), industrial licenses
Permission for land use
Department of Industries
Allotment of land Arunachal Pradesh Industrial Development and Financial Corporation Limited
Site environmental approval
No objection certificate and consent under Water and Pollution Control Act
Department of Environment and Forests, Government of Arunachal Pradesh; Arunachal Pradesh State Pollution Control Board (APSPCB)
Registration under states sales tax Act and central and State excise Act
Commercial Taxes
Department of Tax and Excise, Government of Arunachal Pradesh
Sanction of power
Power feasibility
Power connection
Department of Power, Government of Arunachal Pradesh
Approval for construction activity and building plan
Water and sewerage clearance
Water connection
Public Works Department

 

Cost of setting up business

Cost Parameter

Cost estimate

Industrial land (per sq ft per month) US 2.2 cents
Power (per kWh) Small Industries: US 7.5 cents
Medium industries: US 7.7 cents
Large and Heavy industries: US 8.6 cents
Labour (US$ per day) Unskilled: US$ 1.7 to US$ 1.9
Semi - skilled: US$ 1.8 to US$ 2.1
Skilled: US$ 1.9 to US$ 2.2
Water (per 1,000 litres) Commercial and Industrial: US 15.7 cents

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Key Nodal Agencies in Arunachal Pradesh

Director of Industries

The department of industries is the main executive and regulatory agency, functioning under the state government. It oversees and monitors the over all industrial development activities in the state.

The department is engaged in many various activities such as the registration of industries, regulation and development of industries, providing finance to small scale and other industries, distribution of scarce and indigenous raw materials to different industrial units and various other industrial development related activities.

Arunachal Pradesh Industrial Development and Financial corporation Limited (APIDFC)

APIDFA was incorporated under the Companies Act, 1956, in August 1978, to promote and finance industries in Arunachal Pradesh.

Arunachal Pradesh Energy Development Agency (APDA)

APEDA is the state designated agency (SDA) for implementation and enforcement of the energy conservation Act 2001, in coordination with the bureau of energy efficiency (BEE), ministry of Power, Government of India.

APEDA is also the state nodal agency for projects connected with clean development mechanism (CDM).

Arunachal Pradesh Khadi and Village Industries Board (APKVIB)

The APKVIB was constituted by the government of Arunachal Pradesh in 1989, with the mission to create employment opportunities in the non-farm sector in the rural areas, to promote saleable articles and support rural development to improve quality of life.

The board oversees industries such as khadi (silk, cotton, woollen), minerals, forest- and agro- based industries, polymer and chemical, engineering and non-conventional energy, textile industry and service sectors.

North Eastern Development Finance Corporation Limited (NeDFI)

NeDFI was promoted by Industrial Development Bank of India (IDBI), Small Industries Development Bank of India (SIDBI), Industrial Finance Corporation of India (IFCI), Industrial Credit and Infrastructure Corporation of India (ICICI), Unit Trust of India (UTI), life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC) and its subsidiaries, and State Bank of India (SBI). Incorporated in August 1995, NeDFI has it's headquarter in Guwahati, Assam.

The finance corporation also provides facilities such as project and equipment finance, working capital finance, schemes for development of entrepreneurial skill and market development for products from the Northeast.

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More Information on Arunachal Pradesh

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