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Scheme for Industrial Development of Jammu and Kashmir

  • 08 Jan 2021
  • 5 min read

Why in News

Recently, the Cabinet Committee on Economic Affairs has approved the proposal of Department for Promotion of Industry and Internal Trade (DPIIT) for Central Sector Scheme for Industrial Development of Jammu and Kashmir (J&K).

  • DPIIT comes under the Ministry of Commerce and Industry.

Central Sector Schemes

  • These schemes are 100% funded by the Central government.
  • Implemented by the Central Government machinery.
  • Formulated on subjects mainly from the Union List.

Key Points

  • Aim:
    • To take industrial development to the block level in Union Territory (UT) of J and K, which is the first time in any Industrial Incentive Scheme of the Government of India and attempts for a more sustained and balanced industrial growth in the entire UT.
  • Beneficiaries:
    • Scheme is made attractive for both smaller and larger industrial units.
  • Expenditure:
    • The financial outlay is Rs. 28,400 crore for the scheme period 2020-21 to 2036-37 (17 years).
  • Role of J&K in Implementation:
    • Scheme envisages a greater role of the UT of J&K in registration and implementation of the scheme while having proper checks and balances by having an independent audit agency before the claims are approved.
  • Incentives Under the Scheme:
    • Capital Investment Incentive:
      • It provides an incentive at the rate of 30% in Zone-A and 50% in Zone-B on investment made in plant and machinery (in manufacturing), or construction of building and other durable physical assets (in service sector).
        • Zone-B includes far-off areas and will receive higher incentives so as to ensure equal opportunities of growth in far-flung areas and major towns.
        • Zone-A includes areas other than Zone-B.
      • A capital investment is a sum of money that goes towards furthering the objectives of a business or towards purchasing long-term assets for the business.
    • Capital Interest subvention:
      • It provides for 6% capital interest subvention for a maximum of seven years on loans up to Rs. 500 crore for investment in plant and machinery (in manufacturing), or construction in building and all other durable physical assets (in service sector) for 10 years.
        • Capitalized interest is the cost of borrowing to acquire or construct a long-term asset.
    • GST Linked Incentive:
      • It is based on Gross Goods and Services Tax (GST).
      • This will incentivise output up to 300% of the eligible value of actual investment made in the plant and machinery (in manufacturing), or construction in building and all other durable physical assets (in service sector).
    • Working Capital Interest Incentive:
      • This will provide all existing units incentive at the annual rate of 5% for maximum 5 years. Maximum limit of incentive is Rs. 1 crore.
        • Working capital, also known as net working capital (NWC), is the difference between a company's current assets, such as cash, accounts receivable (customers' unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable.
  • Significance:
    • The scheme will encourage new investment, substantial expansion and also nurture the existing industries in the Union Territory.
    • It will also provide employment to 4.5 lakh people besides leading to equitable, balanced and sustainable socio-economic development of the region.
  • Other Initiatives:


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