Gujarat’s new Industrial Policy 2020 focuses on MSMEs,<br>Atmanirbhar Bharat, targets firms' relocation from China

Gujarat’s Industrial Policy 2020 announced the other day - in line with the Atmanirbhar Bharat Abhiyan of the center - not  only aims to provide an estimated Rs 40,000 crore as subsidies to industries in the next five years, help lease out government land to industrialists, provide incentives to private industrial parks  but also envisages ‘relocation incentives’ to units looking to relocate in wake of Covid-19 pandemic, especially from China.

“Gujarat welcomes all those industrial units planning to shift from China and other countries due to the pandemic. We will decide on a case-to-case basis. We have already held four meeting with Japan, three meetings with United States, one each with Germany and UK in this regard,” Chief Minister Vijay Rupani said while announcing the new industrial policy in Gandhinagar.

M K Das, Principal Secretary, Industries

The policy conceptualises 15 thrust areas broadly categorized in two major groups - Core sectors and Sunrise sectors.

While Core sectors consist of areas where Gujarat already has a strong manufacturing base and potential to accelerate further on a global scale including Electrical machinery & equipment ; Industrial Machinery & equipment; Auto & Auto Components ; Ceramics ; Technical Textiles ; Agro & Food Processing ;Pharmaceuticals & Medical devices ; Gems & Jewelry  and Chemicals (in designated area), Sunrise Sector comprises Industry for manufacturing ; Electric Vehicle and its components ; Waste management projects ; Green Energy (Solar & Wind Equipment) ; Eco-friendly compostable material (substitutes to traditional plastics)  and 100% export oriented units, irrespective of sector.

The policy also stresses on bringing investments for job creation, value-addition, adoption of state-of-the-art technology, increasing productivity with Industry 4.0 manufacturing, and creating an innovation-driven ecosystem.

Announcing the policy, Rupani emphasized that the new “Gujarat Industrial Policy 2020 has been formed to further consolidate the growth momentum that the State has achieved over the past few years, and enhance the current growth rate”.

Highlights of the policy

Industries will now be able to get government land for projects on long-term lease up to 50 years (further extendable as per prevailing policy) to industrial enterprises at 6 per cent of the market rate. “The industries will be able to mortgage the land,” said Rupani, highlighting the key aspects of the policy.

To capitalise on the global pandemic situation, the Gujarat government will provide special incentives to companies planning to relocate their operations from abroad to the State.

 “We had constituted nine task force committees that held several rounds of serious and productive meetings. It helped us to arrive at this new policy. The policy incorporates most of the suggestions indicated by the industry at large,” Rupani added.

The policy provides capital subsidy and tax incentives to units. In a first, Gujarat took a bold decision to de-link incentives from SGST, with up to 12 per cent of fixed capital investment to be given to large industries for setting up manufacturing operations in the State in the form of capital subsidy.

 The new policy is silent on large infrastructure and key industries as part of the port-led development of the State, including LNG, petrochemicals, chemicals, iron and steel, and cement; it lays much stress on the MSMEs.

 The new policy enables MSMEs to source foreign technologies with up to 65 per cent of the total cost of technology acquisition being supported by government with a ceiling of Rs.50 lakh. The MSMEs will also be eligible for capital subsidy of up to 25 per cent of the eligible loan amount up to Rs.35 lakh, while they will be encouraged to install solar rooftop projects on the units with higher tariff for the solar power generated at Rs.2.25 per unit against Rs.1.75.

 While the State is preparing a separate Services Sector Policy, the New Gujarat Industrial Policy 2020 offers interest subsidy of up to 7 per cent up to Rs.35 lakh per annum for seven years to service sector MSMEs in the areas of financial services, healthcare, audio-visual, and environmental services, among others.