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Punjab notifies Industrial Policy 2013: Complete Text of Notification

Chapter 6

 

INCENTIVES FOR Electronics Hardware and IT industry

 

6.1    Preamble

 

a)         Punjab symbolizes the land of enterprise and endeavor. The State of Punjab, blessed with fertile soils and rivers, has earned the distinction of being the "Food Basket and Granary of India" owing to its enterprising spirit and toil of its people. Punjab is a progressive State of India and has evolved into a land of boundless opportunities for investment, industry and employment. As per World Bank Study, 2009, Punjab has been adjudged the “Best Destination for doing business in India”. Punjab has the highest road density in India and envisages to be power surplus state soon. To add to its prestige, the State already has Indian School of Business at Mohali and Indian Institute of Technology at Rupnagar. It has planned to develop Knowledge City in Mohali with major initiatives of setting-up Indian Institute of Science Education & Research, Indian Institute of Nano Science Technology, National Agri-Food Biotechnology Institute etc.

 

b)         The existing estates in Mohali were developed during the year 1980-81 for setting up of Electronic Industries.  Last IT/ Knowledge Policy of Punjab was notified in October, 2009. The recession trends worldwide did impact the growth of the IT sector in the state also. However, in view of the fast changing global economic scenario, the state government has decided to frame a new well directed investment policy to boost the State’s economy and to achieve leadership as a catalyst of India’s advancement in the coming years. Mohali and areas in its vicinity has been emerging as the most preferred investment destination in Northern India for IT/ ITeS/ Knowledge industry. State of Punjab would endeavor to maintain the prominence of Mohali by upgrading and improving the infrastructure continuously to international standards. Besides, the State would also create new IT/ ITeS/ Knowledge/ Electronics industry hubs/ clusters in Mohali as well as Amritsar on priority basis. For this purpose the State government has already identified about 1700 acres in the district of Mohali for development as Knowledge Park whereby IT/ ITeS/ Knowledge/ Electronics industry hubs/ clusters would be set-up.

 

c)         This strategy has been conceived keeping in view the fact that there is need to augment the infrastructure in the state by allowing development of world class campus/ complexes to fulfill the requirements of Information Technology (IT), Information Technology Enabled Services (ITES), Knowledge and Electronics Hardware Industry which will contribute as the primary instrument for facilitating Punjab’s emergence as a leading state in the country. Further looking at the large number of employment opportunities associated in this sector, the State Government intends to accelerate growth of this sector.

 

d)             Under this policy, the incentives for the IT/ITES/Knowledge industry will be available for the Districts of Mohali and Amritsar only. Whereas, for the Electronic Hardware Industry, the incentives will be available in the entire State of Punjab.

 

6.2    Vision

 

To position the State of Punjab as one of the most preferred and competitive investment destination in the field of Information Technology (IT), Information Technology Enabled Services (ITES), Knowledge and Electronics Hardware Industry.

 

6.3    Mission

 

To create simple, investor friendly, efficient, conducive and an enabling ecosystem for investment in field of Information Technology (IT), Information Technology Enabled Services (ITES), Knowledge and Electronics hardware industry in the State of Punjab by focusing on policy advocacy, reforms, facilitating infrastructure, human capital development, proactive engagement with investors and customer care.

 

6.4    Definitions

 

a)         Electronics Hardware Industry consists of electronic systems design and manufacturing industry which comprises semiconductor design, high-tech manufacturing, electronic components and electronic system design for consumer electronic products, telecom products & equipments and IT systems & hardware. Electronic Hardware Industry for the purpose of application of this Policy shall be as per the list of verticals of Electronics System Design Manufacturing provided in the guidelines for operation of the Modified Special Incentive Scheme for Electronics System Design Manufacturing sector issued by Department of Electronics and Information Technology (DeitY), Government of India, as amended from time to time. Annexure-1 gives the list of industries included in this category.

 

b)         Electronic hardware manufacturing units refer to companies in the Electronic Hardware Industry.

 

c)                             IT units refer to companies in the IT software design & development, software maintenance & implementation, operation of software systems, provision of software services, management of database, maintenance of computer networks and telecommunication network, network services, network administration, business process outsourcing or providing Information Technology enabled Services (ITeS).

 

d)                            ITeS means digital communication services, digital information content provision, digital database management and updation, remote digital office services, software operations and other information work that relies primarily and substantially on digital communication including data centres, call centers and back offices operations using IT but not directly sales and marketing.

 

e)         Knowledge Industries would be eligible for the benefits under this policy at par with IT units, which refer to those industries which are relatively intensive in their inputs of technology and/or human capital. These include IT/ITES, Nanotechnology, Consulting and Biotechnology. This will also include Research and Development services and other specialized institutions, institutions  offering  specialized  education  &  training  for  IT  and Knowledge  Industries and Electronics Hardware Industry  such  as  finishing  schools,  Entrepreneurship Development Cells, Incubation Centres, Institutes of higher learning and other knowledge industries.

 

f)          Developers or builders refer to infrastructure companies constructing built up space for sale/ lease/ or lease-cum-sale to the IT/ ITeS/ Knowledge/ Electronic Hardware industries.

 

g)         MSMEs means Micro, Small & Medium Enterprises defined by Govt. of India as follows:

Manufacturing Sector

    Enterprises

 Investment in plant & machinery

    Micro Enterprises

 Does not exceed twenty five lakh rupees

    Small Enterprises

 More than twenty five lakh rupees but does not exceed five crore rupees

    Medium Enterprises

 More than five crore rupees but does not exceed ten  crore rupees

Service Sector

    Enterprises

 Investment in equipments

    Micro Enterprises

 Does not exceed ten lakh rupees:

    Small Enterprises

 More than  ten lakh rupees but does not exceed two crore rupees

    Medium Enterprises

 More than two crore rupees but does not exceed five core rupees

 

 

 

 

 

 

 

 

 

 

 

h)   IT Parks are defined as follows:

a)         Minimum area required for plotted I.T. Park will be 5 Acres for the Parks being setup within Municipal limits and 10 Acres outside Municipal limits subject to provisions of the relevant Master Plan.

b)             In case of built-up I.T. Park, the minimum area required will be 2.5 Acres and minimum investment required in case of such Parks should be Rs 25 Crores.

 

6.5    FOLLOWING INCENTIVES SHALL BE PROVIDED

General provisions as mentioned in Chapter-5 of this Fiscal Incentives for Industrial Promotion 2013 shall be applicable.

6.5.1  FOR IT/ ITES/ KNOWLEDGE INDUSTRY UNITS

6.5.1.1           Applicability of the Incentives

Unless otherwise specifically mentioned, a minimum investment of Rs. 1 crore would be required for availing the incentives under this policy. These incentives will be available for the Districts of Mohali and Amritsar only.

6.5.1.2           PROVISIONS OF VAT

a)         80% exemption of VAT for the new units from commencement of production and started after the date of issue of this Policy, for a period of 10 years from the date of commencement of production for products made in Punjab and sold in Punjab.

b)         80% exemption of CST on all IT products for 10 years.

c)         However the maximum cumulative quantum of these incentives will be limited to 80% of FCI.

d)         Reimbursement of VAT paid by the promoter on the purchase of machinery and equipment for the unit, within the State

6.5.1.3           INCENTIVES IN RESPECT OF ELECTRIC POWER

a)         Power would be available to units in approved IT Parks, Industrial Focal Points and Industrial Areas and Industrial Estates at the tariff applicable to industry.

b)         Exemption from payment of Electricity Duty on Power, including Captive Power consumed by the same unit or exported to PSPCL shall be available to new units, with the proviso that any contributions made out of the Electricity Duty levied, such as those deposited in the Social Security Fund, shall not be exempted.

c)         This incentive shall be available during the eligible period of availing incentives i.e. 10 years.

d)         This incentive shall commence only after the date of Production.

e)         Electricity Duty exemption is not available on Captive Power exported to entities other than PSPCL.

6.5.1.4           EXEMPTION FROM STAMP DUTY

a)         No stamp duty will be levied in respect of land allotted by Department of Information Technology/any other Development Authority of the State to the units.

b)         100% exemption of stamp duty for IT/ITES/Knowledge Units/Developers on all components within the said Park on the sale/ lease / lease-cum-sale of land or built up office space within the constructed IT Park. This concession would be available only for the first transaction when the first sale by the infrastructure company is made to a unit.

c)         For the projects where land has been acquired upto 3 years prior to the date of application by the applicants the same shall be eligible for refund which will be given after the start of commercial production.

d)         Exemption from payment of Stamp duty as levied in Schedule 1-A of Indian Stamp Duty Act on purchase/lease of land is available from the date of submission of application with Nodal Agency, with the proviso that any other charges such as Social Security Fund as levied in schedule-1-B of the Act shall not be exempted.

6.5.1.5           PROPERTY TAX INCENTIVE

The units shall be exempted from payment of Property Tax for a period of 10 years from the date of approval. The projects whose premises subsequently falls in Municipal Corporation, Municipal Council or Notified Area Committee limits shall also remain exempt from payment of property tax for this period of 10 years from the date of approval.

6.5.1.6           EXEMPTION FROM CLEARANCE FROM POLLUTION CONTROL BOARD

The units notified by Department of Information Technology, Government of Punjab will not require any NOC/ Clearance from Punjab Pollution Control Board (PPCB) for release of electricity connection from Punjab State Power Corporation Limited (PSPCL). In case Diesel Gen-Sets are installed in the project, the requisite NOC for the same shall required to be obtained by the unit/ developer from PPCB.

6.5.1.7           EXEMPTION FROM INSPECTION UNDER VARIOUS LABOUR LAWS

a)         The units will be exempted from inspections under the following Acts and the Rules framed there under, barring inspections arising out of specific complaints. The units will be permitted to file self-certifications as in the prescribed formats.

i. The Payment of Wages Act, 1936

ii. The Minimum Wages Act, 1948

iii. The Factories Act, 1948

iv. The Employment Exchanges Act, 1959

v. The Employment Exchange (Notification of Vacancies Act), 1961

vi. The Punjab Shops and Commercial Establishment, 1958

vii. The Contract Labour (Regulation & Abolition) Act, 1970

b)         All such units have general permission for three shift operations with women allowed to work in the night shift, provided adequate measures have been taken to ensure safety of the women employees.

6.5.1.8           EXEMPTION  FROM PUNJAB APARTMENT AND PROPERTY           REGULATION ACT (PAPRA)

The units shall be exempted from the Punjab Apartment and Property Regulation Act (PAPRA) 1995, except for section 5(9), Section 6 to Section 20, Section 32 and Section 36 to Section 39 of the Act, in accordance with the power vested with the state government under Section 44 (2) of the Act.

6.5.1.9           OTHER Incentives Related to HOUSING AND URBAN DEVELOPMENT

a)         40% of mechanical parking is allowed.

b)         Units will have permissible FAR of 1:3 of gross area of the project.

c)         The Equated Car Space (ECS) shall be 1 per 100 sqm of covered area upto 5 acre plot and 2 per 100 sqm of covered area for plot greater than 5 acres.

d)         5% residential component of total built up area under industrial use shall be permissible.

e)         Exemption from Zoning Regulations and Conversion Charges

i. Notified units are exempted from land use zoning regulations and can be set up in any of the following notified land uses in the Master Plan/ Zonal Development Plan:

·                Residential use zone

·                Commercial use zone

·                Institutional use zone

·                Industrial use zone

·                Mixed use

ii. No conversion or change of land use charges or External Development Charges would be levied.

The local authority shall obtain a bank guarantee for an amount equal to 100% (One Hundred percent) of the conversion charges due. The premises will be inspected on completion by development agency for ensuring compliance with the above stipulations before advising the Local Authority for discharge of Bank Guarantee.

6.5.2  FOR ELECTRONICS HARDWARE MANUFACTURING INDUSTRY UNITS

6.5.2.1           Applicability of the Incentives

Unless otherwise specifically mentioned, a minimum investment of Rs. 5 crore would be required for availing the incentives under this policy. The incentives will be available in the entire State of Punjab.

6.5.2.2           PROVISIONS OF VAT

a)         80% exemption of VAT for the new units started after the date of issue of this Policy, for a period of 10 years from the date of commencement of production for products made in Punjab and sold in Punjab.

b)         80% exemption of CST on all electronic hardware products for 10 years.

c)         However, the maximum cumulative quantum of these incentives will be limited to 80% of FCI.

6.5.2.3           INCENTIVES IN RESPECT OF ELECTRIC POWER

a)         Power would be available to units in approved IT Parks, Industrial Focal Points and Industrial Areas and Industrial Estates at the tariff applicable to industry.

b)         Exemption from payment of Electricity Duty on Power, including Captive Power consumed by the same unit or exported to PSPCL shall be available to new units, with the proviso that any contributions made out of the Electricity Duty levied, such as those deposited in the Social Security Fund, shall not be exempted.

c)         This incentive shall be available during the eligible period of availing incentives i.e. 10 years.

d)         This incentive shall commence only after the date of Production .

e)         Electricity Duty exemption is not available on Captive Power exported to entities other than PSPCL.

6.5.2.4           EXEMPTION FROM STAMP DUTY

a)         No stamp duty fee will be levied in respect of land allotted by Department of Information Technology/any other Development Authority of the State to the units.

b)         100% exemption of stamp duty for Electronics Hardware Manufacturing Units/Developers on all components within the said Park on the sale/ lease / lease-cum-sale of land or built up office space within the constructed IT Park. This concession would be available only for the first transaction, when the first sale by the infrastructure company is made to a unit.

c)         For the projects where land has been acquired upto 3 years prior to the date of application by the applicants, the same shall be eligible for refund which will be given after start of commercial production.

d)         Exemption from payment of Stamp duty as levied in Schedule 1-A of Indian Stamp Duty Act on purchase/lease of land is available from the date of submission of application with Nodal Agency, with the proviso that any other charges such as Social Security Fund as levied in schedule-1-B of the Act shall not be exempted.

6.5.2.5           PROPERTY TAX INCENTIVE

The units shall be exempted from payment of Property Tax for a period of 10 years from the date of approval. The projects whose premises subsequently falls in Municipal Corporation, Municipal Council or Notified Area Committee limits shall also remain exempt from payment of property tax for this period of 10 years from the date of approval.

6.5.2.6           CLEARANCE FROM POLLUTION CONTROL BOARD

The units notified by Department of Information Technology, Government of Punjab will not require any NOC/ Clearance from Punjab Pollution Control Board (PPCB) for release of electricity connection from Punjab State Power Corporation Limited (PSPCL). In case Diesel Gen-Sets are installed in the project, the requisite NOC for the same shall required to be obtained by the unit/ developer from PPCB.

Electronics Hardware Manufacturing units will have to follow and ensure the guidelines for the reduction in use of hazardous substances in the manufacturing of such equipment under the e-Waste (Management & Handling) Rules 2011 effective from 1.5.12. Moreover, Hazardous Waste Management and Trans-boundary Movement Rules’ 2008 will also be applicable.

 

6.5.2.7           EXEMPTION FROM INSPECTION UNDER VARIOUS LABOUR LAWS

a)         The units will be exempted from inspections under the following Acts and the Rules framed there under, barring inspections arising out of specific complaints. The units will be permitted to file self-certifications as in the prescribed formats.

i. The Payment of Wages Act, 1936

ii. The Minimum Wages Act, 1948

iii. The Factories Act, 1948

iv. The Employment Exchanges Act, 1959

v. The Employment Exchange (Notification of Vacancies Act), 1961

vi. The Punjab Shops and Commercial Establishment, 1958

vii. The Contract Labour (Regulation & Abolition) Act, 1970

b)         The units have general permission for three shift operations with women allowed to work in the night shift, provided adequate measures have been taken to ensure safety of the women employees.

6.5.2.8           EXEMPTION  FROM PUNJAB APARTMENT AND PROPERTY           REGULATION ACT (PAPRA)

The units shall be exempted from the Punjab Apartment and Property Regulation Act (PAPRA) 1995, except for section 5(9), Section 6 to Section 20, Section 32 and Section 36 to Section 39 of the Act, in accordance with the power vested with the state government under Section 44 (2) of the Act.

6.5.2.9           OTHER Incentives Related to HOUSING AND URBAN DEVELOPMENT

a)         40% of mechanical parking is allowed.

b)         The ECS and FAR shall be as applicable for other manufacturing industry in Punjab Housing Policy.

c)         5% residential component of total built up area under industrial use shall be permissible.

d)         Exemption from Zoning Regulations and Conversion Charges

i. Notified Electronic Hardware manufacturing units with minimum built up space of 1,00,000 sq. ft. shall be exempted from land use zoning regulations and can be set up in any of the following notified land uses in the Master Plan/ Zonal Development Plan:

·                Industrial use zone

·                Mixed use

ii. No conversion or change of land use charges or External Development Charges would be levied.

The local authority shall obtain a bank guarantee for an amount equal to 100% (One Hundred percent) of the conversion charges due. The premises will be inspected on completion by development agency for ensuring compliance with the above stipulations before advising the Local Authority for discharge of Bank Guarantee.

6.5.2.10        Preferential Market Access (PMA)

In line with the Government of India policy, Preferential Market access shall be given to Electronics hardware manufacturing units in the State for the products procured by all government departments in the State. The year wise PMA and value addition thresholds for each product shall be in line with the National Electronics Policy and National Telecom Policy. This policy shall be applicable from the date of notification and shall remain in force for a period of next 7 years.

6.5.2.11  Special Incentives for the semi-conductor wafer fab

Separate investment subsidy package for wafer fab capital outlay and required land allocation would be introduced. A special committee under the chairmanship of the Chief Minister shall be constituted for approval and provisioning of these special incentives.

6.5.3  FOR IT PARKS (Both Software & Electronics Hardware Sectors)

6.5.3.1             PROVISIONS OF VAT

a)         80% exemption of VAT for the new units located in Parks from commencement of production and started after the date of issue of this Policy, for a period of 10 years from the date of commencement of production for products made in Punjab and sold in Punjab.

b)         80% exemption of CST for the new units located in Parks on all IT and electronic hardware products for 10 years.

c)         However the maximum cumulative quantum of these incentives will be limited to 80% of FCI.

6.5.3.2             INCENTIVES IN RESPECT OF ELECTRIC POWER

a)         Provision of uninterrupted power supply to units located in notified IT parks.

b)         Power would be available to units in approved IT Parks, Industrial Focal Points and Industrial Areas and Industrial Estates at the tariff applicable to industry.

c)         Exemption from payment of Electricity Duty on Power, including Captive Power consumed by the same unit or exported to PSPCL shall be available to new units, with the proviso that any contributions made out of the Electricity Duty levied, such as those deposited in the Social Security Fund, shall not be exempted.

d)         This incentive shall be available during the eligible period of availing incentives i.e. 10 years.

e)         This incentive shall commence only after the date of production.

f)          Electricity Duty exemption is not available on Captive Power exported to entities other than PSPCL.

6.5.3.3             EXEMPTION FROM STAMP DUTY

a)         100% exemption of stamp duty for Developers on all components within the said Park as a Single Unit on the sale/ lease / lease-cum-sale of land or built up office space within the constructed IT Park. This concession would be available only for the first transaction when the first sale by the infrastructure company is made to a unit.

b)         100% reimbursement from stamp duty on land directly acquired by the developers for construction of IT Parks comprising all components such as industrial, commercial and residential within the said Park as a Single Unit to develop their own campuses only after IT Park is duly notified by Department of Information Technology provided that it is set up at a single location as one unit.

c)         For the projects where land has been acquired upto 3 years prior to the date of application by the applicants, the same shall be eligible for refund which will be given after start of commercial production.

d)         Exemption from payment of Stamp duty as levied in Schedule 1-A of Indian Stamp Duty Act on purchase/lease of land is available from the date of submission of application with Nodal Agency, with the proviso that any other charges such as Social Security Fund as levied in schedule-1-B of the Act shall not be exempted.

6.5.3.4             EXEMPTION  FROM PUNJAB APARTMENT AND PROPERTY  REGULATION ACT (PAPRA)

The provisions regarding exemption from the PAPR Act in the Punjab Housing Policy 2013 will be applicable to the I.T. Parks as well except that there will not be any obligation on the part of the Promoter to provide any EWS housing in the I.T. Park.

6.5.3.5             OTHER Incentives Related to HOUSING AND URBAN DEVELOPMENT

a)         An Equated Car Space (ECS) of 1.5 per 100 sqm of covered area upto 5 acre plot and an ECS of 2 per 100 sqm of covered area for plot greater than 5 acres for IT/ITES/Knowledge parks (excluding Electronics Hardware Manufacturing Parks).

b)         FAR of 1:3 as per the Punjab Housing Policy 2013 for I.T. units, knowledge based industries, research institutions & commercial components in the I.T. Parks and 1:2 for residential component within the Park.  Higher FAR upto 1:3, beyond 1:2 FAR, is purchasable by the Promoter in case of Residential component.

c)         For Electronics Hardware Manufacturing parks, the ECS and FAR shall be as applicable for other manufacturing industry in Punjab Housing Policy 2013.

d)         5% residential component of total built up area under industrial use shall be permissible.

e)         IT/ITES/Knowledge parks (excluding Electronics Hardware Manufacturing parks) could be set up in any zones except residential zone, notwithstanding the fact that such Parks have Industrial, Residential and Commercial components at the same location.

f)          Change of Land Use (CLU) charges would be as per Punjab Housing Policy, 2013 wherein CLU charges are exempted for Industrial component only.

g)         External Development Charges (EDC) would be exempted only for IT industry component of the IT Park for a period of three years from the date of applicability of the new incentive policy.  (..Contd.)

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