Government announces norms for National Investment and Manufacturing Zones

To promote manufacturing in the country, the government on Friday issued norms for setting up of National Investment and Manufacturing Zones (NIMZs) with host of benefits, including exemption from capital gains tax.

There will be exemption from capital gains tax on sale of plant and machinery of a unit located in a NIMZ, the guidelines issued by department of industrial policy and promotion (DIPP) said.

The tax break will be granted in case of re-investment of sale consideration within a period of three years for purchase of new plant and machinery in any other unit located in the same NIMZ or another NIMZ, it said.

Besides, NIMZs will be eligible for Viability Gap Funding, which cannot exceed 20 per cent of the project cost. As per the norms, the developers of NIMZs will be allowed to raise funds through external commercial borrowing (ECBs) for developing the internal infrastructure of the NIMZs.

Soft loans from multilateral institutions will be explored for funding infrastructure development in NIMZ, it said. Assistance would be provided for negotiating non-sovereign multilateral loans by providing back-to-back support, if necessary.

NIMZs are conceptualised as integrated industrial townships of at least 50 sq km (5,000 hectares) with state-of- the-art infrastructure.

At least 30 per cent of the total land area would be devoted to manufacturing units.

With regards to labour policy, the guidelines said, the central government will put in place a scheme for a job loss policy to enable units to pay suitable worker compensation in the eventuality of closures, through insurance.

The compensation under this instrument would be equivalent to 20 days' average pay for every completed year of continuous service, or any part thereof in excess of six months, it said.

Under the National Manufacturing Policy, the government has proposed to set up NIMZs. The policy aims at enhancing the share of manufacturing in GDP to 25 per cent within a decade and creating 100 million jobs.

The NIMZs are envisaged as integrated industrial townships with state of the art infrastructure; land use on the basis of zoning; clean and energy efficient technology; necessary social infrastructure, etc, to provide a productive environment for persons transitioning from the primary to the secondary and tertiary sectors.

The policy is based on the principle of industrial growth in partnership with the States, it said, adding that state governments will be encouraged to adopt the instrumentalities provided in the policy.