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North
East Industrial and Investment Promotion Policy (NEIIPP), 2007
File No.10(3)/2007-DBA-II/NER
Government of India
Ministry of Commerce and Industry
Department of Industrial Policy and Promotion. New Delhi dated the 1 April,2007
OFFICE MEMORANDUM
Subject: North East Industrial and Investment Promotion
Policy (NEIIPP), 2007
The Government has approved a package of fiscal incentives and
other concessions for the North East Region namely the ‘North
East Industrial and Investment Promotion Policy(NEIIPP),
2007’, effective from 1.4.2007, which inter-alia, envisages
the following:
(i) Coverage
The North East Industrial Policy (NEIP), 1997 announced on
24.12.1997 covered the States of Arunchal Pradesh, Assam,
Manipur, Meghalaya, Mizoram, Nagaland and Tripura. Under
NEIIPP, 2007, Sikkim will also be included. Consequently, the
‘New Industrial Policy and other concessions for the State of
Sikkim’ announced vide O.M. No.14(2)/2002-SPS dated 23.12.2002
and the Schemes thereunder i.e. Central Capital Investment
Subsidy Scheme, 2002, Central Interest Subsidy Scheme,2002 and
Central comprehensive Insurance Scheme, 2002, notified vide
Notifications No. F.No.14(2)/2002-SPS dated 24.12.2002 will be
discontinued from 1.4.2007.
(ii) Duration
All new units as well as existing units which go in for
substantial expansion, unless otherwise specified and which
commence commercial production within the 10 year period from
the date of Notification of NEIIPP, 2007 will be eligible for
incentives for a period of ten years from the date of
commencement of commercial production.
(iii) Neutrality of location
Incentives will be available to all industrial units, new as
well as existing units on their substantial expansion, located
anywhere in the North Eastern Region. Consequently, the
distinction between ‘thrust’ and ‘non thrust’ industries made
in NEIP, 1997 will be discontinued from 1.4.2007.
(iv) Substantial Expansion
Incentives on substantial expansion will be given to units
effecting ‘an increase by not less than 25% in the value of
fixed capital investment in plant and machinery for the
purpose of expansion of capacity/modernization and
diversification’, as against an increase by 33 1/2% which was
prescribed in NEIP, 1997.
(v) Excise Duty Exemption
100% Excise Duty exemption will be continued, on finished
products made in the North Eastern Region, as was available
under NEIP, 1997. However, in cases, where the CENVAT paid on
the raw materials and intermediate products going into the
production of finished products (other than the products which
are otherwise exempt or subject to nil rate of duty) is higher
that the excise duties payable on the finished products, ways
and means to refund such overflow of CENVAT credit will be
separately notified by the Ministry of Finance.
(vi) Income Tax Exemption
100% Income Tax exemption will continue under NEIIPP, 2007 as
was available under NEIP, 1997.
(vii) Capital Investment Subsidy
Capital Investment Subsidy will be enhanced from 15% of the
investment in plant and machinery to 30% and the limit for
automatic approval of subsidy at this rate will be Rs.1.5
crores per unit, as against Rs.30 lakhs as was available under
NEIP, 1997. Such subsidy will be applicable to units in the
private sector, joint sector, cooperative sector as well as
the units set up by the State Governments of the North Eastern
Region. For grant of Capital Investment Subsidy higher than
Rs.1.5 crore but upto a maximum of Rs.30 Crores, there will be
an Empowered Committee Chaired by Secretary , Department of
Industrial Policy & Promotion with Secretaries of Department
of Development of North Eastern Region (DONER), Expenditure,
Representative of Planning Commission and Secretary of the
concerned Ministries of the Government of India dealing with
the subject matter of that industry as its members as also the
concerned Chief Secretary/Secretary(Industry) of the North
Eastern State where the claiming unit is to be located.
(viii) Interest Subsidy
Interest Subsidy will be made available @ 3% on working
capital loan under NEIIPP, 2007 as was available under
NEIP,1997.
(ix) Comprehensive Insurance
New industrial units as well as existing units on their
substantial expansion will be eligible for reimbursement of
100% insurance premium.
(x) Negative list
The following industries will not be eligible for benefits
under NEIIPP, 2007
(i) All goods falling under Chapter 24 of the First Schedule
to the Central Excise Tariff Act, 1985 (5 of 1986) which
pertains to tobacco and manufactured tobacco substitutes.
(ii) Pan Masala as covered under Chapter 21 of the First
Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).
(iii) Plastic carry bags of less than 20 microns as specified
by Ministry of Environment and Forests Notification
No.S.O.705(E) dated 02.09.1999 and S.O. 698(E) dated
17.06.2003.
(iv) Goods falling under Chapter 27 of the First Schedule to
the Central Excise Tariff Act, 1985 (5 of 1986) produced by
petroleum oil or gas refineries.
(xi) Incentives of Service/other Sector Industries
Incentives under NEIIPP, 2007 will be applicable to the
following service sector activities/industries
I. Service Sector
(i) Hotels (not below Two Star category), adventure and
leisure sports including ropeways;
(ii) Medical and health services in the nature of nursing
homes with a minimum capacity of 25 beds and old-age homes;
(iii) Vocational training institutes such as institutes for
hotel management, catering and food crafts, entrepreneurship
development, nursing and para-medical, civil aviation related
training, fashion, design and industrial training.
A number of tax concessions under the existing provisions of
Section 10A and 10AA of the Income Tax Act are already
available to the IT Sector. However, one of the important
impediments to the development of Software Technology Parks or
IT related SEZs in the North Eastern Region is the
non-availability of trained human resources in the North
Eastern Region. Accordingly, tax benefits as is availed under
Section 80 IC of the Income Tax Act would be extended to IT
related training centers and IT hardware units. 3
II. Incentive for Bio-Technology Industry”
The biotechnology industry will be eligible for benefits under
NEIIPP, 2007 as applicable to other industries.
III. Incentives for Power Generating Industries
Power Generating plants will continue to get incentives as
governed by the provisions of Sections 81A of the Income Tax
Act. In addition, power generating plants upto 10MW based on
both conventional and non-conventional sources will also be
eligible for capital investment subsidy, interest subsidy and
comprehensive insurance as applicable under NEIIPP, 2007.
(xii) Establishment of a monitoring mechanism for
implementation of the NEIIPP, 2007.
In order to establish a monitoring mechanism for
implementation of NEIIPP, 2007, a ‘High Level Committee’/ an
‘Advisory Committee’ under the Chairmanship of Secretary,
Department of Industrial Policy and Promotion and comprising
Secretaries of the Ministries/Department of Revenue,
Department of Development of North Eastern Region (DONER),
Expenditure, Representative of Planning Commission, CMD, NEDFi
as well as major stakeholders including the industry
associations of the North Eastern Region would be constituted.
In addition, and ‘Oversight Committee’ will be constituted
under the Chairmanship of the Union Commerce and Industry
Minister with Industry Ministers of NE States as its members.
(xiii) Value Addition
In order to ensure genuine industrial activities in the North
Eastern Region, benefits under NEIIPP, 2007 will not be
admissible to goods in respect of which only peripheral
activities like preservation during storage, cleaning
operations, packing, re-packing, labeling or re-labelling,
sorting, alteration of retail sale price etc. take place.
(xiv) Transport Subsidy Scheme
The Transport Subsidy Scheme would continue beyond 31.03.2007,
on the same terms and conditions. However, an early evaluation
of the scheme will be carried out with a view to introducing
necessary safeguards to prevent possible leakages and misuse.
(xv) Nodal Agency
The North East Industrial Development Finance Corporation (NEDFi)
will continue to act as the nodal agency for disbursal of
subsidies under NEIIPP, 2007.
2. The ‘New Industrial Policy and other concession in the
North Eastern Region’ announced vide O.M.No.EA/1/2/96-IPD,
dated 24.12.1997 (NEIP,1997) will cease to operate with effect
from 01.04.2007. Industrial Units which have commenced
commercial production on or before 31.03.2007 will continue to
get benefits/incentives under NEIP,1997.
3. Government reserves the right to modify any part of the
Policy in public interest.
4. All concerned Ministers/Departments of the Government of
India are requested to amend their respective
Acts/rules/notifications etc. and issue necessary instructions
for giving effect to these decisions.
(N.N. Prasad)
Joint Secretary
Copy for information and necessary action to
(i) All Ministers/Departments of the Government of India and
Planning Commission.
(ii) Chief Secretaries of the States of Arunchal Pradesh,
Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and
Sikkim.
(iii) Secretary (industries) of the States of Arunchal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura
and Sikkim.
(iv) The North East Industrial Development Finance Corporation
(NEDFi), Guwahati.
Copy also to :
(i) Cabinet Secretariat.
(ii) PMO.
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