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Deprived local industries

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  2 Feb 2016 12:00 AM GMT

With the North East Industrial and Investment Promotion Policy (NEIIPP) remaining suspended for over a year, the Centre is mulling an altertive route to help fund new industrial units in the region. Union Minister for Industries and Commerce Nirmala Sitharaman did some loud thinking to this effect during her visit to Guwahati recently. She informed that her ministry has sent a proposal to the Fince ministry, suggesting a nodal role for the Ministry of Development of North Eastern Region in implementing a ratiolised policy. As much as Rs 15,000 crore is available with the DoNER under Non-Lapsable Central Pool of Resources (NLCPR), which can be utilised for NEIIPP. Sitharaman also took the opportunity to blame the previous UPA government for ‘loopholes’ in the NEIIPP, and the Congress for spreading ‘misinformation’ about its suspension. According to her, the policy was flawed, causing uneven sectoral growth with only a few sectors like the cement industry cornering the benefits. This apart, only a limited budget of Rs 700 crore was earmarked in the 11th Five Year Plan period for the policy, which being open ended ‘had no limit on the number of proposals to be accepted from the industries’. The disbursement in a single year 2014-15 was more than the total amount budgeted for five years, the minister pointed out. After all, under the NEIIPP — industrial units in the region are eligible for 100 percent income tax exemption, 30 percent capital investment subsidy, interest subsidy and excise duty benefits, among other benefits.

Since the expenditure under NEIIPP was much more than planned, the rendra Modi government suspended it from December 1, 2014, even though the policy was scheduled to run until 2017. Registration of schemes for setting up industries in the region under the policy stopped completely, badly hurting investments. Northeast State governments as well as trade and industry bodies have been demanding its resumption; Chief Minister Tarun Gogoi has been lambasting the NDA government for suspending the policy which the Manmohan Singh government had revised in 2007. While the blame game continues between New Delhi and NE State capitals over NEIIPP, it will do well to consider how micro, small and medium enterprises (MSMEs) in the region are faring. Considering the adverse law and order situation, dismal power scerio, transportation bottlenecks and distance from Delhi and other market centres, the wooing of large industrial houses to invest in the Northeast has borne little fruit over the years. So the MSMEs, numbering around 10.64 lakh in the region, should have been given all support possible to build up a credible industrial base and generate employment. But the reality is otherwise, as pointed out by the Federation of Industry & Commerce of North Eastern Region (FINER) in a memorandum to the Northeast MPs Forum recently.

The FINER has complained how government departments and public sector undertakings are floating tenders favouring big industrial houses from outside the region, thereby flouting guidelines about buying one-fifth of their annual value of goods and services from MSMEs. Tenders for even modest works are fixing high thresholds of annual turnovers for participating units to the tune of Rs 200 crore and above. With big industrial houses thus cornering the contracts, local micro and small enterprises are being elbowed out and deprived of benefits enshrined in government ectments, rues FINER. Well, this is what comes of bureaucrats and PSU bosses selling out to big players in their greed for ‘commissions’. The situation is particularly bad in Assam, though the bulk of Northeast MSMEs are located in the State. These small players are being almost totally shut out of State government work and supply orders; as for Central contracts, they hardly figure at all. So while New Delhi and Dispur play politics over a viable industrial policy, both are equally to blame as far as encouraging and nurturing local small enterprises are concerned. As for the banks here, ostensibly worried about their low credit-deposit ratios and high non-performing assets — they have little on offer for MSMEs. Loans are mostly advanced on the strength of collaterals; at the first sign of trouble, the borrower is threatened with liquidation of persol securities. The FINER has shared borrower feedbacks with the RBI and MSME ministry about the unwillingness of banks in NE to help out troubled MSMEs with options to put them back on track. Prime Minister Modi may be pushing his dreams of ‘Start up India’ and ‘Make in India’, but these will remain pipe dreams in the Northeast unless his government urgently puts into effect a suitable industrial policy for the region, and the State governments here learn to play ball.

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