Incentives for industrial growth in the Northeast 

The Union Cabinet’s approval of a new industrial scheme for the northeastern region, the Uttar Poorva Transformative Industrialization Scheme, 2024 (UNNATI-2024), fills the gap in the policy regime left by the expiry of the previous North East Industrial Development Scheme (NEIDS) in 2022. The financial outlay of the proposed scheme is Rs. 10,037 crore for the scheme period from the date of notification to 10 years. Along with an additional 8 years for committed liabilities. The region missed the bus and failed to derive optimal benefits during the past industrial policy regimes and previous NEIDS period, despite adequate budgetary allocations to fund the incentives for investment proposals. The longer duration of the new scheme is expected to boost confidence among industrial investors in the assured flow of incentives. Being a central sector scheme, fund disbursement will be quicker and will not be hampered by the financial constraints of the States. The scheme is proposed to be divided into two parts. Part A caters to the incentives to the eligible units amounting to Rs. 9737 crore, and Part B is for implementation and institutional arrangements for which Rs. 300 crore is earmarked. The proposed scheme envisages approximately 2180 applications, and it is anticipated that direct employment opportunities of about 83,000 will be generated during the scheme period. Any successful industrial project always creates huge opportunities for indirect employment and livelihood along the supply and product value chains. The scheme stipulates that industrial units will be allowed to apply for registration from the date of notification up to March 31, 2026, and all applications for registration shall have to be disposed of by March 31, 2027. The States, accordingly, will have to ensure that adequate applications are submitted well ahead of the submission deadline. Fixing the date of disposal has brought more certainty to the implementation of the scheme, as applications for registration are not going to keep hanging. Keeping renewable energy and electric vehicle charging stations on the positive list and cement and plastic on the negative list of the scheme is praiseworthy and critical to protecting the region from ecological destruction. Attracting investments for renewable and EV charging stations will boost decarbonisation efforts in the region. According to industrial estimates, the cost of an EV charging station, which involves leasing land needed for parking cars, electricity charges, energy metres, etc., in India ranges from Rs. 1 lakh to Rs. 50 lakh, depending on the type of charger and infrastructure. Range anxiety arising from a lack of public charging stations has been posing hurdles to EV penetration in the country and accounts for only 1% of total automobile sales, despite incentives provided by the government under various schemes. The region, by taking advantage of incentives under UNNATI-2024, can lead the country in EV penetration by pushing sound proposals for charging stations. The Federation of Industries in the North East Region (FINER), the apex body of industries in the region, has hailed the new scheme. It points out that, for the first time, industrial policy for the region has been tailored to actively promote investments in less developed districts of the North East. “The scheme divides the North East into two zones: Zone A for industrially advanced districts and Zone B for backward districts, ensuring tailored incentives and equitable distribution of funds,” states the apex industry body. This, however, also reminds us of the need for district authorities in both zones to play the role of catalysts by handholding entrepreneurs to prepare commercially viable and sustainable proposals for registration and availing of the incentives. The industry body also needs to undertake a comprehensive review as to what the gaps are in past policy regimes and what needs to be done to ensure that it does not turn out to be another incentive-paying central sector scheme. Apart from new industrial units, UNNATI-2024 has provisions for incentives for significant expansion of existing industrial units, which has brightened hopes for existing units to increase manufacturing capacity. The landlocked northeastern region is gradually being converted into a linked region, with the central government pushing transborder connectivity as India deepens its relations with the neighbouring countries of Bhutan, Bangladesh, Nepal, and ASEAN nations. The northeastern region has been pushed to the centre of India’s bilateral and multilateral cooperation Act East and Neighbourhood First policies, and the states in the region, by tapping the potential created by the new scheme, can become a hub of industrial activity in the strategic geopolitical sub-region. Writing a commercially sound investment proposal is the key to getting approval for registration. The Department for Promotion of Industry and Internal Trade needs to collaborate with the States to help entrepreneurs in the region write and pursue compelling investment proposals. The onus lies on the states, various government departments, and industry associations to build awareness among entrepreneurs and existing industry units about the various incentives available under the new industrial scheme.