B. Sudershan Reddy, C.J.

1. On 24.12.1997 the Govt. of India, Ministry of Industry, Department of Industrial Policy and Promotion announced its new Industrial Policy and other concessions to new industries in the North Eastern Region. The policy recognised the continued backwardness of the North Eastern Region and noted that a new and synergetic incentive package was widely felt to stimulate development of industries in the region. The origin of the new industrial policy is traceable to a statement made on October 27th, 1996 by the hon'ble Prime Minister of India and as well as the views and recommendations of various interdepartmental Committees constituted for the specific purpose to suggest remedial measures in order to accelerate the process of industrialisation in the backward North Eastern Region. The following are the salient features of the new Industrial Policy.

A. Development of Industrial Infrastructure

(i) Currently the funding pattern for the growth, centers envisages a Central/assistance of Rs. 40 crore for each Centre and balance amount to be, raised by the State Government. Government has approved that entire expenditure on the growth centers would be provided as Central assistance, subject to a ceiling of Rs. 10 crore.

(ii) In respect of the industries the funding pattern would be changed from 2: 3 between GOI and SIDIH to 4:1 and the GOI fund would be a grant.

B. Transport Subsidy Scheme

(i) The Transport subsidy scheme will be extended further in so far as MB States are concerned for a period of 10 years, i.e., upto 31.3.2007 being co-terminus with the 10th Five Years Plan on same term and conditions as are applicable now.

C. Fiscal Incentives to new Industries units and their substantial expansion.

(i) Government has approved for converting the growth centres and IIDCs into a total tax-free zone for the next 10 years. All industrial activity in these zones would be free from Income Tax, excise for a period of 10 years from the commencement of production. State Governments would be requested to grant exemptions in respect of Sales tax and Municipal tax.

(ii) Industries located in the growth centers would also be given capital investment subsidy at the rate of 15 per cent of their investment in plant and machinery subject to maximum ceiling of Rs.30 lakh.

(iii) The commercial banks and the North East Development Financial Corporation CNEDFI) will have dedicated branches/counters in process applications for term loans and working capita in these centers. White sanctioning assistance NEDFI and commercial banks would take a liberal view of the debt equity ratio.

(iv) An interest subsidy of 3 per cent on the working capital loans would be provided for a period of ten years after the commencement of production. The working capital requirements would be worked out " as per the Nayak Committee.

(v) Similar benefits would be extended to the new industries unit on their substantial expansion in other growth centres or IIDCs or industrial estates/parks/exports, promotions zones set up by the estate in the MB region. New industrial units or their substantial expansion in the specified Industries (as at annexure-A) located outside this growth centers and other identified locations would also be eligible for the similar fiscal incentives.

2. The Ministry of Finance, etc., were accordingly requested to amend Rules/Notifications, etc., and issue necessary instructions for giving effect to the decisions so announced in the policy. It reads as under:

Ministry of Finance, etc., are requested to amend rules/notifications, etc., and issue necessary instructions to give effect to these decisions.

3. The said policy decision itself is the outcome and based, on note dated 12.11.1997 submitted for consideration of the Cabinet on new Industrial Policy and other concessions to be provided in North Eastern Region. The note is a North Eastern Region specific one which takes into consideration the recommendations made by the Committee constitut