Telangana to keep industrial policy on hold

Hyderabad: The implementation of the Telangana government’s new industrial policy, the “online single window approval system,” ensuring that all government approvals are given within three weeks will be put on hold for now.

The big investors who came forward to set up mega projects in TS earlier are now shying away from submitting investment applications after the recent package announced by the Centre, which failed to offer any major fiscal concessions like income tax, excise, customs duty exemptions etc. as anticipated.

Chief Minister K. Chandrasekhar Rao who was expected to unveil the online approval system this week to facilitate submission of applications online from investors, dropped his plans due to the poor response from investors. Top firms like Reliance ADAG, the C.K. Birla group, the Mahindra group, the Lulu group etc, which had earlier expressed interest in investing in TS have reportedly conveyed to the government that they would wait for some more time till there is clarity over whether the Centre would accord tax incentives to TS or not.

The Reliance ADAG group had promised to invest in power, infrastructure and media. The C.K. Birla group had promised to set up healthcare and cement units in Telangana. The Mahindra group had promised to set up new tractor manufacturing plants while the Lulu group had promised to invest in retailing and food processing.

In fact, most of the concessions promised by the TS government in its industrial policy are linked to the Centre’s policies and they can be extended to industrialists only if the Centre approves them.

Two days ago the Centre came out with a package for TS to promote industrialisation and growth. To the utter disappointment of industrialists, there were no tax incentives.

According to the Centre’s package, “The manufacturing industries set up in the backward region, as notified, would be given 15 per cent additional depreciation on new plant and machinery in the first year. An additional investment allowance of 15 per cent would be given to industries in backward regions for investments made in new plant and machinery in any of the five years for which additional concession would be notified.”

“Even these minor concessions granted by the Centre would not be available for investors as they want to set up units in and around Hyderabad, which do not fall in the backward region category. The government has decided to take up the issue with the Centre.

A delegation headed by Chief Minister and the industries minister will visit New Delhi soon and pursue the case with the Prime Minister and the finance minister,” said a senior official of the industries department.

The government is hopeful that in the next phase the Centre will come out with tax incentives for Telangana as promised in the AP Reorganisation Act, 2014.

The government is of the view that there is no point in launching the online approval system at this stage when investors are not keen on submitting applications till the Centre gives clarity over tax incentives.