2.

8 STATE GOVERNMENT INDUSTRIAL POLICIES AND REGULATIONS

Learning Objectives (4 to 5- as per content)

To understand the content of tamilNadu industrial policy

To identify the most important sectors in the industrial policy

To evaluate the effectives of state industrial policy in TamilNadu

The State of Tamil Nadu has always been in the forefront of economic growth in the
country. The State has made impressive strides over the years to carve out a niche for itself in the
fields of engineering, automobiles, textiles, leather, Information Technology, electronic
hardware and hi-technology industries and the Gross State Domestic Product (GSDP) stood at
Rs.4,51,313 crore at constant prices in 2012-13. The industrial GSDP of Tamil Nadu grew at an
impressive rate of 9.60% from the year 2005-06 to 2012-13 at constant prices.

The Vision 2023 Tamil Nadu document envisages Tamil Nadu to be the most
prosperous and progressive State with no poverty by the year 2023. Towards achieving this
major goal, manufacturing sector is assigned the key role of energizing the economy and creating a
virtuous circle of enhanced competitiveness, efficiency and vibrancy in all sectors and galvanize
the citizen and other stake holders towards reaching the targets in unison. Under this strategy,
one of the 10 thrust areas identified in the document is acceleration in the economy and
achievement of long term goals by increasing the share of manufacturing in the State economy at
the annual rate of 14% ultimately reaching the target of 22% by 2023.

To maintain its position as a progressive State, the Government has recently taken
proactive steps like the release of Vision 2023 Tamil Nadu document, formulation of Tamil Nadu
Infrastructure Development Act, Rules and Regulations, along with Tamil Nadu Transparency in
Tenders (Public Private Partnership and Procurement) Act and Rules. The United Nations
Report on Probity in Public Procurement has recognised Tamil Nadu as the first State to have
a legislative frame work to deal with Public Private Partnership procurement. Recognising the
importance of quality infrastructure, the Tamil Nadu Infrastructure Development Fund
(TNIDF) and a Project Preparation Fund (PPF) have also been set up and in 2013-2014,
Rs.2000 crore has been provided for the Tamil Nadu Infrastructure Development Fund and
Rs.200 crore for the Project Preparation Fund.

Traditionally, Tamil Nadu has been in the vanguard of industrialization among the
Indian States. The State has had a strong presence in textiles, engineering, automobile
production and auto components manufacture and recently in Information and Bio
Technology sectors.

Tamil Nadu has always been a safe haven for the investors owing to a favourable business
climate, excellent infrastructure for trade and investment, outstanding law and order maintenance,
peaceful industrial relations and healthy socio-economic reforms.

Amongthe Indian States, Tamil Nadu is now

ranked:
 First in the number of factories
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  First in the number of workers employed in the factories sector
 Third in Gross Industrial Output and
 Third in Net Value Addition

More than 3000 foreign JVs and 100% foreign subsidiaries including Ford, Hyundai,
Saint Gobain, Nokia, Motorola, Dell, Renault-Nissan, and Daimler, in addition to major local
manufacturers like Ashok Leyland, TVS group, Titan, Murugappa group, cement companies
etc., have manufacturing bases in Tamil Nadu with a Foreign Direct Investment (FDI) of over
$ 10.0 billion. Tamil Nadu is increasingly becoming the choice of destination for foreign
investors, which provides them with a global reach. Ranked among the top three Indian States
in terms of Purchasing Power Parity (PPP), Tamil Nadu is a dream come true for all those
looking for a rich cultural heritage, a highly productive work force, excellent infrastructure
and cost-effective operations. Each of these facts is substantiated by an enviable track record.
Tamil Nadu is to-date the only State to attract seven automobile giants-Ford, Hyundai, Mitsubishi,
Daimler, Nissan, Renault and BMW. As on date, Chennai, the capital of Tamil Nadu and the Detroit
of South Asia, has an installed capacity to produce 13,80,000 cars and about 3,50,000 commercial
vehicles each year.
Caterpillar, USA and Komatsu, Japan chose Chennai to establish their large earth moving
equipment manufacturing plants. Chennai is now emerging as one of the “Top 10” Global
Automobile manufacturing centres. The State is also the preferred choice for over 350 large
auto component manufacturers accounting for more than 35% of India’s auto components
production.
A comparison of the total operating costs across various investment destinations in
India would place Tamil Nadu ahead of the rest and in a very favourable position to offer
investors opportunities they would find hard to resist. Chennai serves as the most cost
effective production base for export markets by many MNCs
Tamil Nadu is known as a major exporter of Leather and Leather Goods, Textiles and
Garments, Automobiles and Components, Engineering Goods, Castings, Pharmaceuticals,
Spices, Agro-Products, Marine Products, Electronic Hardware and, of course, Software.
Tamil Nadu offers an abundance of relevant skills, robust IT infrastructure and easily
available real estate. Chennai is the choice of international finance majors as well - Stanchart,
World Bank, Citibank and ABN-AMRO Bank have set up their back office operations in the
city. BPOs and off-shore operations have also preferred to operate from Chennai. With more
than 1,780 IT / IT Enabled Services (ITES) companies, over 3,75,000 professionals and
annual IT exports of Rs.50,000 crore, Chennai, with its IT Bay Area, towers over other major
cities as an IT and ITES powerhouse2.
Tamil Nadu has an enrolment of over 1,82,000 graduate engineers from 553
engineering colleges, 1,20,000 diploma holders from 501 polytechnic institutes, 9,05,000
science and arts graduates, and over 35,000 software engineers 3. The State is blessed with a
talent pool of keen minds, well-honed expertise and specialized educational institutions like
Anna University (the World’s largest engineering university), Indian Institute of Technology,
Madras, the National Institute of Technology, Trichy and the Madras Institute of Technology
and many other private institutions that serve as alma mater to some of the sharpest brains in
the country, from where a legion of top notch engineers gear up to take on the world. The
Government has set up the Indian Institute of Information Technology at Srirangam near
Tiruchirapalli recently to take higher technical education to the next level for the coming
decades.
 The State also complements its skilled manpower with salubrious working conditions,
a peaceful industrial climate, committed workforce and extremely competitive wage rates that
offer substantial cost savings. In short, when it comes to human resources, Tamil Nadu is the “Number
1” in skilled manpower availability.
The installed capacity of conventional energy sources in Tamil Nadu is 11,415 MW.
Tamil Nadu is the undisputed Leader in wind power generation with an installed capacity of
7,145 MW. The renewable energy capacity of the Tamil Nadu is 30% of the total installed
renewable energy capacity in the country. The State has recently unveiled the Solar Policy
proposing to add 3000 MW solar power by 2015.

With the second largest coastline in the country of around 1076 kms, a network of 3 major
ports and 23 minor ports4 that includes India’s most efficient container port at Chennai, Tamil
Nadu has effectively harnessed the might of the oceans to provide the perfect gateway for
investors to reach out to the world. Its climate favours year-round port operations.

Travelling within Tamil Nadu or to any other part of the world from the State has been
made extremely convenient, through extensive connectivity in the skies, on land and across the
waters. 650 plus direct international flights a week and passenger traffic of over 4.50 million per
year make Chennai’s international airport the perfect launch pad, with excellent connectivity
to Europe, USA, the Gulf and East Asia5.

Be it apparel or leather, food or textile processing, biotechnology or IT, the State

Government of Tamil Nadu has developed industry-specific parks that help promote products
from each industry. In the Private Public Partnership (PPP) mode, the Government of Tamil
Nadu has promoted the Mahindra World City, a modern self-contained industrial park, on the
outskirts of Chennai. This is India’s first operational Special Economic Zone (SEZ) created
with world class infrastructure, offering Plug and Play facilities.

THE NEED FOR A NEW INDUSTRIAL POLICY

In the post-liberalisation era, Tamil Nadu introduced Industrial Polices in 1992, 2003
and 2007. The Vision 2023 Tamil Nadu document which lays out the road map of
development for the State, aims to achieve a consistent economic growth rate of 11% per
annum in a highly inclusive manner and to identify and remove the bottlenecks in
development, prioritise critical infrastructure projects, and work to propel the State of Tamil
Nadu to the forefront of development. The document identifies 10 themes for the State which
includes inclusive growth, world class infrastructure and healthy investment climate. The
Vision 2023 Tamil Nadu document envisages a 14% annual growth in the manufacturing
sector and an investment of Rs.15 lakh crore in the next 10 years. In order to attain the growth
targets fixed for the respective economic indicators, the formulation of a New Industrial
Policy has become imperative.
OBJECTIVES
1. To position Tamil Nadu as the most preferred State for manufacturing, with a reputation
for efficiency and competitiveness and to attract incremental investments of over 10%
every year in Manufacturing.
2. To achieve an annual average growth rate of 14% in the manufacturing sector in Tamil
Nadu.
3. To raise the investment in infrastructure from the existing 4–5% of the GSDP gradually to
10% by 2015 and further to 11.5% from 2019 as envisaged in the Vision 2023 Tamil

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 Nadu document.
4. To make Tamil Nadu the innovation hub and the knowledge capital of India, on the
strength of world class institutions in various fields and the best human talent
5. To enhance Tamil Nadu’s position in high technology industries including aerospace,
nano technology etc.,
6. To achieve rapid industrialisation of the Southern districts of Tamil Nadu
7. To achieve inclusive and sustainable industrial development in Tamil Nadu
8. To create gainful employment opportunities for an additional 2.0 million persons
before 2016
9. To double exports from Tamil Nadu by 2016.

APPROACH

Keeping the above objectives in mind, this Policy adopts a multi-pronged approach of :
(i) providing world-class infrastructure,
(ii) special emphasis on priority sectors like automobiles, bio-technology, electronic
hardware and aerospace
(iii) improving the quality of human resources and
(iv) providing attractive incentives to the investors.

STRATEGY
INFRASTRUCTURE:
Recognising that world class infrastructure, both industrial and social, is a prerequisite
for rapid industrialisation, the Government of Tamil Nadu aims at creating and
upgrading the existing infrastructure to world standards. Towards this end, the Tamil
Nadu Infrastructure Development Board, headed by the Hon’ble Chief Minister, has
been constituted and the State has released the Vision 2023 Tamil Nadu document,
outlining the growth trajectory for the next decade. The Government of India, on its
part, has initiated action to prepare a comprehensive master plan for the Chennai -
Bengaluru Corridor which will identify the infrastructural bottlenecks in this region
and the projects required to remove them, with the assistance of the Japanese
International Corporation Agency(JICA).
Tamil Nadu is already endowed with a relatively better infrastructure among the Indian
states. However, rapid industrialisation and growing urbanisation require a further impetus to
investment in infrastructure. Taking note of this, the State Government has initiated steps to
address the issues of power availability, land for industries, skilled manpower, roads and ports,
industrial water etc. To achieve the targeted growth rates during the XII plan period (2012–
2017), substantial investments are needed to create additional capacities in various
components of infrastructure. The following are the targets for capacity addition during the
XII plan period:

 To invest not less than US $ 30 billion, through private and public sectors, in
infrastructure development
 To increase the power generation capacity adequately to meet the future
demand by commissioning Mega and Ultra Mega Power Projects
 To establish a land bank of at least 53,000 acres throughout the State
 To augment industrial water supply
 To augment capacities for handling and safe disposal of industrial effluents and solid
 wastes
 To establish Corridors of Excellence
 To improve Port connectivity; to upgrade the minor ports at Nagapattinam, Colachel,
Cuddalore and Manappadu as major ports and to upgrade other ports as Intermediate
ports
 To augment social infrastructure like housing, health care, technical
education/skill development, etc. to support the manufacturing sector.

Specifically, the Government will endeavour to implement the following flagship

infrastructure projects, in public or private sector:
 An aeropark
 A logistics hub close to the Airport
 A Biotechnology Enterprise Zone
 A Heavy Engineering Hub
 Four Special Investment Regions for Manufacturing industries
 High-speed passenger trains in the Chennai-Coimbatore, Chennai – Madurai –
Kanniyakumari and Madurai – Salem – Bangalore sectors
 Industrial Corridor of Excellence between Madurai – Tirunelveli –
Thoothukudi
 Creating Expressways, widening major national highways and four- laning of
major State Highways
 Peripheral Ring Road and Outer Ring Road for Chennai and other major
cities
 A Liquefied natural Gas (LNG) Terminal and gas transmission and
distribution pipeline infrastructure
PRIORITY SECTORS
The Government will give a special thrust to:
Automobile and Auto components Sector
Renewable Energy Equipment manufacturing Industries.
Aerospace industry and
Bio-technology and Pharmaceuticals Sector.

The Government has formulated specific policies for these sectors aimed at creating enabling
infrastructure and offering special incentives. Further, Aerospace industries will be given
special importance and a specific policy will be formulated for this sector.
SKILL DEVELOPMENT

Tamil Nadu Skill Development Corporation: The Tamil Nadu Skill Development
Mission implemented through a society has been reorganised as a Special Purpose
Vehicle(SPV) with participation from private sector under section 25 of the Companies Act,
1956 as a body corporate in the name, Tamil Nadu Skill Development Corporation for
providing skill training through different departments.

Thrust will be given for creating a skilled and balanced workforce with a special
focus to enable women to enhance their employability. The Government will take the
lead in partnering with the industry in developing
a curriculum for the industrial training institutes to make their graduates industry-ready.
Technical institutes and polytechnics will be incentivised to align themselves with the
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industry needs and organise skill development programmes jointly to improve the
employability of their students.

Industry-Institution Collaboration: A framework for industry- institution

collaboration and public-private partnership for ITIs, Polytechnics and Engineering colleges
will be formulated. The Government will facilitate setting up of Technology Parks within and
around Higher Learning Institutions and Universities.
Cluster level skill development: This Initiative will focus on specific existing clusters in
the auto, leather, textiles, and electronic hardware sectors. A Cluster Human Resources (HR)
Skills Development Committee will be established in each major cluster with the membership
of engineering colleges, polytechnics, ITIs, arts and science colleges in the vicinity and the
participating industries to set targets for training and the revision of course content of these
institutions.

Training Subsidy: The Government will offer training subsidy as an incentive on a

case to case basis taking into account the capacity of employment generation and the potential
for significant improvement of skills.

Inclusive Development:

As envisaged in the Vision 2023 Tamil Nadu document, Tamil Nadu will exhibit a
highly inclusive growth pattern and will be a poverty free state with opportunities for gainful
and productive environment for all those who seek it, and will provide care for the
disadvantaged, vulnerable and the destitute in the State.

Industries employing differently -abled persons would be incentivised suitably, by

supporting skill development programs to enable their productive employment.

TECHNOLOGY DEVELOPMENT
Technology Incubation centres: Realising that technology is a key element
contributing to productivity, quality, competitiveness and market acceptability of products and
that technology and business incubators have emerged as useful instruments for innovation, the
Government will encourage development of “Centres of Excellence and Innovation,” in areas
such as chip and electronic hardware design, leather product design and automotive design in
collaboration with academic institutions of excellence, industry and Government of India to
develop a pool of Technocrats. The centres will also network with Angel Investors and
Venture Capitalists (VCs) to provide mentoring and financial support to the start-ups. The
centre will enable the tenant companies to gradually mature over a period of 2-3 years and
then shift to a commercial place for transacting actual business.
 Subsidy for Quality certification / Patent registration: The Government will
reimburse 50% of the expenditure incurred by the industrial units subject to a maximum of
Rs.1.00 lakh, in getting the BIS, ISO 9000 / 14000 or any other national or international
certification or patent registration.

Promotion of R & D: In order to encourage Research and Development in manufacturing

sector, companies investing in R & D facilities will be incentivised as follows:

For capital goods to be used in setting up hi-technology R & D centers VAT would be
zero rated. Such capital goods shall not be used for commercial production and be used
exclusively for R & D.

FINANCIAL SERVICES CENTRE

Appreciating the significance of the contribution of the Services sector to the growth
of the manufacturing sector, Government has planned to set up an exclusive Integrated
Financial Services Centre which shall house leading national and international financial
intermediaries including banks, insurance companies, mutual funds, consultants, brokerages
etc.
INVESTMENT PROMOTION
Tamil Nadu Investment Promotion Programme : The Tamil Nadu Investment
Promotion Programme has been launched in the state with financial assistance from JICA to
further improve the investment climate through strengthening the policy framework and
enhancing the quality of urban infrastructure.
EXPORT PROMOTION

Tamil Nadu is a major exporter of a variety of manufactured goods like automobiles,

auto components, Engineering goods, Textiles and Garments, Leather products, Electronic
Hardware, Chemicals, etc., apart from Software and Support services. Tamil Nadu’s exports
stood at a value of Rs.1,80,179 crore during 2012- 20138. The Government has set a target to
double the exports by 2016.
LABOUR SECTOR INITIATIVES

Flexibility in labour laws will be adopted without compromising labour welfare.

Subject to applicable labour laws and within the parameters of the Industrial Employment
(Standing Orders) Act, 1946 (Central Act 20 of 1946), flexibility in employment conditions
including flexible working hours for women and shorter and longer duration of working
hours, 24x7 operations (3 shifts), employment of women in the night shifts and flexibility in
hiring contract labour will be permitted.

MULTI-STOREYED BUILDINGS APPROVAL

Industrial buildings exceeding 15 mts height but not exceeding 2 floors will not be
treated as Multi-Storeyed Buildings (MSBs, attracting declaration of MSB areas and
application of special rules for MSBs under the Town and Country Planning Act). An additional
Floor Space Index (FSI) incentive of 50% will be given for non-MSB flatted tiny, small and
medium scale industries.
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 SINGLE WINDOW MECHANISM
To avoid procedural delays in getting statutory clearances from various authorities, the
Government of Tamil Nadu has established a Single Window facilitation mechanism under the
Guidance Bureau to accord in-principle composite approval for pre- project clearances at the
State Government level. A Committee headed by the Chief Secretary will monitor the
progress of final approvals of all such cases.
The Tamil Nadu Industrial Development Corporation (TIDCO) will be mandated to
facilitate various Infrastructure projects including Power, Port development, SEZ, waste
treatment, handling and disposal, etc.
INCENTIVES FOR MANUFACTURING SECTOR
Manufacturing units other than those belonging to categories listed in
Annexure- A will be eligible for incentives under this policy.

For the purpose of administering the fiscal incentives, the districts of the state are
classified as follows :

A - Chennai, Tiruvallur and Kancheepuram(3 districts) B -

Other than A & C (20 districts)
C - Southern Districts(9 districts)

“Southern Districts” for this purpose means the Districts of Madurai, Theni, Dindigul,
Sivagangai, Ramanathapuram, Virudhunagar, Tirunelveli, Thoothukudi and Kanniyakumari
For the purpose of administering the fiscal incentives, the following are 4 categories of
different investment ranges along with the employment criteria:-

“Mega Project” means a manufacturing project, new or expansion, located in A & B

category districts with the following investment ranges and creating the employment
stipulated therein.

Category Investment Range (Rs. in crore)

A B
Mega Projects Above 500 – 1500 Above 350- 1000 creating
creating an employment of an employment of 200 in 3
300 in 3 years years

“Super Mega Project-A” means a manufacturing project, new or expansion, located in A & B
category districts with the following investment ranges and creating the employment
stipulated therein.

Category Investment Range (Rs. in crore)

A B
Super Mega A Above 1500 –3000 creating an Above 1000 – 2000
employment of 400 in 5 years creating an employment of
300 in 5 years

“Super Mega Project-B” means a manufacturing project, new or expansion, located in A & B
 category districts with the following investment ranges and creating the employment
stipulated therein.

Category Investment Range (Rs. in crore)

A B
Super Mega B Above 3000 – 5000 Above 2000 – 4000
creating an employment of creating an employment of
600 in 6 years 500 in 6 years

“Ultra Mega Project” means a manufacturing project, new or expansion, located in A & B
category districts with the following investment ranges and creating the employment
stipulated therein.

Category Investment Range (Rs. in crore)

A B
Above 5000 creating Above 4000
Ultra Mega an employment of creating an employment
700 in 7 years of 600 in 7 years

STANDARD INCENTIVES

All major industries in categories A&B districts will be eligible for the following
standard incentives:

Capital Subsidy and Electricity Tax Exemption: Irrespective of the location of the
project, new or expansion manufacturing units will be given a back- ended capital subsidy and
electricity tax exemption on power purchased from the Tamil Nadu Generation and
Distribution Corporation Ltd. (TANGEDCO) or generated and consumed from captive sources
based on employment and investment in fixed assets /eligible assets as the case may be, made
within the investment period as detailed below:

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 Direct Electricity tax exemption
Investment in fixed Capital (in number of years) from
employment
assets/eligible fixed subsidy (Rs. date of commercial
assets (Rs. in crore) in crore) production
(in numbers)

5 - 50 100 0.30 2 years

50 - 100 200 0.60 3 years
100 - 200 300 1.00 4 years
200 to 500 400 1.50 5 years
500 - 1500 600 1.75 5 years
1500 -3000 800 2.00 5 years
3000 and above 1000 2.25 5 years

New or expansion manufacturing units located within SIPCOT Industrial parks in respect of
A & B districts will be provided an additional capital subsidy of 50% over and above the
eligible limit, enumerated in the table above.
New or expansion manufacturing units located outside the SIPCOT Industrial Parks in B & C
districts will be provided an additional capital subsidy of 10% and 25% respectively over and
above the eligible limit, enumerated in the table above.

Stamp Duty concession: 50% Exemption from Stamp duty on lease or sale of land meant for
industrial use shall be offered for projects located in Industrial parks promoted by SIPCOT in
A and B category districts. In the case of Ultra Mega projects, it will be 100%, irrespective of
location. Normal registration charges will however apply in these cases. For computation of
stamp duty, property in such industrial parks would be valued at actual land or building value paid
by the manufacturing units to such industrial park.

Environmental Protection Infrastructure subsidy: Dedicated Effluent Treatment Plants (ETP)

and / or Hazardous Waste Treatment Storage and Disposal Facility (HWTSDF) set up by
individual manufacturing units would be eligible for an Environment Protection Infrastructure
subsidy of Rs.30 lakhs or 25% of capital cost of setting up such ETP/ HWTSDF, whichever is
less.

Individual Manufacturing Units adopting Zero Effluent or Waste Water Discharge,

Clean Development Mechanism and Emissions Trading Mechanism will be given a higher
amount of subsidy on a case-to-case basis.
STRUCTURED PACKAGE OF INCENTIVES
Apart from the above standard incentives, Mega, Super-mega A, Super-mega B and Ultra-
mega projects will be eligible for a structured package of incentives as detailed below (For A &
B category districts) if they satisfy both the investment and the minimum employment criteria
fixed for each category.

Invest
ment Investment Range Fiscal Incentives Offered
Category (Rs.in crore)

A Districts B Districts For A & B group districts

Mega Above 500 – Above 350- Net output VAT+CST paid will be given as
1500 1000 Investment promotion subsidy/ soft loan
for 10 years from the date of commercial
creating an creating an production with a ceiling of 80% of
employ employ ment investment made in EFA within the
ment of of 200 in 3 investment period.
300 in 3 years
years In respect of expansion projects the cap will be
70%. Base volume principle and sliding scale
will be applied.

Super Above 1500 Above 1000 Net output VAT+CST paid will be given as
Mega A –3000 – 2000 Investment promotion subsidy/ soft loan
for 12 years from date of commercial
creating an creating an production with a ceiling of 90% of
employment employment investment made in EFA within the
of 400 in of 300 in investment period. If ceiling is not reached
5 years 5 years within 12 years, addl. period up to 6 years
will be considered

In respect of expansion projects the cap will be

80%. Base volume principle and sliding scale
will be applied.

Refund of VAT paid on capital goods will

be given as subsidy during the
investment period.

However, this subsidy will be included for

capping of incentive based on Net Output
VAT+CST[

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Super Above 3000 Above 2000 Net output VAT+CST paid will be given as
Mega B – 5000 – 4000 Investment promotion subsidy/ softloan for
creating an creating an 14 years from date of commercial
employ employ ment production with a ceiling of 100% of
ment of of 500 in 6 investment made in EFA within the
600 in 6 years investment period. If ceiling is not reached
years within 14 years, addl. period up to 7 years
will be considered

In respect of expansion projects the cap will be

80%. Base volume principle and sliding scale
will be applied. Refund of VAT paid on
capital goods will be given as subsidy
during the investment period.

However, this subsidy will be included for

capping of incentive based on Net Output
VAT+CST.

Ultra Above 5000 Above 4000 Gross output VAT and CST paid will be
Mega creating an creating an given in the form of Investment Promotion
employment of employment Subsidy/softloan for 16 years (or) till the
700 in 7 years of 600 in 7 cumulative availment of the gross Output
years VAT+CST paid by the Company reaches
100% of eligible investment within the
investment period, whichever is earlier.

Input VAT refund as Investment Promotion

subsidy for a period concurrent with the
period of output VAT+CST refund or
softloan.

Refund of VAT paid on Capital Goods and

tax paid on Works Contract will be given as
subsidy during investment period. However,
these two subsidies will be included for the
ceiling fixed for Gross Output VAT+CST
based incentive.

In respect of expansion projects, the cap will

be 80%. Base volume principle and Sliding
scale will be applied.
 Incentivising additional employment generation:

An additional 10% output VAT+CST paid will be given as Investment Promotion subsidy/soft
loan to the investors if they double the committed employment levels within the investment period, which
is capped to the investment made in the EFA during the Investment period. This additional incentive will be
applicable for ‘B’ and ‘C’ category districts only.
Employment Based Incentives: With a view to encourage employment intensive
industries to set up their projects in Tamil Nadu, the current scheme of offering employment
based package of incentives will continue.
In case, a project qualifies for any investment based package of incentives also, as per
this policy, the choice will be left to the investing company to choose either the investment
based package or employment based package. This should be a one time choice and should be
exercised in the beginning itself.

The investment period may be extended by the Government in deserving cases, for
valid reasons.

In the case of Investment Promotion Soft loan, the cap will be the one fixed for the
respective categories/class. In the case of Investment Promotion subsidy, the cap will be half
of the one fixed for the respective category/class. For softloan, the interest charged will be
0.1% per annum. The project/company may exercise an one time option for availing either
Investment Promotion softloan or subsidy before the commencement of the commercial
production.

INTER-DEPARTMENTAL COMMITTEE

An Inter-Departmental Committee will be constituted under the Chairmanship of the

Principal Secretary to Government, Industries Department to consider the applications for
sanction of incentives listed in this Policy. This Committee will include Secretaries of various
departments like Finance, Energy, Commercial Taxes and Labour. The Committee at its
discretion may invite any other Government department /agency as an Invitee. The Guidance
Bureau will be the convenor of this Committee.

IMPLEMENTATION OF INCENTIVES

The State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) and
Tamil Nadu Industrial Investment Corporation (TIIC) are mandated to act as the
implementation agencies for the various incentives listed out in this Policy as per the level of
investments.

MECHANISM FOR DISBURSAL OF INCENTIVES

A suitable mechanism that ensures speed and transparency for disbursal of incentives
will be put in place.
CASHLESS MECHANISM
Efforts will be made to evolve a cashless mechanism considering practical difficulties,
if any, faced by the Companies in receiving the incentives in the present system followed.
SPECIAL PACKAGE FOR SOUTHERN DISTRICTS

With a view to ensure that the fruits of industrialisation reach the southern districts of
Tamil Nadu, Industries set up in the southern districts will be eligible for a special package
which will be higher than the package available for the rest of the State as detailed below:
“Mega Project” means a manufacturing project, new or expansion, located in C category
districts with the following investment ranges and creating the employment stipulated.

Category Investment Range (Rs. in crore)

Mega Projects Above 200 – 500
creating an employment of 100 in 4 years

“Super Mega Project-A” means a manufacturing project, new or expansion, located in C

category districts with the following investment ranges and creating the employment
stipulated.

Category Investment Range (Rs. in crore)

Super Mega A Above 500-1500
creating an employment of 250 in 5 years

“Super Mega Project-B” means a manufacturing project, new or expansion, located in C

category districts with the following investment ranges and creating the employment
stipulated.

Category Investment Range (Rs. in crore)

Super Mega B Above 1500 – 3000 creating an employment of 350
in 6 years

“Ultra Mega Project” means a manufacturing project, new or expansion, located in C

category districts with the following investment ranges and creating the employment
stipulated.

Category Investment Range (Rs. in crore)

Ultra Mega Above 3000 creating an employment of 500 in 7 years

Incentivising additional employment generation: This additional incentive will be

given as enumerated in para 17.1.

Standard incentives: All major industries set up in these districts will be eligible for the
following standard incentives :

Capital Subsidy and Electricity Tax Exemption: New or expansion manufacturing

units established in Southern districts will be given a back-ended capital subsidy and
Electricity Tax exemption as enumerated in para 16.1.
 Stamp Duty concession: 50% Stamp duty concession shall be offered for lands
purchased/leased for the projects located in areas other than Industrial parks promoted by
SIPCOT. In the case of Ultra Mega projects and the projects located in SIPCOT Industrial
Parks, this will be 100%. Normal registration fees will, however, apply. For computation of
stamp duty, property in such industrial parks would be valued at actual land or building value
paid by the manufacturing units to such industrial park.

Environmental Protection Infrastructure subsidy: Dedicated Effluent Treatment

Plants (ETP) and / or Hazardous Waste Treatment Storage and Disposal Facility (HWTSDF)
set up by individual manufacturing units would be eligible for an Environment Protection
Infrastructure subsidy of Rs.30 lakhs or 25% of capital cost of setting up such ETP/
HWTSDF, whichever is less. Conclusion

Learning outcomes (each module) – 4 to 5

Short questions – 5 or more each module

What is state industrial policy?

How many industrial policies are there in India?
What are the objectives of TamilNadu industrial policies and regulations?
What are the main features of TamilNaduindustrial policy

Long questions – 3 or more each module

Explain TamilNadu industrial policy
Discuss the features of Tamiladu Industrial policy

MCQs (minimum 3 for each module)

OER links, Videos, books including e-books, research papers and journals, Further readings

https://testbook.com/objective-questions/mcq-on-industrial-policies-and-challenges--
5eea6a1239140f30f369ec45
https://byjus.com/free-ias-prep/industrial-policy-india/
https://www.tutorialspoint.com/entrepreneurship_development/industrial_policies_regulations.htm
https://www.drishtiias.com/to-the-points/paper3/india-s-industrial-policy
https://www.wisdomjobs.com/e-university/entrepreneurship-development-tutorial-2677/industrial-
policies-and-regulations-27098.html
https://www.youtube.com/watch?v=9fNzaAB4zW4