The Sikkim Industrial Promotion and Incentive (Amendment) Act, 2003

(1) This Act may be called the Sikkim Industrial Promotion and Incentive (Amendment) Act, 2003. (2) It shall come into force at once.

(1) This Act shall be applicable to all industrial units existing on the date of commencement of this Act and also the industrial unit as may be set up after the commencement of this Act. Notwithstanding anything contained herein the industries set up prior to commencement of this Act and enjoyed benefits, concessions, incentives or some other package of subsidies etc. for a period of ten years under any Notification or Rules or Orders or Schemes etc. shall not be eligible for any benefits under this Act. (2) The Scheme will also be applicable to existing units in case of diversification, modernization and expansion. (3) Diversification, modernization and expansion should entail enhancement in the existing capacity by at least 25% and the package of incentive admissible to the unit shall relate to the expanded portion only. For the purpose of this calculation undepreciated value of the capital investment made on land, building, plant and machinery of the unit will be taken into consideration. In the Sikkim Industrial Promotion and Incentive Act, 2000, (hereinafter referred to as the said Act), section 2 shall be renumbered as sub-section (1) of that section and in sub-section (1) as so renumbered, for the word "five", the word "ten" shall be substituted and after sub-section (1) as so renumbered, the following sub-sections shall be inserted, namely:- "(2) The Scheme will also be applicable to existing units in case of diversification, modernization and expansion. (3) Diversification, modernization and expansion should entail enhancement in the existing capacity by at least 25% and the package of incentive admissible to the unit shall relate to the expanded portion only. For the purpose of this calculation undepreciated value of the capital investment made on land, building, plant and machinery of the unit will be taken into consideration." In the Sikkim Industrial Promotion and Incentive Act, 2000, in section 12A, for sub-section (1), the following sub-section shall be substituted namely:- "(1) The Tax payable by industrial unit under the Sikkim Value Added Tax Act, 2005 shall be deferred for a period of 3 (three) years for both regular and thrust area industries from the date of commencement of commercial production, subject to the following conditions namely:- (a) the industrial unit shall have to obtain concurrent notification to the effect under Section 30A of the Sikkim Value Added Tax Act, 2005 by furnishing such security, or additional security, deposit, as the prescribed authority may deem necessary; (b) total amount of tax deferred during first, second and third years shall be paid in four equal quarterly installments after expiry of the three years deferment period."

In this Act unless the context otherwise requires :-(a) 'Artisan and tiny units, Small scale Units and Medium/Large scale Units' mean an Industrial Unit as defined by the Government of India from time to time and includes co-operative industrial units; (b) 'Capital' means the total investment of money on tangible assets like building, etc. and intangible assets like good will; (c) 'Company' means a unit registered under the provision of the law relating to registration of Companies for the time being in force in the State; (d) 'Co-operative Society' means any Co-operative industrial unit registered under the Sikkim Co-operative Society Act, 1978; (dd) 'Diversification' means separately identifiable investment made by an existing unit; (e) 'Fixed investment' means investment made in land, building, plant and machineries and other capital goods; (f) 'Partnership Firm' means a unit formed by two or more persons; (g) 'Proprietorship' means a unit owned by a single person; (h) 'Small Scale Industry' means where the investment in fixed assets in plant and machineries, (i.e. excluding the cost of land, building, etc.) whether held on ownership terms or on lease or on hire purchase, not exceeding 100 lakhs; (i) 'Working Capital' means that component of fund loan which is required for meeting up the expenditure on day-to-day operation of a unit including cost of inventories, raw materials, component works in progress and operative expenses like wages, salaries, power charges and other recurring expenses; (j) 'Working Capital Loan' means a loan required for acquisition of current assets for meeting day to day requirements of an industrial unit for completing the operation cycle and include cash credit and over draft facilities and any other short term loan required by the industrial unit; (k) 'Year' means the financial year commencing on the first day of April and ending on the 31st day of March next following. In the said Act, in section 3.- (i) after clause (d) following clauses shall be inserted, namely:- "(dd) \"Diversification\" means separately identifiable investment made by an existing industrial unit in the fixed capital assets to set up a project for manufacturing of new products (s) provided that the additional investment in the fixed assets is not less than 25% of the gross fixed capital and increase of additional employment is at least by 10%. (ddd) \"Expansion\" of an industrial units means additional fixed unit. For the purpose of calculation, Gross value of all the capital investment made on land, building and plant machinery of the existing unit will be taken into consideration. Expansion shall also imply an increase of at least 25% in the existing installed capacity as well as increase of addition employment of at least by 10%. Prior to going for expansion, the units should be operating at least at a minimum of 80% capacity during the three previous years." (ii) after clause (e), the following clause shall be inserted, namely:- "(ee) \'Modernisation\' means separately identifiable investment made by an existing industrial unit in the fixed capital technology having a definite advantage in reduction of cost of production provided that the additional investment in the fixed assets should not be less than 25% of the gross fixed capital. The incentive available to the unit undergoing expansion/diversification/modernization shall be for the additional investment made and/ or the increase in production over the average of three previous years prior to the year when the unit goes for expansion/diversification as applicable. The year for this purpose shall mean a financial year. The units which have taken up expansion/diversification/modernization plan prior to coming into force of this policy should intimate the concerned agency within three months from the date of implementation of the policy". In the said Act, in sub-section (2) of Section 8, after the words "thrust area units" the words "and to the subject to maximum of Rs. 2 lakhs (Rupees two lakhs)" shall be inserted.

Where an industrial unit fails to furnish any information or material particulars or record or document or having received the benefits available under the act is found to have resorted to malpractice or misused benefits of concessions or suppresses or furnishes wrong information or is otherwise found to have not acted bonafide shall be disqualified for availing any benefits or concession or incentive under the Act. In the said Act, for the existing section 5, the following section shall be substituted, namely:- "Sanctioning Authority 5. For the benefits/incentives under this Act, the following authorities shall have the power of sanctioning namely:- (1) General Manager of District Industries Centres - up to Rs. 10,000/- (Rupees ten thousand). (2) Director of Industries upto Rs. 1,00,000/- (Rupees one lakh). (3) Secretary Industries - Upto Rs. 1,50,000/- (Rupees one lakh and fifty thousand). (4) Minister in-charge, Industries - all cases above Rs. 1.5 lakhs to Rs. 5 lakhs (Rupees five lakhs). (5) There shall be a Committee constituted under the Scheme consisting of the Minister Industries with secretary, Industries, Secretary, Finance and Director, Industries as members who shall sanction subsidies incentive between Rs. 5 to Rs. 8 lakhs (Rupees five to eight lakhs). (6) All cases above Rs. 8 lakhs (Rupees eight lakhs) will be placed in the cabinet." In the said Act, for the existing Section 12 A the following section shall be substituted namely:- '12A(1) "The Value Added Tax (VAT) payable by an industrial Unit shall be deferred for a period of 10 (ten) years up to 12 (twelve) years for notified thrust area industries, from the date of commencement of actual commercial production. These units will be permitted to collect VAT also, if any, during the entire period of deferment as the case may be. At the end of the deferment period, the VAT collected will have to be remitted to the Government Account in four half yearly installments. All the industrial units which are already enjoying the sales tax exemption the same will be converted into VAT deferral scheme as above for the remaining periods of their exemption as the case may be." (2) The levy of State Excise Duty and Sales Tax on units manufacturing alcoholic/beer products shall be governed by such notification as may be issued by the State Government from time to time (2) Central Sales Tax shall not be exempted'

Sanctioning authority for benefits/incentives under this Act shall be such as would be notified by the State Government from time to time who shall also be the authority to receive all applications for such incentives or benefits and also shall deal with any issue of recovery, reimbursement or adjustment.

Where an industry has received or is eligible to receive subsidy on interest, such subsidy will be for interest in excess of 4% of the interest payable by the industrial unit on the working capital loan and will be available for a period of five years in the following manner to different categories of industries from the date of obtaining the loan:- Artisan and Tiny units: Rs. 10,000.00 Small Scale Units: Rs. 50,000.00 Medium/Large Scale units: Rs. 1,00,000.00 (1) There shall be 100% reimbursement of power bill for an industrial unit consuming power up to the extent of Rs. 50,000 (Rupees fifty thousand) per annum. The reimbursement above the initial limit shall be to the extent of Rs. 50,000 (Rupees fifty thousand) plus 25 percent of the balance of actual payment subject to a maximum of Rs. 2 lakhs (Rupees two lakhs). (2) The State Government shall grant a subsidy of 30 percent power tariff to industrial units coming up in growth centres in Thrust areas. (3) 50% of the cost incurred on linking of power from the main line to the factory premises up to a maximum ceiling of Rs. 50,000 (Rupees fifty thousand). (4) Power tariff to the industries shall be levied at the cost of production as and when available.

An investment subsidy on the total investment shall be provided on a graded level to the industry. It will be available to both new as well as those carrying out expansion, diversification or modernization activities.

(Table Content as follows:) Investment in Plant and machinery, subject to a maximum of Rs. 10 lakhs (Rupees ten lakhs). a) For units set up in the thrust area 10 Percent 5 percent of total capital investment in plant and machinery subject to a maximum Rs. 15 lakhs (Rupees fifteen lakhs) b) For units set up in the thrust areas by local entrepreneurs 20 Percent of total capital investment in Plant and machinery, subject to a maximum of Rs. 30 lakh (Rupees thirty lakhs) c) For units set up by local entrepreneurs 10 percent of total capital investment in plant and machinery subject to a maximum of Rs. 20 lakhs (Rupees twenty lakhs) d) 10 percent of total capital investment in Plant and machinery, subject to a maximum of Rs. 5 lacs. (Rupees five lakhs). e) For units set up by local entrepreneurs 10 percent of total capital investment in plant and machinery, subject to a maximum of Rs. 10 lacs (Rupees ten lakhs) f) For units set up in the thrust areas 15 Percent of total capital investment in plant and machinery subject to a maximum of Rs. 7 lakhs (Rupees Seven lakhs) g) For units set up in the thrust areas by local entrepreneurs 15 Percent of total capital investment in plant and machinery subject to a maximum of Rs. 14 lakh (Rupees fourteen lakhs) h) 30 percent of total capital investment in Plant and machinery subject to a maximum of Rs. 60,000 (Rupees sixty thousand) for units set up by local entrepreneurs. i) 15 percent of total capital investment in Plant and machinery subject to a maximum of Rs. 30,000/- (Rupees thirty thousand). j) For units set up in the thrust areas 20 Percent of total capital investment in plant and machinery subject to a maximum of Rs 40,000/- (Rupees forty thousand). k) For units set up in the thrust areas by local entrepreneurs 20 percent of total capital investment in plant and machinery subject to a maximum of Rs. 80,000/- (Rupees eighty thousand). (1) Where an industrial unit already enjoying a Central Investment Subsidy shall not be eligible to claim State Investment Subsidy under the Act.

(1) In order to encourage and assist industrial units to be self reliant in their power requirement, the State Government shall subsidise 25 percent of the cost of the captive power generating sets subject to a maximum of Rs. 1 lakh (Rupees one lakh). And in case of units set up by local entrepreneurs subsidy will be 50 percent subject to a maximum of Rs 2 lakhs. (2) Industries set up in the thrust area shall get a 30 percent subsidy subject to a maximum of Rs. 1.25 lakhs (Rupees one lakh and twenty five thousand). In case of units set up by local entrepreneurs in the thrust area subsidy will be 60 percent subject to a maximum of Rs 2.50 lakhs. (1) Built up factory sheds shall be allotted to the women entrepreneur on priority basis and the rent will be subsidized @ 75% of the economic rent for five years from the date of commencement of commercial production. Stipend at the rate of Rs. 500/- (Rupees five hundred) per month per trainee shall be provided for training of 100 youth annually for special entrepreneurship development programme (EDP) to be conducted by Government approved recognized institutions subject to the condition that such training shall be for not less than 3 (three) months duration.

A unit with fixed capital investment exceeding Rs 3 crores set up in a district where there are no medium or large Scale industries will be given pioneer status. Such unit will be eligible for additional State Capital Investment Subsidy of 5% on the fixed capital investment subject to a ceiling of Rs. 10 lakhs. Such units will also be given Power Subsidy for an additional period of 2 years. Small Scale, Village and Cottage Industrial Units will be reimbursed in full for the amount paid towards Stamp Duty and Registration fee for term loans/incentives from Financial Institutions including mortgage of fixed assets. The reimbursement will be admissible after disbursement of loan by Financial Institutions/Banks and will be subject to the condition that the asset is not transferred for a period of 5 (five) years.

Special incentives as detailed below shall be granted to Women entrepreneurs, namely:- (1) Additional state capital investment subsidy of 5%, subject to a ceiling of Rs 5 lakhs which constitute more than 50% of the workforce in the industry. (2) 5% interest subsidy on working capital of 2% subject to a ceiling of Rs 2 lakhs for a period of three years from the date of commencement of commercial production. (3) Built up factory sheds shall be allotted to the women entrepreneur on priority basis and the rent will be subsidized @ 75% of the economic rent, for a period of five years from the date of commencement of commercial production. (1) The Government shall reimburse annually up to 30% (thirty percent) of the realistic wages bill for local employees. This would be for three years from the date of commencement of commercial production. The maximum limit of such subsidy is Rs. 1 lakh (Rupees one lakh) and Rs. 2 lakhs (Rupees two lakhs) subject to maximum of Rs. 2 lakhs (Rupees two lakhs). (2) Fifty per-cent of the cost incurred on the training of local employees will be reimbursed subject to the following conditions, namely: (a) Such trained person shall be absorbed in the unit failing which the unit will refund the subsidy amount paid for the same. (b) Training shall be conducted in an institute approved by the State Government.

Stipend at the rate of Rs. 500/- (Rupees five hundred) per month per trainee shall be provided for training of 100 youth annually for special entrepreneurship development programme (EDP) to be conducted by Government approved recognized institutions subject to the condition that the training period shall not be less than 3 (three) months duration. (1) Cost of Laboratory Equipment for the purpose of quality control and test certification subject to a maximum of Rs. 10,000 (Rupees ten thousand) shall be reimbursed in cases where it does not form part of the project cost and for local entrepreneurs Rs. 20,000 (Rupees twenty thousand) per unit will be reimbursed. (2) Export oriented units committing to export at least 50% (fifty percent) of the value of the turnover will be eligible for an additional reimbursement of Rs. 1,00,000 (Rupees one lakh) against such quality control measures. For local entrepreneurs Rs. 2,00,000 (Rupees two lakhs) will be reimbursed.

Small Scale, Village and Cottage Industrial Units will be reimbursed in full for the amount paid towards Stamp Duty and Registration fee for obtaining loans for incentives from Financing Institutions including mortgage of fixed assets. The reimbursement will be admissible after disbursement of loan by financing institutional Banks and will be subject to the condition that the assets so created/acquired shall not be sold or transferred for a period of 5 (five) years. An industrial unit shall receive a one-time subsidy on consultancy charge paid to an approved Consultant as per the scale noted below: (1) For Project upto Rs. 10 lakhs 3% subject to maximum of Rs. 20,000/- (Rupees twenty thousand). For local entrepreneurs 6% subject to maximum of Rs. 40,000 (Rupees forty thousand). (2) For project above Rs. 10 lakhs 3% subject to a maximum of Rs. 1,00,000/- (Rupees one lakh). For local entrepreneurs 6% subject to maximum of Rs. 2,00,000 (Rupees two lakhs).

(1) The Government will reimburse annually up to 30% (thirty percent) of the realistic wage bill for local employees. This would be for three years from the date of commencement. The maximum limit of such subsidy is Rs. 1 lakh (Rupees one lakh). (2) Fifty percent of the cost incurred on the training of local employees will be reimbursed subject to the following conditions, namely:- (a) Such trained person shall be absorbed in the unit failing which the unit will refund the subsidy amount paid for the same. (b) Training shall be conducted in an Institute approved by the State Government. Entrepreneurs sent out side Sikkim with the approval of the Director of Industries for study tours and inplant training shall be eligible for reimbursement of the return journey expenses of second class train fare and an allowance of Rs. 1000/- (Rupees one thousand) per mensem per entrepreneur; Provided that the period of such a study tour/inplant training should not exceed three months and the entrepreneur shall give an undertaking in writing to the Department of Industries that he/she shall start an industrial unit after obtaining the necessary technical know how of the industry concerned. The study tour and in plant training for a period not exceeding three months may also be made available for workers who are sent outside the State. Provided that the industrial unit sending such workers shall obtain an undertaking from them that they shall work in the unit at least for a period of three years from the date they complete training. The reimbursement of expenditure of return journey of Second Class by train and allowance of Rs. 500/- (Rupees five hundred) per workers shall be eligible to the industrial unit concerned in such cases.

(1) Cost of Laboratory Equipment for the purpose of quality control and test certification subject to a maximum of Rs. 10,000 (Rupees ten thousand) per unit will be reimbursed in cases where it does not form part of the project cost. For local entrepreneurs Rs. 20,000 (Rupees twenty thousand) per unit will be reimbursed. (2) Export oriented units opting to export at least 50% (fifty percent) of the value of the turnover will be eligible for an additional reimbursement of Rs. 1,00,000 (rupees one lakh) against such quality certification. For local entrepreneurs Rs. 2,00,000 (Rupees two lakhs) will be reimbursed. The State Government shall endeavour to provide a developed land with all infrastructural facilities at Growth Centres to all new units except those in the "Services" and "Village Industries Sector" in the following manner, namely: 1) The developed land will be allotted on lease basis for a period of 30 (thirty) years. 2) The State Government will subsidise the cost of land development at the rates given below: a) Small scale Industries - 25% b) Export Oriented Unit and Units owned and managed by local Entrepreneurs - 30% c) Large and medium Units (as per definition) - 15% 3) The cost of land development will be recovered from the alloted industrial units after framing allotment rules, which shall be notified.

An industrial unit shall receive a one-time subsidy on consultancy charge paid to an approved Consultant as per the scale noted below:- (1) For Project upto Rs. 10 lakhs 3% subject to maximum of Rs. 20,000/- (Rupees twenty thousand). For local entrepreneurs 6% subject to maximum of Rs. 40,000 (Rupees forty thousand). (2) For project above Rs. 10 lakhs 3% subject to a maximum of Rs. 1,00,000/- (Rupees one lakh). For local entrepreneurs 6% subject to maximum of Rs. 2,00,000 (Rupees two lakhs). The State Government shall provide transport subsidy of 50% for transportation of Plant and machineries from any part of India to the location of unit in Sikkim at maximum limit of Rs. 1 lakh (Rupees one lakh). For local entrepreneurs the maximum limit will be Rs. 2 lakhs (Rupees two lakhs).

A subsidy of 50% shall be admissible to meet the cost of technical know-how obtained from organizations approved in advance by Government of Sikkim on a case to case basis. The subsidy will be released only on commencement of commercial production. The subsidy will be 60% for Small Scale Industrial Units set up in thrust areas and Export Oriented Unit.

Special incentives shall be granted to the Agro and Food processing Industries as detailed below: Additional State Capital Investment Subsidy of 5% subject to a ceiling of Rs. 5 lakhs for agro and food processing industries. 50% of the cost payable for getting Food product Order (FPO) license / AGMARK Trade Mark for the products for food processing industries subject to a maximum ceiling of Rs. 1 lakh (Rupees One Lakh).

Industrial units either small or large set up within the territory of State of Sikkim shall enjoy a price preference to the extent of 15% over the rates of price quoted for same product having same or equivalent quality brought from outside the state. (1) The State sales Taxes shall be exempted for a period of 10 (ten) years from the date of actual commercial production. However for the units in the notified thrust areas the exemption period will be 12 (twelve) years. (2) The levy of State excise duty and sales tax on units manufacturing alcoholic/beer products shall be as per notification excise/80/DL/SS/86/284 dated 03.10.2000. (3) Exemption of Central Sales Taxes and Central Excise Duties will be governed by the laws and rules of Government of India in this regard.

An industrial unit consuming power upto Rs. 50,000.00 per annum shall be eligible for 50% reimbursement.

Industrial unit shall be exempted from payment of security deposit and/or earnest money in respect of tenders or quotations for purchase of stores by Government Department.

The industrial unit shall obtain Indian Standard Institute/International Standard Organisation Certificate in respect of their products to compete at the state and national level and to ensure product quality and for such the State Government shall reimburse 100% of the expenditure incurred on the registration fees, testing fees, annual license fees, purchase of testing equipment provided the maximum amount payable by way of reimbursement shall not exceed Rs. 25,000.00

The amount spent by an industrial unit in obtaining a registration with Promotion Council, Indian Standard Institution, Commodity Board, Chamber of Commerce, etc. shall be reimbursed to the unit, subject to a maximum of Rs. 10,000.00 (Rupees ten thousand) or the actual registration fee, whichever is less.

Exemption under Notification No. 2/TIC dated the 16th February, 1974 will continue.

(1) The Value Added Tax (VAT) payable by an industrial Unit shall be deferred for a period of 10 (ten) years and up to 12 (twelve) years for notified thrust industry from the date of commencement of actual commercial production. These units will be permitted to collect VAT along with bill throughout the entire period of deferment as the case may be. At the end of the deferment period, the VAT collected will have to be remitted to Government Account in four half yearly instalments. For those industrial units which are already enjoying the sales tax exemption the same will be converted into VAT deferral scheme as above for the remaining periods of their exemption as the case may be. (2) The levy of State Excise Duty and Sales Tax on units manufacturing alcoholic/beer products shall be governed by such notifications as may be issued by the State Government from time to time. (3) Central Sales Tax shall not be exempted.

(1) The benefits, concessions or exemptions as conferred under this Act shall be for such period as may be notified by the sanctioning authority. (2) The sanctioning authority may with the approval of the Government from time to time, notify such additional benefits, concessions or exemptions applicable to industrial units as may be considered desirable.

If any difficulty arises in giving effect to the provisions of this Act the Government may by order not in consistent with the provisions of this Act, remove such difficulties. All the notifications, orders, instructions, circulars, schemes etc issued from time to time for the purpose of extending benefits/incentives/concessions to industry both tiny, small scale or medium/large scale industry are hereby repealed.