Arunachal Pradesh is the largest state among the North Eastern States, having an area of 83743 Sq Km, with a population pf just above 1 million. Through it has successfully launched various socio-economic development programmes and though the literacy rate has also been rising, industrial activity is insignificant. Hence, the need for a well-defined Industrial policy.

This policy resolution is the second of its kind and will be known as “The New Industrial Policy of Arunachal Pradesh 2001”.

Arunachal Pradesh is the largest state among the North Eastern States, having an area of 83743 Sq Km, with a population pf just above 1 million. Through it has successfully launched various socio-economic development programmes and though the literacy rate has also been rising, industrial activity is insignificant. Hence, the need for a well-defined Industrial policy.

This policy resolution is the second of its kind and will be known as “The New Industrial Policy of Arunachal Pradesh 2001”.

§  The State Government will encourage the establishment of industrial undertakings in the private and cooperative sectors for the sustainable development of the state.

§  Employment opportunities and gainful self-employment in industrial and allied sectors for the local populations of Arunachal Pradesh will be given priority.

• Investors from outside the state will be encouraged to invest in the state. Hundred percent equity ownership of an industrial unit by entrepreneurs will be allowed for a maximum period of 30 (thirty) years by the end of which period such equity holding will be reduced to 49 percent, the remaining 51 percent will be held by a local Arunachal Tribal entrepreneur or a group of local tribal entrepreneurs or the state government, if it considers necessary to do so.

§  Outside entrepreneurs may be allowed to hold land on lease for a period of 30 years, after which the lease may be renewed for a further period of 30 days. The consideration for the lease may be in the form of annual or lump sum payments or as equity. (The lease may be used as security for loans from financial institutions.)

§  Development of all industries will be encouraged. To begin with, the following industries will have priority.

§  Industries based on locally available raw materials.

§  Textiles (handlooms and power looms) and handicrafts.

§  Electronics and knowledge based industries.

§  Industries based on non- timber forest produce.

§  Infrastructure, such as power and communications.

§  Tourism

§  Medical services

§  Educational services

A package of incentives for all eligible industrial units has been devised. The package is contained in Part-V.

A programme for the development of infrastructure facilities, inter-alia including the establishment of Industrial Estates, Industrial Growth Centers, Integrated Infrastructure Development Centers, strengthening of existing Industrial Estates, Export Promotion Industrial Parks, Export Promotion Zones, Border trade, will be taken up in a phased manner. Reserves of minerals will be explored and exploited commercially through appropriate agencies. Government will make special efforts for development of local entrepreneurial, managerial and technical skills. For this purpose, special training and educational programmes, including women, will be put on a sound economic and commercial footing and ensure smooth flow of credit for new industrial projects, village industries and rural artisans. The District Industries Centers and financial institutions will work in close cooperation.

There will be no licensing requirements for industry save as may be provided by any law or Central Government policy.

§  State Level Empowered Committee : A State Level Industrial Empowered Committee comprising of the concerned Secretaries and representatives from banking and financial Institutions will be formed to grant the requisite clearances and facilitate the establishment of industries from a single window. This Empowered Committee will be headed by the Minister of Industries and will meet as often as necessary.

§   Strengthening of District Centers :  The Government will strengthen the DICs with adequate and basic facilities. Each DIC will have an Udyog Sahayak Cell to guide entrepreneurs in the setting up of project report and arrangement of finance for the projects. There will also be a women’s cell in each DIC to give special attention to the women entrepreneurs. A data bank will also be created in each DIC for the benefit of the entrepreneurs. The District Level Industrial Advisory Boards will be reconstituted for monitoring the working of the District Industries Centers.

§  Rural Non-Farm Sector :  NABARD has identified 10 sectors for development, which include sectors like Agriculture, Fish rearing and processing, Rural Retail Trade, Sericulture & Silk Textile Fiber products, Construction, Small plantation products, Handloom, Handicrafts products in cane & Bamboo and wood. These activities are to be developed for creation of additional employment in the rural areas. All relevant Departments will be associated in the implementation of these schemes.

§   Industrial Sickness :  A package for the revival of sick industries in the SSI and Tiny sector will be devised by the Industries Department.

§  Public Sector Policy :  The State Government will gradually vacate economic space for the private and cooperative sectors and the public and state sectors will be economic players only where absolutely necessary.

§   Women Entrepreneurs :  To generate employment among women and to encourage women entrepreneurs, the Government will reserve 33 percent of industrial sheds, development plots in Industrial Area / Estate / Growth Centre etc for women.

§   Registration of SSI Units :  In order to speed up the SSI Registration process, the JDI / DDI / ADI will be empowered to register  the SSI units. A single window service cell will be set up for assisting entrepreneurs to get all required technical project or activity in the district. Units fulfilling all formalities of registration will be given provisional or permanent registration by the District Industries Centres / Directorate of Industries immediately.

Date of Effect : The New Industrial policy of the Government of Arunachal Pradesh will come into effect from the date of notification of this policy.

Eligibility   : New registered units set up after the date of the notification of the policy, or which started production after 1 April 2000 and existing registered units, which have undertaken expansion, modernization or diversification, or which have not completed five years of production as on 1 April 2000 will  be eligible for the package of incentives. All units must be registered . Existing units that have not completed five years of commercial production as on 01.04.2001 are also eligible for the incentives scheme.

AND FINANCIAL CORPORATION (APIDFC)

Introduction :

Arunachal Pradesh Industrial Development and Financial Corporation Ltd. (APIDFC) was incorporated in the Year 1978 as a fully owned company of the Government of Arunachal Pradesh under the Companies Act, 1956 for promotion of industries in the State. It is performing the twin role of State Industrial Development Corporation and State Financial Corporation.

Functions and Objectives :

• Development of Infrastructure facilities.
• Promotion of industries.
• Extending financial assistance to the prospective entrepreneurs.

Development of Infrastructure Facilities :

One of the main objectives of setting up of APIDFC is to develop infrastructure facilites for promotion of industrial development in the State. However, APIDFC could not take up the activities due to the fact that the State Department of Industries is handling all infrastructure development activities like establishment of industrial estate/growth centre, export promotion industrial park and integrated infrastructure development centres. The State Govt. has been requested to hand over all such activities to APIDFC as is being done in other SIDCs.

Industrial Promotion :

Despite being rich in natural resources and even after the implementation of various development programmes in the state during the five year plans, the level of economic development in Arunachal Pradesh continues to be very low compared with most of the other states of the country. The major factors that have impeded the industrial development in the state are :

• Late start to the process of industrialisation in the region has led to slow growth of entrepreneurial and industrial culture.
• Near absence of domestic/local manufacture of capital equipment/capital goods industries which necessitates transportation of machinery at higher costs.
• Lower productivity of labour and higher wage rate.
• Absence of technical and business information.
• Necessity of maintaining large inventory due to remoteness of the region.
• Limited and dispersed market for goods within the region coupled with higher cost of marketing outside the region.
• Increasing threat from national competitors using modern technology, larger units and better distribution network resulting in saturation of accessible markets.
• Lack of inflow of investible funds from outside the state.

A study of the resource availability scenario, climatic conditions and environmental opportunities indicates the following thrust area for industrial development :

• Agro and horticulture-based units.
• Mining and mineral-based units.
• Plantation Crop based units.
• Cottage industry product unit.
• Adventure tourism.

Inspite of all the inherent bottlenecks and constraints for industrial development in the state, APIDFC promoted a wide spectrum of projects covering various industrial and service sectors like weaving and knitting, saw mill, plywood manufacturing, pharmaceuticals, hotels, transport etc.

FINANCIAL OPERATIONS :

Authorised and paid up share capital :

The authorised capital of APIDFC is Rs.600 lakhs and the paid-up capital is Rs. 162.50 lakhs as on March 31, 1999. The Govt. of Arunachal Pradesh is holding the entire equity of Rs. 162.50 lakhs.

Performance as on March 1999 :

At the end of March 1999, APIDFC has sanctioned term loan aggregating Rs.815.44 lakhs to 145 units against which disbursement was made to the tune of Rs.806.83 lakhs to 144 units. The following are the details of the last 5 years :

(RS. in lakhs)              

Recovery of dues :

Low recovery and weak capital base of the Corporation have impeded the performance in sanction and disbursement. Rising NPAs have been a matter of concern to the Corporation. To reduce NPAs the Corporation is encouraging one time settlement of dues of the borrowers whose loan accounts have become sticky and remained doubtful for years together. Though some of the sections of the SFCs Act, 1951 have been made applicable in respect of the Corporation to effect recovery, application of the sections has not yielded the desired result due to lack of a suitable buyer.

Details of the recovery performance of the Corporation in the last five years are as under :
(Rs. in lakhs) 

 
Subsidiaries :

APIDFC has two subsidiary companies viz. Parasuram Cement Ltd., a 30 TPD Cement project at Tezu, Lohit District and Arunachal Horticultural Processing Industries Ltd,.a 5 TPD fruit processing project at Nigmoi, Along, West Siang. The commercial operations of both the companies have been suspended due to continuous loss incurred by these companies.

Agency activity :  
 
The State Government has appointed APIDFC as channelising agency to implement the various schemes of assistance of National Scheduled Castes and Scheduled Tribes Finance and Development Corporation Limited, a Govt. of India undertaking and an apex financial institution for financing facilitating and promoting the economic development activities of STs of the state. As on March 1999, the Corporation has sanctioned term loan aggregating Rs.83.28 lakhs to 52 beneficiaries and disbursed Rs.68.97 lakhs to 49 beneficiaries under the different schemes of assistance.

Restructuring :  
 
The major factors that have had an adverse effect on the financial performance of the Corporation have been its weak equity base and huge interest burden on Govt. loan. Against its authorised share capital of Rs.6 crore, its paid up share capital as on March 1999 is Rs.162.50 lakhs whereas the Corporation is burdened with interest of Rs. 649.46 lakhs on Govt. loan of Rs.7.13 crores.

In the year 1997, the Corporation utilised the services of Tata Consultancy Services (TCS) to carry out a study on both operational and financial review and redesign of the Corporation so as to improve its performance. Accordingly TCS prepared a detailed Corporate Restructuring Report. The report is already with the Govt. for consideration. The state government has also constituted a high level committee in this regard.

Joint Venture Project : 

The Corporation has promoted a joint venture hotel project at Itanagar with Indian Tourism Development Corporation under the name of Donyi Polo Ashok Hotel Corporation Limited.

Incentives for industries :

The following incentives are available in the state :

CENTRAL SUBSIDIES :

• Transport subsidy @ 90% transportation cost of raw-materials/finished goods between Siliguri and site of the Project. Also 50% subsidy of transportation cost of finished goods from one state to another in the NE Region.
• All incentives under the New Industrial Policy for the NE Region.

STATE SUBSIDIES :  

• Land is allotted on a 40 years’ lease basis.
• The allotments of built-up factory sheds in the industrial estate on concessional rate for three years.
• Subsidised training fee of Rs.5000/- per head provided the trainees are employed by the industrial unit.
• Capital subsidy at 15% in case of tiny and SSI units.
• Capital subsidy at 7.5% to medium and large scale units subject to maximum of Rs.12 lakhs.
• Subsidy of 50% of the cost of technical know-how obtained by SSI and tiny Industries from reputed research and development organisation subject to Maximum of Rs.50,000/-.
• 4% subsidy in interest charged by Financial Institution on term loan for a period of 5 years.
• All the incentives for rehabilitation of sick industrial units.
• 50% subsidy towards cost of diesel generating set upto a maximum of Rs.50,000.
• Subsidy equivalent to the power consumed on the actual manufacturing process for a period of 3 years to all industries except plywood and medium/large scale industrial units.
• 50% of the cost but not exceeding Rs. 25,000/- of feasibility study and preparation of project report provided the study/report is conducted/prepared with prior approval and by an approved consutlant.
• 25% subsidy on the purchase of testing equipments and fees of the Bureau of Indian Standard (BIS), both for registration and the annual fee for a period of 5 years from the date of production.
• Price preference on the produce of local industries purchased by the government, semi government and autonomous organisations at the following rates :-

@ 7.5% to Co-operative venture and large and medium industries.
@ 15% to the SSI units.
@ 17% to cottage/tiny sectors, security/earnest money deposits are also exempted for registered SSI Units.