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General Incentives Several nontax incentives in the
form of capital subsidies and concessional credits are offered by the
central and state governments in the interest of developing backward
areas, exports or some specific industries. No distinction is made
between domestic and foreign investors.
Regional Incentives Industrial units that are set up
in specified backward districts are eligible for a central government
subsidy on their fixed capital investment and for concessional financing
from national financial institutions. The central government also grants
a transport subsidy in certain selected areas. In addition, the state
governments offer various types of incentives and facilities, such as
land on concessional terms, water and power at reduced rates,
concessions in sales tax and octroi ( a levy of duty on entry of goods
into a specified area), and other subsidies.
Certain areas (six in 1985) have been designated as free trade or
export-processing zones, and are located at Kandla, Santa Cruz, Cochin,
Madras, Falta and Noida. Industries that are set up in these areas and
fulfill the required conditions are eligible for various concessions,
exemptions and benefits in respect of customs duty, excise duty, sales
tax, foreign equity participation, licensing regulations, and
concessional finance.
Special Industry Incentives Certain industries, e.g.,
jute textiles, are eligible for concessional credits in the form of soft
loans. Some others, e.g., tea plantations, are given subsidies for labor
housing, replanting, etc.
Export Credits Export incentives take the form of cash
assistance or cash compensatory support on exports of certain items,
duty drawback, i.e., a refund of central excise and customs duties
levied on raw materials and components used in the manufacture of
exports, import replenishment to replace imported raw materials and
components used in the manufacture of exports, airfreight subsidy on the
export of certain products, special treatment for export-oriented units
for import of raw materials, and credit facilities from approved
financial institutions at pre-shipment and post-shipment stages.
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