NAGALAND: INDUSTRIAL POLICY
In today's world it is difficult for a society to command or to aspire to become strong without a sound economy. Industry & Commercial play vital roles in the growth of an economy.
Nagaland, the sixteenth state of the Union of India, after thirty-one years of Statehood continues to be a deficit state despite special privileges. It is still heavily dependent on central grants for survival, and its economy still has long strides to take just to come at par with sister States in India, let alone complete in the global arena.
Without proper diagnosis, administration of remedial measures may get misdirected. There is therefore, need for an honest introspection. Without clear objectives and guideposts, the journey may take longer than necessary or meander completely in the wrong direction. Hence, the need for a policy that lays down goals and provides directions.
PRESENT INDUSTRIAL SCENE
There are 1850 SSI units, 8 large and medium industries including 1 Joint Sector Undertaking (with Government of India) and seven state Sector Projects. Over 110 Timber based Industrial Licences have been issued in the Private Sector.
Many of the Units set up in the Private Sector are not functioning well. The PSUs have been making continuous losses and have piled up heavy debts over the years. Some are in the process of revival.
The State Government has in the pipeline, one Mechanised Bricks Plant at Dimapur with an investment of Rs. 12.00 crores and one Fruits and Vegetables Processing Plant with an investment of Rs. 4.50 crores. In the light of the poor performance of the existing PSUs and today's concept of industrial management, serious consideration needs to be given for complete, partial or selective privatisation of these PSUs.
POTENTIAL AND PROBLEMS
Nagaland is predominantly an agricultural state. With thirty-one years of "Exposure" to modern agriculture we are still heavily dependent on other States for import of foodgrains, cereals, meat, vegetables, oil and other processed food. Ironically, we are capable of producing surplus, such as bamboo shoots and fruits, there has been no linkage with profitable markets, nor do we have the where-withal for competitive processing of quality products for external market. Forestry has enormous potential, but it is another story of "could have been". The natural forests have been exploited indiscriminately without commensurate efforts for replenishment. Should modern forestry be taken up in the right earnest it will require imaginative interlinking with development of infrastructure for protection, extraction, transportation, processing and marketing to ensure effective use of these resources.
Most of the State's mineral deposits lie in the far eastern sector, beneath tall, steep mountains considered as relatively backward areas. These could not be exploited and processed without drastic emphasis on laying of basic infrastructure including networking with market outlets.
It is obvious that the approach has to be multipronged and integrated. The effort, out of necessity has to be, not of one single department in isolation, but of all the concerned departments as a team, whose concerted and coordinated efforts will facilitate growth of industry and commerce. This calls for efforts by the whole Government machinery, since our resources are severely limited and are likely to be so in the near future also, the concept of creating industrial zones becomes not only relevant but necessary.
The lush green wilderness of the rugged Naga country, and our very special Naga village life will be an attraction to tourists both from within the country and abroad. It is needless to say that commensurate resource allocation has to be made for tourism development in the state. Further, tourists are not likely to come for glimpses of the Naga mountains if their lives and limbs are at risk. And this brings us to the next important issue.
Today, the social climate in Nagaland is not conducive to industrial development and commercial activities. If Nagaland economy is to develop a climate of peace, free from extortion, threat and possible violence needs to be treated first by dealing effectively with the law and order problems.
It also needs to be highlighted that in the present situation, or even in the foreseeable future, we cannot compete with the rest of the States in terms of industrial activities, if we think or plan in terms of marketing our products within the country only. Remote geographical location, costlier local labour, dearth of technical know-how, lack of internal financial resources, absence of an industrial culture and far costlier means of transportation are some of the obvious negative factors. The possible solution appears to be the export orientation of our industries including foreign collaboration and participation. Serious efforts need to be made in this direction.
1. POLICY OBJECTIVES
This policy endeavours:
1.1. To create an atmosphere conducive for industrial growth keeping in view the natural resources and the socio-economic conditions of the state of Nagaland.
1.2 To identify the areas most suitable for industrialisation, based on the resources available and the priority areas where immediate scope for industrial development exists.
1.3 To simplify legal and procedural formalities for obtaining licences, permission, registration of charges, mortgage of assets and such other documentation. To establish Nodal Agency to avoid multiple references, ensure speedier disposal thereof and manage related affairs professionally.
1.4 To identify and develop entrepreneurial and managerial skills through intensive training programmes. Also to create facilities for training industrial labour and thereby bring about industrial culture and climate.
1.5 To create and provide necessary infrastructural facilities such as power, water, roads, etc. for speedy industrialisation.
1.6 To ensure regular, timely and adequate flow of funds for industrialisation through state Financial Institutions. Also to evolve a system of incentives for channelising investement in pre-defined priority areas of industrialisation.
1.7 To rehabilitate viable sick units. Partial and selective privatisation of Public Sector Undertakings. The Industries Department shall arrange to conduct cost-benefit analysis of all Public Sector Undertakings and consider leasing out some of the units to competent and well-proven interested Private firms.
1.8 To encourage, invite and facilitate investment from outside particularly from abroad.
1.9 Minimum regulation by Government Agencies except in providing infrastructure and to let industries flourish within the dynamics of market forces.
1.10. To the extent possible, industrial development in the state will be export-oriented with foreign collaboration and participation.
1.11 On the basis of this Policy document, concerned Department and Agencies shall take appropriate follow up action which shall be coordinated and monitored by the Industries Department.
1.12 This Policy document and follow-up proposals will provide the broad parameters for allocation of funds by the Government towards industrial development in the state.
1. APPROACHES/INDUSTRIAL ZONES
1.1 Industrial growth shall be encouraged within the Industrial Zones specifically declared by the state Government. This will facilitate an integrated approach in laying infrastructure, optimizing utilisation of available resources, including marketing facilities, minimizing overhead expenditure and providing a more effective administrative coverage over affairs related to industrialisation. To the extent practicable, all large, medium and small industrial units shall be located within these zones. Cottage and Tiny Industries, however, shall be encouraged wherever viable. As defined by Government of India, units having investment upto Rs. 2.00 lakhs are under Cottage and Tiny Sector, units having investment in Plant and Machineries upto Rs. 60.00 lakhs are under Small Scale Industries and those units having investment of more than Rs. 60.00 lakhs will fall under Medium and Heavy.
1.2 Within the Industrial Zones, as notified separately by Industries Department with specific boundaries, the state Government shall regulate to set up Project/Industries for the entrepreneurs/industrialists within the enabling provisions of the existing law with regard to transfer of land.
1.3 The state Government shall make special effort for development of industrial infrastructure such as extension of railway lines, roads, power and water supply for such Industrial Zones.
1.4 The Industries Department shall expedite formulation of integrated Project Reports on each of the Industrial Zones for providing adequate fund allocation by the Government and for follow-up by the concerned Departments.
1.5 Licensing of all industrial units of various sectors shall remain liberalized within the framework of the Policies of the Central Government for industrial units sought to be established.
1.6 Initially, there will be four industrial Zones as under: (a) Dimapur (b) Baghty. (c) Tuli. (d) Tizit. Other areas such as Kiphire, Longnak and Ghathashi could be considered subsequently for declaration as Industrial Zones.
2. PRIORITY AREAS
2.1 The undermentioned industries shall be named as "Priority Industries" and special incentives shall be offered to them. These priority areas are :
(a) Tourism Development and Hoteliery.
(b) Floriculture and Bio-Technology.
(c) Agro-based Industries.
(d) Sericulture and Aqua-culture.
(e) Wood, Bamboo, Cane and Forestry based industries including wood-waste ultilisation and wood product diversification.
(g) Handloom and Handicrafts.
(h) Mineral-based industries.
3. FOREST-BASED INDUSTRIES:
3.1 In order to generate diversified forest-based industries in the state, the Forest Department shall lay down a Forest Policy addressing critical issues like ecological balance, environmental upgradation, preservation and regulated exploitation within sustainable limits. The Department shall set targets, choose the most economically viable plant species suitable to Nagaland and take appropriate steps towards making the state a forest surplus one within a set time frame.
3.2 Apart from emphasizing bio-mass generation through new technologies, conducting application oriented research work, preservation of gene banks and arranging for import of new species of greater economic value for cultivation in Nagaland, the Forest Department will also provide technical support to forestry activities wherever required.
3.3 The Industries and Forest Departments shall conduct screening of existing forest based industries without losing time to revoke or suggest modification in the terms. The possibility of delicensing non-functional units will also be taken up expeditiously.
3.4 Periodical review of all forest-based industries will be taken jointly by the Forest and Industries Department. Considering the current deterioration in the quality of forest wealth in the state and the extremely haphazard methods followed in exploiting these resources, some drastic restrictions need to be imposed. There shall be a total ban on export of unprocessed forest products such as logs, timber, veneer, cane, bamboo and all other forest products, which are not defined as finished products, to destinations outside the state. Veneer products, however, shall be diverted to plywood factories within the State.
4. AGRO-BASED INDUSTRIES:
4.1 A Policy on Agro-Allied Sectors shall be formulated by the state Government with long terms projections on targets, area coverage, production levels and areas of emphasis in terms of farming, processing and marketing activities. The Government shall also take concrete steps for improvement of bio-technology and modernisation of agriculture in the state with a view to enhance quantitative and qualitative targets in these core Sectors, especially in respect of cash crops that can be grown in the State.
4.2 Subsidy for transportation of agricultural produce to the industrial units shall be given to the extent of 50% of the cost of transportation from the place of harvest to location of processing unit within the State.
5. MINERAL-BASED INDUSTRIES:
5.1 Exploitation and processing of minerals in Nagaland shall be regulated by provisions of Nagaland. Ownership and transfer of land and its resources. Act and the relevant rules framed for the purpose. To facilitate systematic approach to
(1) laying of infrastructure
(2) exploitation and processing and
(3) networking of market, the Nagaland State Mineral Development Corporation shall coordinate the activities with the Nodal Agency.
5.2 Emphasis will be on attraction of investment from outside and export-orientation of finished products.
6. TOURISM DEVELOPMENT:
6.1 Steps will be taken for declaring tourism as an industry.
6.2 The concerned Department will formulate a comprehensive Policy conducive on tourism development in the state after identifying potential areas with national and international perspectives. Detailed estimates, programme and activity charts shall be formulated within the parameters of such policy. Emphasis will be on completion of scheme or programme within the shortest possible time, instead of spreading funds thinly on many schemes at a time. Concerted efforts will be made for full utilisation of funds and channelising of facilities available from the Government of India.
7. DEVELOPMENT OF COTTAGE AND TINY INDUSTRIES:
7.1 The approach shall be to:
(a) preserve and promote traditional handlooms and handicrafts and also to exploit their economic and commercial potential.
(b) Develop Artisan skills.
(c) Provide gainful employment in rural areas and supplement family income by developing skills in providing essential services.
(d) Utilise local natural resources in rural areas for production of finished goods/semi finished products.
(e) Promote spirit of collective and community participation.
7.2 The Nagaland Handloom & Handicrafts Development Corporation and the Nagaland Khadi & Village Industries Board shall be revitalised by induction of competent professionals in the Board to function:
(a) As a promotional agency to extend assistance to entrepreneur and also to market the products of the artisan and cottage industry.
(b) As institution to fund projects of entrepreneurs in cottage and tiny sector.
7.3 The Government will assist in promoting skills amongst local youths in essential services with an initial target of atleast one person trained in the following trades per village:
(viii) Ceramic and Pottery,
(ix) Traditional sculpture and constumes,
(xi) Electrician skills,
(xii) Shoe making (Cobblery),
(xiii) Barber Trade,
(xv) Weaving and Knitting and
7.6 Such training programmes shall be interlinked with arrangement and provision of modern implements and equipment to the successful trainees.
7.7 The State Government shall provide adequate budget for this purpose.
7.8 Incentives as incorporated in the Policy for SSI units shall be available for all industraial units under cottage and tiny sector.
8. FINANCE, BANKING AND COMMERCE
8.1 The State Investment Promotion Council (SIPC) shall review and supervise from time to time the flow of institutional finance, its quantum and direction.
8.2 In this mater the state Investment Promotion Council shall be assisted by a Director of Institutional Finance, who shall be under the administrative control of the Finance Department. For the purpose of industrial financing, he shall, however, be under the functional control of the SIPC.
9. LICENSING AND SINGLE WINDOW CLEARANCE
9.1 The State Investment Promotion Council (SIPC) shall endeavour to provide all necessary facilities to entrepreneurs under a single roof. The SIPC shall also be advisory and coordinating body in the matter of framing of industrial policies in the state. The Council will have executive powers and shall be constituted of representatives of PHE, Power, Industries, Finance, Geology Mining, Forest, Transport, Agriculture and Law Departments and also NIDC representative and shall operate as an Autonomous Agency. The Chairman, SIPC will be the Chief Secretary or a person well experienced in the field of industries.
9.2 Among other activities, the SIPC will execute the following duties:
(a) SIPC will be the verifying, clearing, licensing and recommending agency of all capital and revenue subsidy claims of industrial units, including funds for infrastructure. The SIPC shall be the disbursing agency for subsidy.
(b) This Council will assist the Government in framing Policies as regards promotion and development of industries in the state.
(c) It will manage Industrial Estates, Growth Centres and affairs related to Industrial Zones with the assistance of NIDC.
(d) It will work out a programme for training through institutions by organising workshops and courses for entrepreneurs and officials of the state owned enterprises in acquiring knowledge and improving capabilities in the field of management/accounts/finance/economics in addition to upgrading the technical skills of the entrepreneurs.
(e) This Council will also regulate Industrial raw material pricing as and when necessary.
(f) The SIPC shall, in coordination with the Industries Department arrange training programmes for local artisans wherever possible with an export orientation.
10. Other General Principles:
(1) The state Government shall endeavour to process only finished products from the state.
(2) The State Government shall endeavour to promote private entrepreneurship and restrict further investment in Government Undertakings or Departmentally run units. There shall be reduction of excess employees and a definite shift towards complete, partial or selective privatisation by way of leasing to private firms or business houses.
(3) The state will take immediate steps to revamp the Boards of state owned Corporations to induct professionals and also to draw up concrete plans to restructure these Corporations with a view to make them self-sustaining profit making ventures. The Corporations shall be encourage to seek consultation/professional expertise for improving managerial skills, computerising operations and evolving better systems and procedures for operating in a competitive atmosphere.
PART - III
POLICY ON INFRASTRUCTURE
1.1 Whereas the generation and distribution of power in the state has made substantial progress, power availability for industrial requirements is not adequate. The state Government shall give priority to power generation and its transmission for industrial purpose. Certain relaxation as regards transfer of land and property would be considered for power projects coming up in the state through private enterprise including those with foreign investment.
1.2 In order to encourage and assist industrial units to be self sufficient in their requirement of power the state Government shall subsidize the expenditure upto 30% of the cost of power generating machines for captive power generation units, for a period of 5 years from the date of implementation of the policy, which will be reviewed from time to time.
1.3 The state Government shall undertake a special Industrial Electrification program to provide 5 KM of power line with transformers for power supply to industrial units wherever required provided prior clearance has been obtained from SIPC for setting up the unit at that place.
1.4 The State Government shall consider grant of subsidy 30% in power tariff to industrial units coming at approved location for a period of 5 years from the date of declaration of this policy.
1.5 The State Government shall subsidise 30% of the cost of non-conventional power generation units like windmill, solar energy units, bio-gas units etc.; subject to overall state and Central assistance not exceeding 60%. Only those units going for captive power generation to the extend of 100% of their requirement from non-conventional energy sources shall be eligible for such subsidy.
2. Roads/Railways/waterways/airways/cableways Transport:
2.1 Steps shall be initiated for expansion and improvement of the National Highway, State highways, inter-district roads and the Border roads, to facilitate movement of heavy vehicles, machines, industrial equipment, raw materials and commercial goods.
2.2 All possible steps shall be taken for completion of foot-hill roads along Assam-Nagaland boundary.
2.3 The state Government shall identify and declare certain roads as industrial roads and accommodate them in their priority programs by allocating earmarked budget. The roads to so laid shall conform to industrial requirements. The identification of such roads shall be done by the SIPC.
2.4 There shall also be a special industrial roads scheme to extend approach roads to industrial units upto 2 Km to be laid at state Government's cost provided such locations has been approved by SIPC before taking up the project.
2.5 Efforts will be made to interlink the declared industrial zones by rail in order to facilitate cheaper and mass movement of industrial goods.
2.6 In view of the steep mountainous topography where it is envisaged to develop forest and cash crops, cheaper means of transportation of raw materials need to be considered. As such, efforts will be made to lay cableways and develop waterways presently not navigable for transportation of raw materials/finished products etc.
2.7 Serious efforts will be made for expansion and improvement of the existing facilities at Dimapur Airport with essential paraphernalia with a view to facilitate tourist movement. Work on construction of a modern building for Dimapur has already started. It will be taken up strongly with the Government of India to start daily flights to Dimapur from Delhi, Calcutta and Guwahati.
2.8 Efforts shall also be made to have an international Airport at Dimapur. If the present Airport area does not have sufficient land, the State Government shall expeditiously take steps for acquisition of sufficient land at suitable location in Dimapur area.
2.9 Location of one airstrip in Lungkhum area which was used during World War II and another Airport in Kiphire area shall be actively considered if necessary by acquiring land by the State Government for future development.
3. Water Supply
3.1 The State Government shall undertake a special industrial water supply scheme for provision of water supply to industrial zones both industrial uses and drinking purposes by way of exclusive deposit works.
3.2 The industrial water supply scheme shall also include subsidising cost of deep tube wells upto 30% provided the units come at approved locations.
4.1 Every effort shall be made by the State Government for providing daily communication facilities to the industrial zones and factory sites on priority with global linkages.
5. Market Network
5.1 There will be a marketing cell manned by experts to be attached to the SIPC.
5.2 This cell shall, apart from other things
(i) explore, locate and identify markets for products from the state,
(ii) collect, store and provide relevant marketing information and provide guidance to entrepreneurs and
(iii) Liaison between manufacturers sellers and buyers.
5.3 Prospects for direct trade and commerce with Myanmar, and beyond, will be explored and facilitated. This shall be far more cost effective in terms of reduced transport cost, man power involvement and time management. As a start, the State Government shall take appropriate steps for opening trans-border trade with Myanmar.
PART - IV
Apart from Central subsidy applicable to industrial units in the small scale and tiny sector, Central transport subsidy, state subsidy on power generation and power tariff mentioned earlier, the following additional incentives will be provided by the state Government:-
1. The Government shall lay emphasis on entrepreneurship development programme to develop entrepreneurial skills in various fields for promotion of industrial activities.
2. The cost of nonstandard specifically approved feasibility reports prepared by the agencies recommended by the SIPC will be subsidised upto 2% of the project cost subject to a ceiling of Rs.25,000/-. The cost shall be reimbursed only after the promoter completes documentation for loans from the state Level Institutions for such projects. The report shall become the property of the Government if the project is not implemented within two years of approval/registration of such proposal.
3. Sales Tax exemption will be given for 5 years to manufacturing units from the date of announcement of this new policy. The scheme shall be eligible only to units setup after announcement of the policy.
4. The State Government shall re-imburse in full the amount spent towards stamp duty and registration charges for securing loans availed from the state financial institutions including by way of mortgage of fixed assets. The re-imbursements shall be made only by the financing agency. The amount shall be routed through the state level financing agency (NIDC).
PART - V
1. The State Government shall make efforts to upgrade and expand the existing Polytechnic Institutions including Women ITI in terms of quality and variety of training programs to cater the needs of industrialisation. The Higher and Technical Education department shall initiate the same in consultation with the Industries department and the SIPC.
2. The state Government shall initiate steps for establishment of a school on business administration and management in the state.
3. The SIPC shall also initiate steps to organise and conduct capsule courses on business management and marketing dynamics and promote study tours.
4. The state will adopt the state financial corporation Act and empower the NIDC to act as under the same as a twin function IDC/SFC. The Board of the corporation will be recast to bring in greater professionalism and to reduce political interference.
5. Arrangements will be made by the state Government to send out a team of senior officials to other states and abroad to study, assess feasibility and make official contacts for inviting outside investors to Nagaland and to explore market avenues.
1.1 Without going through the exercise of preparing comprehensive project reports and detailed technical estimates within the parameters of this policy, it is not possible to make accurate financial projections. The exercise is rendered more difficult by our inability to predict accurately, or even approximately the amount of industrial activities that are going to be generated on declaration of this policy. It is, however, necessary to lay down some pointers.
2.1 The possible financial sources for industrial growth in the state are identified as under :
a) State budget
b) Central assistance
c) Institutional financing
d) Foreign assistance
e) Private sector investments, from within and outside.
f) Internal and outside resources mobilization through shares, debentures, securities and bonds etc.
2.2 Every possible effort shall be made by the state Government and SIPC for industrial resource mobilisation from all possible channels. In view of severely limited state budget and limited prospects for internal recourse mobilization, vigorous efforts shall be made for channelising resources through central assistance, institutional financing and private investments, from within and outside.
Areas of financial involvement
3.1 Within the ambit of this policy the areas where state finances are likely to be involved are identified as under:
a) Laying of infrastructure - Direct
b) Various subsidies - Direct
c) Promotion of forestry and agro-allied sectors, raw materials - Direct
d) Upgradation of existing training programs - Direct
e) Promotion of short training courses and arrangement of equipment - Direct
f) Tourism development in infrastructure and activities - Direct
g) Tax holiday - Indirect
h) Power tariff concessions - Indirect
i) Equipment and maintenance of SIPC - Direct
4.1 On tax holiday and power tariff concessions, the state Government shall issue separate orders.
Some financial projections
On declaration of this policy some new units are likely to come up under its purview. Others, as and when established, will come under it.
4.2 In terms of the state Government's direct burden, the following projections are made for the first one year.
(Rs. in Lakhs)
a) SIPC maintenance/equipment 10.00
b) Upgradation of existing training programs 10.00
c) Promotion of short training courses 2.00
d) Tourism development 100.00
e) Forestry 100.00
f) Agro-allied sectors 200.00
g) Industrial infrastructure 100.00
h) Various subsidies 50.00
Total 572.00 (Rupees five hundred seventy two lakhs only)