Context: Recently, the Cabinet Committee on Economic Affairs has approved the proposal of Department for Promotion of Industry and Internal Trade for New Industrial Development Scheme of Jammu & Kashmir.
Background

• The development of reorganization of Jammu & Kashmir into UT of Jammu & Kashmir under the J&K Reorganisation Act, 2019 is considered as historic development.

Key Features of New Industrial Development Scheme for Jammu & Kashmir

• It is a Central Sector Scheme for the development of Industries in the UT of Jammu & Kashmir.
• The scheme is approved with a total outlay of Rs. 28,400 crore upto the year 2037.
• The main purpose of the scheme is to generate employment which directly leads to the socio economic development of the area.
• The smaller units with an investment in plant & machinery upto Rs. 50 crore will get a capital incentive upto Rs. 7.5 crore and get capital interest subvention at the rate of 6% for maximum 7 years.
• The scheme aims to take industrial development to the block level in UT of J&K, which is first time in any Industrial Incentive Scheme of the Government of India and attempts for a more sustained and balanced industrial growth in the entire UT.
• The scheme has been simplified on the lines of ease of doing business by bringing one major incentive i.e. GST Linked Incentive that will ensure less compliance burden without compromising on transparency.
• The scheme envisages greater role of the UT of J&K in registration and implementation of the scheme while having proper checks and balances by having an independent audit agency before the claims are approved.
• It is not a reimbursement or refund of GST but gross GST is used to measure eligibility for industrial incentive to offset the disadvantages that the UT of J&K faces.

Incentives provided under New Industrial Development Scheme for Jammu & Kashmir

• Capital Investment Incentive: At the rate of 30% in Zone A and 50% in Zone B on investment made in Plant & Machinery (in manufacturing) or construction of building and other durable physical assets (in service sector) is available.
• Capital Interest subvention: At the annual rate of 6% for maximum 7 years on loan amount up to Rs. 500 crore for investment in plant and machinery (in manufacturing) or construction of building and all other durable physical assets (in service sector).
• GST Linked Incentive: 300% of the eligible value of actual investment made in plant and machinery (in manufacturing) or construction in building and all other durable physical assets(in service sector) for 10 years.
• The amount of incentive in a financial year will not exceed one-tenth of the total eligible amount of incentive.
• Working Capital Interest Incentive: All existing units at the annual rate of 5% for maximum 5 years.
• The maximum limit of incentive is Rs 1 crore.

Need for Industrial Development of J&K 

• The present scheme is being implemented with the vision that industry and service led development of J&K needs to be given a fresh thrust.
• The scheme emphasizes on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones.
• It is anticipated that the proposed scheme is likely to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons.

Other Initiatives

• Earlier Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) Social Endeavour for Health and Telemedicine (SEHAT) scheme was launched to extend health insurance coverage to all residents of J&K.
• The Union Cabinet has also approved a special package worth Rs. 520 crore in the Union Territories (UTs) of J&K and Ladakh for a period of five years under the Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM).
• In August 2019, the Central government had suspended all modes of communications in the wake of revocation of Jammu and Kashmir's special status, granted under Article 370. Eventually, services were partially restored, with internet speed restricted to 2G.