Advantages of Incentives and Subsidies
Advantages of Incentives and Subsidies
Advantages of Incentives and Subsidies
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They act as a motivational force for entrepreneurs. They encourage the entrepreneurs to start the industries in backward areas. Industrial development happens uniformly in all regions. Increase the ability of entrepreneurs to face competition successfully.
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Empirical studies reveal that the incentives and subsidies are being highly misused. Incentives and subsidies turned out to be grounds for dishonesty. They have given scope for favouritism and rampant corruption. They have become the seeds for unethical business practises. Resulted in financial drain on the exchequer.
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SCHEMES CONTD
SUBSIDIES IN OPERATION
Subsidy for R AND D works. Capital investment subsidy. Transport subsidy. Subsidy for power generations. Subsidies for artisans and traditional industries. Subsidy for buying test equipment. Subsidy for market studies.
All industry rateis applied to all exporters alike. Brand rateis applicable to only certain manufacturers.It is fixed on furnishing information to the authorities by the exporter.Brand rate can also be fixed where all industry rate does not exist.
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EXCISE REBATE
Finished goods which are subject to excise duty for home consumption are exempted from the duty when they are exported. The exporters can also avail of this facility in following methods where finished goods are excisable Export Under BondIn this the exporter has to execute a bond in favour of the Central Excise
CONCEPT OF HIREPURCHASE
There are two types of purchases 1) when full payment is made at one time 2) when the payment is deferred There are further two systems of deferred payments 1) Hire purchase system 2) Installment payment system Hire purchase is an agreement under which the owner called the hire vendor gives delivery of goods to the buyer called the hire purchaser who pays the price in certain no of installments.The hire vendor retains the
The hire purchase price of the goods The cash price of the goods. The date of commencement of the agreement.
TAX EXEMPTION
Under the income tax act, new industrial undertakings including ssi units are exempted from payment of income tax on their profits subject to a maximum of 6% per annum of their capital employed. This exemption in tax is allowed for a period of five years from the commencement of production. The unit has to satisfy two conditions
SSI REGISTRATION
The main purpose of Registration is to maintain statistics and to maintain a roll of such units for the purpose of providing incentives and support ventures. All states have generally adopted the uniform registration procedures as per the guidelines.
BENEFITS OF REGISTERING
The registration scheme has no statutory basis, units normally get registered to avail some benefits, incentives or support given either by central or state government. Centre offers a no of incentives like excise exemption, exemption under direct tax laws, statutory support such as reservation and interest on delayed payments act. Both centre and states target their incentives and support packages to units registered with them.
Basis of Evaluation
The unit should have obtained all necessary clearances eg drug license under drug control order, NOC from pollution control board etc Unit does not violate any locational restrictions in force, at the time of evaluation. Value of plant and machinery is within prescribed limits. Unit is not owned controlled or
DE REGISTRATION
A SSI unit can violate the regulations in following ways which can make it liable for de-registration It crosses the investment limits It starts manufacturing any new item that requires industrial license or other kind of statutory license. It does not satisfy the condition of being owned controlled or being a subsidiary of any other industrial
INDUSTRIAL LICENSING
INDUSTRIAL LICENSING POLICY Industrial License is granted by the govt of India under the recommendation of the Licensing committee. The following industries require compulsary industrial license Distillation and brewing of alcoholic drinks
LOCATIONAL RESTRICTION
It does not apply for the following If the unit were to be located in area designated in 1991 census. In the case of electronics, computer software and in future non polluting industry. The location of industrial units is subject to apply environmental regulations.
ENVIRONMENTAL CLEARANCES
Entrepreneurs are required to obtain statutory clearance for setting up an industrial project, under the environment protection act. However if the investment in the project is below the estimated limit then clearance is not necessary, except in cases of pesticides, bulk drugs, integrated paint complexes, mining projects, tourism, himalayan