Baddi investors’ tax holiday cut short by 3 years

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CHANDIGARH: The goods and services tax (GST) has come as a jolt to manufacturers in Himachal Pradesh’sBaddi town that has given the state an industrial identity in just over a decade.

Baddi’s growth took off after the Centre offered a 10-year tax the Centre offered a 10-year tax holiday to manufacturers in 2003. The scheme was open till 2010, and more than 40% of businesses were set up that year. But with GST rolling in, hundreds of these investors find their tax holiday cut short by three years.

“It’s a big jolt for the industry here. The affected industrialists should get monthly reimbursement,“ said Shailesh Aggarwal, president of Baddi-BarotiwalaNalagarh (BBN) Industries Association. “The gover nment had promised tax benefits under a tax holiday scheme, and this is the reason the investment came to Baddi. The government needs to keep its word.“ Baddi’s 2,202 factories were set up at a cost of roughly Rs 15,300 crore and employ 73,392 workers.More than half of these factories were built after 2007, and until GST was announced they were eligible for central excise duty exemption of 5-12% for 10 years.

BBN Industries Association has written to Ministry of Commerce and Industry and also Department of Industrial Policy and Promotion (DIPP) to demand a compensation policy for Baddi’s industries.

A reimbursement policy already exists, but investors say the process is complicated as the Centre will pay them 58% of the excise duty and the state 42%. “I fear the cumbersome processes we will have to go through to get reimbursements in lieu of tax benefits,“ saidSanjay Khurana, an industrialist and former president of Confederation of Indian Industries(CII), Himachal.
Rajender Guleria, former president of BBN Industries Association, said the Himachal government should now focus on improving services in Baddi to continue attracting investors. “It can start with breaking the monopoly of local transporters who overcharge.“