Give me industrial parks, exhorts Nath

NEW DELHI: The Industrial Parks Scheme ��� which provides a 10-year tax holiday to units coming up in select industrial clusters ��� has become the latest bone of contention in commerce & industry ministry���s tussle with the finance ministry.

Commerce & industry minister Kamal Nath has drawn prime minister Manmohan Singh���s attention to the finance ministry���s reluctance to nominate the department of industrial policy and promotion (Dipp) as the implementing agency for the scheme which has been extended till March 2009.

The department of revenue, a division of the finance ministry, runs the Industrial Parks Scheme. The depatment of revenue had taken over the administration of the scheme from Dipp when the scheme was given an extension in 2007.
Mr Nath, in a recent communication to the Prime Minister���s Office (PMO), has also said the plea to reduce the number of units necessary to qualify for tax breaks available to an industrial park should be reduced.

The department of revenue is yet to reduce the number to 20 in the case of multi-product industrial parks and five in the case of IT/ITeS industrial parks, says the communication. Only parks with at least 30 units are entitled to the 10-year tax holiday. Interestingly, IT and ITeS was allowed the benefit only after an intervention by the prime minister.

The PMO had advised the department of revenue to make Dipp the implementing agency, says the commerce & industry minister���s communication. Mr Kamal Nath���s grievance is that even PMO���s advise is being ignored.

The tussle is similar to the scrap between the two departments over special economic zones (SEZ). The finance ministry was not happy with the tax sops for SEZ units and developers, apart from the nomination of the department of commerce as the nodal agency for the zones.

The government has granted approval for 16 industrial parks in 2007-08. These are located in various states including Karnataka, Andhra Pradesh, Maharashtra and Rajasthan.

The new industrial parks scheme notified by the Central Board of Direct Taxes (CBDT) is valid till March 2009 while the earlier scheme was valid till March 2006. The income-tax holiday is available to industrial park units under Section 80-IA (4)(iii) of the Income-Tax Act.

The government made changes in the scheme when it was notified afresh. The revised scheme prescribes a minimum 50,000 sq m for each industrial park, indicating the government���s emphasis on large clusters. The industrial use area in such parks has been increased to 90% from the earlier 66%. No single unit can occupy more than 25% of the land in an industrial park, according to the revised scheme, while the earlier one allowed 50%.

In a bid to prevent misuse of the scheme, the government has disallowed transfer of the entitlement of scheme. A transfer would be contingent to losing tax benefits or industrial park status. Moreover, permanent account number has been made mandatory for all 30 units in a park.