Government issues norms for setting up manufacturing zones

New Delhi: The government has issued norms for setting up of manufacturing zones under the national manufacturing policy, giving them many benefits, including tax sops.

Units located in the National Investment & Manufacturing Zones (NIMZs) will be exempt from capital gains tax on sale of plant and machinery, the guidelines issued by the Department of Industrial Policy and Promotion said on Friday.

NIMZs will be eligible for Viability Gap Funding, support from the government to make projects commercially viable, of up to 20% of the project cost.

The national manufacturing policy seeks to enhance the share of manufacturing in GDP to 25% from the current about 14% within a decade and in the process create 100 million jobs in this period.

To achieve these goals, the policy will largely rely on NIMZs, which are envisaged as integrated industrial townships of at least 50 sq km (5,000 hectares) with state-of- the-art infrastructure. A minimum of 30% of the total land area of NIMZs will be available to manufacturing units.

The capital gains tax exemption will be available only if the proceeds are re-invested within a period of three years for purchase of new plant and machinery in any other unit located in the same NIMZ or another NIMZ, the guidelines said. NIMZs will also be allowed to raise funds through external commercial borrowing for developing the internal infrastructure of the NIMZs. The government will also explore the possibility of soft loans from multilateral institutions for funding infrastructure development in NIMZ.