As the war of words between the ruling party and the opposition over the elusive Special Category Status continues, the Central Government has said no special package for industrial incentive can be considered for Andhra Pradesh at present.
Union Ministry of Commerce and Industry deputy secretary Ashish Dutta said the Planning Commission would accord special category status to a State based on specific criteria. “As the State of Andhra Pradesh cannot be distinguished by any of the criteria, therefore, at present no special package of industrial incentive can be considered,” Mr. Dutta said in a letter addressed to YSR Congress president Y.S. Jaganmohan Reddy.
The letter (dated August 7), according to YSRC MP P. Mithun Reddy, was in response to a letter addressed by Mr. Jagan seeking clarification on the issues pertaining to the residuary State including special package for industrialisation and Visakhapatnam-Chennai industrial corridor. The official said that the State might like to get benefited under the Central Industrial Infrastructure Upgradation Scheme which allowed financial support for improving the quality of infrastructure in the industrial clusters.
He recalled that Section 46(2) and 94(1) of the AP Reorganisation Act provided for special development package and fiscal measures incuding tax incentive to provide industrialisation and economic growth in the State. The fiscal package referred to in Section 94(1) had been complied with by the Ministry of Finance.
The department of Revenue had amended the Income Tax Act to provide additional investment allowance of an amount equal to 15 per cent of the cost of new asset acquired and installed for setting up of any manufacturing unit.
Suitable safeguards had been incorporated restricting the transfer of plant and machinery for a period of five years with a view to ensure that the manufacturing units which were set up availing this facility actually contributed to the economic growth of backward areas of the State for a reasonable period of time.
In addition, higher depreciation allowance of 35 per cent (instead of 20 per cent) was allowed under the relevant provisions of the Income Tax Act in respect of the actual cost of plant and machinery acquired and installed for setting up of a manufacturing undertaking or enterprise in the notified backward area of the State on or after April 1, 2015. This higher depreciation allowance would be available till April 1, 2020.
As regards the Vizag-Chennai Industrial Corridor, he said conceptual development plan report had been completed by the nodal agency Asian Development Bank and two nodes Visakhapatnam and Srikalahasti-Yerpedu had been identified for master planning. Mr. Dutta said that the State Governments were primarily responsible for industrial development in their respective State and the Union Government supplements their efforts through various schemes with a view to promote industrialisation in industrially backward areas of the country.
YSRC MP seeks State’s response to Centre’s letter
The YSR Congress (YSRC) has demanded that the State Government clarify its stand on the special category status issue in the position spelt out by a Union Government official in a letter to Leader of the Opposition Y.S. Jaganmohan Reddy.
YSRC MP P. Mithun Reddy said that the letter clearly states that no special package of industrial incentives can be considered now as the package has already been delivered in various forms.
As for special category status, the State did not fulfil the criteria set by the Planning Commission. The Centre also clarified that industrial development was a State subject and the Centre can only supplement measures taken by the State. “This makes it clear that there will be no special package,” he said.
