The Tamil Nadu State Industrial Policy 2003 targets an industrial growth of eight per cent over the Tenth Plan period.  The state proposes to undertake the second generation of reforms that would strengthen the infrastructure and facilitate the creation of new manufacturing capacities in the state.

In order to create adequate investments in infrastructure and enable private sector participation, the government proposes to enact an Infrastructure Development Enabling Act and set up an Infrastructure Development Board.

The government in its industrial policy, announced on Tuesday, committed to provide good quality power on tap by creating additional power capacity of 30 per cent by March 2007.  The present power generating capacity in the state is 8250 MW.

On the fiscal reforms front, the industrial policy documents states that the state financial corporation, the Tamil Nadu Industrial Investment Corporation, will be recapitalised to enable technology upgradation of industries. The states would also do away with entry tax on imports for manufacturing units.

The state also proposes to enact an Industrial Promotion and Business Deregulation Statute to enable single window approvals at state and district levels.  The proposed statute would also simplify application procedures, returns, inspection and certification routines.

As part of the restructuring process at the public sector undertakings, the state plans to exit from manufacturing through divestments. Privatisation of manufacturing co-operative sector units will be undertaken.

The state also proposes to amend existing labour laws in line with recommendations of the Second National Labour Commission.  The industrial policy has highlighted the need to review existing labour laws like those pertaining to layoff, retrenchment, engagement of contract labour and flexibility of timings of work.  The proposed changes in the labour laws will be done in concurrence with the central government.

Salient features of Industrial Policy 2003

In case of new units, capital subsidies ranging from Rs 25 lakh (Rs 2.5 million) to Rs 100 lakh (Rs 10 million) and exemption from electricity tax for three to five years from the commencement of commercial production will be available for investments between Rs 50 crore (Rs 500 million) and Rs 200 crore (Rs 2,000 million).

The government has also provided for a one-time reimbursement for patent registration after January 1, 2004 up to 50 per cent of expenses or Rs1 lakh (whichever is lower) to any production unit in Tamil Nadu.

Additionally, critical infrastructure subsidy of 25 per cent of capital cost or Rs 25 lakh (whichever is lower) will be given for setting up effluent treatment plants or waste disposal sites.

In order to support the small and medium enterprises in the state, the government will be allocating Rs.1.5 crore (Rs 15 million) for setting up of a centre that will address specific issues like technology promotions and commercialisation, waste management technologies and IPR protection. The allocated sum will used partly for providing a one-time corpus and also reimbursement of the centre's running costs.