Taxation & Legalities
Policies & Incentives
The Industrial Policy
The Industrial Policy of Maharashtra, targets to reduce the population living below the poverty line by 50 percent by the year 2011. This should the help to promote the improvement of the Human Development Index, (HDI) to the level at which it becomes comparable with the best among the Asian countries.
The Industrial, Investment, Infrastructure Policy aims at ensuring sustainable industrial growth through innovative initiatives for development of Key potential sectors and further improving the encouraging industrial climate in the state. In order to achieve this, they key aspects of the policy are focused on boosting the services sector and creating employment opportunities, encouraging investment by the private players in infrastructural developments and providing greater stability to the businesses to propel growth.
The State government has set itself ambitious but achievable targets such as a growth rate of 10 percent in the industrial sector, progress in the service sector of 12%, and the creation of 2 million employment opportunities, all by the year 2010.
At present, the government is focusing on nurturing certain industries as well as facilitating smooth exit options for dying industries, or alternatively reviving them, if it's a viable option. They are formulating growth strategies through tactics such as streamlining industrial procedures and creating a 'hassle-free' industry environment.
The State of Maharashtra has set up an Empowered Committee and Directorate of Information Technology. To attract further investment, the State offers fiscal incentives such as exemption from paying stamp duty and electricity duty, and will also relax labour laws for greater flexibility in working hours.
As per the policy guidelines, it was laid out that Maharashtra Tourism Development Corporation shall work as a single window for clearance of the tourism projects. There will be ease in the land allotment process and also it was specified that tax exemptions shall be granted at the industrial rates
This policy involves the establishment of the Maharashtra biotechnology Board and Maharashtra Biotechnology Commission. A Special Biotechnology Development Fund has also been set up, as well as the creation of Biotech Parks and Biotech Resource Centre. The IT units are free to take advantage of the stamp duty and electricity duty exemptions. Other provisions include establishment of Grape Processing Industry Board, creation of wine institute and wine parks at Nashik/Sangli and excise exemptions and other fiscal benefits.
For developing Special Economic Zones (SEZs) in the state, the government of Maharashtra has drafted the SEZ policy. The SEZs, earmarked as duty-free enclaves, have a relaxed and business friendly policy regime, aimed at promoting rapid industrial development and employment generation. :
Special Economic Zones
This policy was established specifically for the development of Special Economic Zones (SEZs) around the State. These SEZs are duty free enclaves, and have a relaxed and business friendly policy regime, aimed at promoting rapid industrial development and employment generation.
The approved policy regime includes:
- Exemption of all state and local taxes and levies for transactions with the SEZ and for supply from domestic tariff areas to the SEZ
- Exemption from stamp duty and registration fees
- Grant of labour and environment related permits and approvals through a dedicated single window mechanism
- Permission to generate electricity for own consumption
- Expeditious process for land acquisition to set up SEZs
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In order to improve the management of existing industrial infrastructure in the state, the State Government is planning to set up 'industrial township authorities' in respective industrial areas. These authorities will be autonomous bodies responsible for managing common infrastructure with active participation from the industrial units located in the area. They will also collect taxes and revenues for various services. In the first phase, 12 such industrial township authorities shall be set up. The Government is also planning to develop industrial parks in the state through private sector participation.
While the state's electricity sector is considered among the more progressive ones, the State Government has taken steps to further streamline the sector. It has set up the Maharashtra Electricity Regulatory Commission (MERC) under the provisions of the Electricity Regulatory Commission Act, 1998. The process of restructuring the Maharashtra State Electricity Board (MSEB) is underway
The State of Maharashtra has introduced a number of key incentives in order to increase the level of investment in growing industries.
Export Oriented Units (EOUs) Information Technology (IT) and Bio-Technology (BT) units and industries setting up in Special Economic Zones (SEZs) and Electronic Hardware Technology Parks will be exempted from payment of Electricity Duty for a period of 10 years.
Waiver of Stamp Duty and Registration Fees
New units, as well as units undertaking expansion/diversification will be exempted from payment of Stamp duty, up to 31st March 2011. Stamp Duty exemption would be available as given below
- BT and IT units in Public Parks: 100%
- BT and IT units in Private Parks: 75%
- Mega Projects: 50%
Strengthening the Micro, Small and Medium Manufacturing Enterprises:
The government of Maharashtra have brought about incentives, solely for the purpose of promoting quality competitiveness, Research & Development (R&D) and technology up gradation, such as the following:
- 5% subsidy on capital equipment for technology up gradation subject to maximum of US$ 60,975
- 50% subsidy on the expenses incurred for quality certification limited to US$ 2440
- 25% subsidy on cleaner production measures limited to US$ 12196
Special Incentives for Units coming up in the low Human Development Index Districts
New units setting up facilities in notified districts (Annexure-II) and employing at least 75% local persons as defined in the Employment of Local Persons Policy will be offered 75% reimbursement of expenditure on account of contribution towards Employee State Insurance (ESI) and Employee Provident Fund (EPF) Scheme for a period of 5 years.
The quantum of incentives within the approved limit will be decided by the High Power Committee under the chairmanship of Chief Secretary, Government of Maharashtra
All eligible units, new as well as units undertaking expansion in Vidarbha region will be eligible for refund of royalty paid on purchase of Minerals from mine owners within the State of Maharashtra for a period of five years from the date of commencement of commercial production
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Doing Business in Maharashtra
An indicative list of approvals with timeframe for setting up business in Maharashtra
|Issuance of allotment order
|Possession of plot / shed
|Building plans approval
|Grant of water connection
|Urban land ceiling permission
Cost of setting up business
An indicative table on cost of setting up business in Maharashtra
Value (in US$)
|Industrial land (per sq mt)
||Mumbai - 28.72 Pune- 14.36
|Office space rent (per sq ft per month)
||Mumbai - 2.39V Pune - 0.957
|Residential rent (for a 2,000 sq ft house, per month)
||Mumbai - 957 Pune - 287
|5-star hotel room (Single Occupancy, per night)
||Mumbai - 95.74-263 Pune - 95.74
|Electricity (per kWh)
|Water (per 1000 litres)
Note: US$ 1 = INR 47;
Source: MIDC, MSEB, PwC research
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More Information on Maharashtra
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