Business in Uttarakhand

Can I start business in Uttarakhand

In recent years, the hill state is being transformed from an essentially agrarian and services driven economy into a hub of industrial activity. Despite land constraints and road connectivity woes, a proactive industrial policy with incentives has attracted a large number of investors to Uttarakhand.

Following are the industrial estates in the state:

  • Four integrated industrial estates (IIEs) in Haridwar, Pantnagar, Sitarganj and Kashipur.
  • Pharma city at Selaqui.
  • IT park at Sahastradhara road (Dehradun).
  • Growth centre at Siggadi (Kotdwar).

Major initiatives by state

Some of the major initiatives towards increasing industrial activity include:

  • Under the special integrated industrial promotion policy (2008), the government’s incentives include exemption from stamp duty, rebate of up to 90% on VAT, rebate on power tariffs and transport subsidy.
  • The government expects to attract ventures in eco-tourism, adventure sports and service sectors through this policy.
  • Proposed strengthening of the single-window – contact, information and facilitation mechanism.
  • Provision of arranging financing through a consortium of banks and financial institutions.
  • Provision to facilitate expeditious land availability for setting industrial venture and infrastructure projects.
  • In 2013-14, the state government has announced plans to invest $833.3 million in the next 3-5 years towards infrastructure projects.
  • Under the Special Mega Industrial Policy 2013, investments worth more than $12.4 million would come under mega projects attracting a lot of concessions.
  • Some of the concessions include 25% exemption on land premium at base price, 50% reduction in stamp duty, central sales tax at 1%, and 50% exemption on electricity duty for captive generation for seven years.
  • The state government has proposed three smart cities: Dehradun, Haridwar and Roorkeewhich will boost infrastructure projects thereby generating employment. Integrated Industrial Estates (IIEs)
  • IIE in Haridwar is spread over 2,034 acres and is located 3 km from the Delhi-Haridwar national highway (NH).
  • IIE at Pantnagar is spread over 3,339 acres and is located on NH-87.

Fiscal incentives:

  • 100% central excise exemption for 10 years.
  • 100% income tax exemption for first five years and 30% for next five years.
  • Central Sales Tax (CST) at the rate of 1% for five years.
  • Capital investment subsidy at the rate of 15%, subject to a maximum of $49,768.

Proposed industries

  • Cosmetics and allied units
  • Plastic and allied units
  • Apparel and allied units
  • Agro, food and allied units
  • Pharmaceuticals
  • Electrical, electronics and alliedunits
  • Institutional, commercial and alliedunits

Pharma City at Selaqui Industrial Area is located 25 km from Dehradun and spread over 50 acres. However, the area available for the allotment is 30 acres. Sigaddi Growth Centre is located 120 km from Dehradun and spread over 100 acres.

Both the Pharma City and Growth Centre will have the same fiscal incentives that are being extended to IIEs in Uttarakhand. A state-of-the-art IT park at Sahastradhara Road in Dehradun will be spread over 60 acres.

The IT park will have ready-to-occupy, hi-tech, intelligent buildings. The software hub will have developed plots of varying sizes. An exclusive area will be set aside for educational and research organisations on the campus.

An incubation centre Software Technology Parks of India (STPI) will promote local entrepreneurs. The IT park will have large tracts of land devoted to green areas and open spaces. A habitat centre will cater to business support and recreational needs of the professionals.

Industrial expansion

In 2015-16 budget, the state government has announced plans to invest $16.77 million for industrial development. In November 2014, the government approved the new Micro, Small and Medium Enterprises (MSME) Policy for the state.

Under the policy, the capital subsidy would be 40% for backward districts such as Pithoragarh, Uttarakashi, Chamoli, Champawat, Rudraprayag and Bageshwar (Category A). While 30% for districts like Tehri, Pauri and Almora (Category B).Power, interest and transport subsidies will also be provided in a graded manner.

In 2013-14, the Cabinet Committee on Economic Affairs (CCEA) approved the extension of subsidy scheme for new units in Uttarakhand. The scheme will be valid till 2017. All new and existing industrial units would be eligible for a subsidy of 15% (on a substantial expansion) for their investments in plant and machineries.

The subsidy would be given up to $50,000.

Single window clearance

The single-window contract facility is available under a two-tier system:

  • The District Industrial Centres (DIC) at the district-level.
  • SIDCUL at the state-level.

These centres are responsible for providing information and escort services to entrepreneurs. They also maintain a data bank.

Key promotion offices

  • SIDCUL (State Infrastructure and Industrial Development Corporation of Uttarakhand Ltd) functions as the nodal agency of the state to administer all existing Central and state schemes for industrial promotion.
  • The corporation provides the industrial units with the requisite information and guides them on the approvals needed for potential investors.
  • It is a multipurpose company for investment promotion and infrastructure development.
  • Uttarakhand Handloom and Handicraft Development Council (UHHDC) acts as a facilitatorto motivate, guide and organise artisans. UHHDC provides common platforms for direct interactions between creators and connoisseurs, producers and buyers.
  • Industries Association of Uttarakhand (IAU) is an apex body of small and medium scale industries in the state.
  • IAU is committed to the development of the state and its small entrepreneurs.
  • It follows a two-tier system at the city-level and operates through the respective chapters.
  • The thrust and focus of IAU is taking initiatives to help the existing industry and attract new industries in Uttarakhand.
  • The Information Technology Development Agency (ITDA) is an autonomous body to guide and monitor various software projects.

ITDA provides expert inputs, monitor, evaluate and execute the state's IT initiatives and projects under the National e-Governance Plan (NeGP).

Cost of doing business

Parameter Cost estimate
Industrial land purchase (per sq. ft) $4-$8.5
Office space rent (per sq. ft) Dehradun: $18-$170 per month
Residential rent (2,000 sq. ft) Dehradun: $270-$450 per month
Five-star hotel room rent (per night) Mussoorie: $100-$300
Power (industrial) 3.8-7.3 cents per kWh
Labour (minimum wage per day) Unskilled: $1.7–2.7;
Semi-skilled: $2.1–2.8;
Skilled: $2.4–3.1
Highly skilled: $2.6–3.5