Uttar Pradesh’s New Industrial Policy 2022: | Course for UPPSC Preparation - UPPSC (UP) PDF Download

Uttar Pradesh, situated in northern India, is a prominent destination for foreign investment due to its robust connectivity infrastructure, logistics, sectoral incentives, and improved business environment. The recently introduced UP Industrial Investment & Employment Promotion Policy 2022 aims to attract foreign investments of INR 10 trillion (US$120 billion), with the aspiration of transforming the state into a US$1 trillion economy. This article delves into the objectives, incentives, and eligibility criteria outlined in Uttar Pradesh's industrial policy.
The state is gearing up to host the Global Investors Summit (GIS) in February 2023, actively seeking foreign investments totaling INR 10 trillion (US$120.69 billion). A noteworthy development is the commitment of 52 industrial groups to invest in Uttar Pradesh by participating in GIS-2023.
As part of the preparations for GIS-2023, the UP government has implemented investor-friendly policies, including the establishment of the 'Nivesh Mitra' single window portal. This portal streamlines the online approval and clearance processes for establishing industries or enterprises and introduces 25 investment-friendly industrial policies. The Nivesh Mitra portal incorporates an online incentives management system (OIMS) for centralized processing, approval, and online disbursement of policy incentives.
Despite Uttar Pradesh being India's most populous state, it offers businesses significant demographic advantages, such as a vast consumer market and a diverse talent pool. Historical challenges related to population size and administrative complexities are being addressed by the UP government, which is intensifying efforts to boost its industrial base, generate employment, and position itself as a premier investment hub in the country.

This article sheds light on various factors contributing to Uttar Pradesh's attractiveness as an investment destination, with a particular focus on the recently launched Industrial Investment & Employment Promotion Policy 2022. This policy serves as a comprehensive framework for infrastructure and industrial development in the state.

Why invest in Uttar Pradesh?

Infrastructure connectivity and logistics

Besides being the home to the largest railway network in the country, spanning over 16,000 km, the state of Uttar Pradesh (UP) also hosts a significant portion of both the Western Dedicated Freight Corridor (WDFC) and Eastern Dedicated Freight Corridor (EDFC). The WDFC facilitates convenient access to the JNPT port in Mumbai along the western coastline, while 57 percent of the EDFC traverses through UP, connecting the state to the Haldia Port in Kolkata along the eastern coastline.
Dadri, situated in the prominent Gautam Buddh Nagar district, serves as the intersection point for both corridors – EDFC and WDFC, offering distinct advantages in the logistics sector. Additionally, UP is planning the development of a Multi-Modal Logistics Hub (MMLH) and a Multi-Modal Transport Hub (MMTH). Notably, the Varanasi district is witnessing the creation of India's first "Freight Village" spread across 100 acres, linking the export hubs of eastern UP to ports on the eastern coast and functioning as a transshipment hub for cargo both inbound and outbound.

Overseas investor interest in UP

Turning attention to overseas investor interest in UP, recent government sources suggest that six European countries – France, England, the Netherlands, Denmark, Belgium, and Germany – are poised to invest in UP across 18 diverse industries. These include energy, retail, chemical, pharmaceuticals, automobile, electronics manufacturing, EV manufacturing, infrastructure, agro and food processing, textiles, defense engineering, technology, manufacturing, agriculture equipment, water management, greenhouse technology, venture capitalism, and transport.
Noteworthy foreign companies already established in UP encompass Honda, Yamaha, New Holland Agriculture, Adobe, Cadence, Xerox, Heidelberg Cement, EXL, Samsung, Ingersoll Rand, and STMicroelectronics N.V. Further, media reports highlight the growing interest of several US-based fintech and IT companies in UP for fintech and healthcare development opportunities. Entrepreneurs like Sanjay Govil and Avi Basu are notably expressing their intentions to invest in the state, with Govil looking to contribute over INR 5 billion (US$60.36 million) for building IT campuses in Noida and Lucknow, and Basu exploring technology for aiding farmers in UP through his company, Wingsure.

How will the UP Industrial Investment & Employment Promotion Policy 2022 support global investors?

Introduced in late November, the UP Industrial Investment and Employment Promotion Policy 2022 aims to propel Uttar Pradesh into a $1 trillion economy. The policy strives to establish a forward-thinking, inventive, and competitive industrial environment in the state, with the goal of generating employment opportunities and attracting global investments.
According to the UP state government, the 2022 industrial policy is designed to provide one of the most appealing and advantageous incentive packages for investments in India.
Incentives
The UP Industrial Investment and Employment Promotion Policy 2022 provides investors in the state with flexibility by offering a one-time choice among three 'mutually-exclusive' options: capital subsidy, reimbursement of net SGST (State goods and services tax), and additional incentives under the Production Linked Incentives (PLI) Scheme.
For the distribution of these incentives, the policy classifies investments into four main categories based on capital investment: Large, Mega, Super-Mega, and Ultra-Mega.
Capital Investment-Based Project Categories – UP Industrial Investment and Employment Promotion Policy 2022.

The 2022 industrial policy will focus on making improvements across five pillars:

• Horizontal
  • Enhancing overall infrastructure quality
  • Improving logistics efficiency
  • Facilitating access to finance
  • Developing a skilled labor force

• Vertical
  • Prioritizing focus sectors
  • Nurturing sunrise sectors
  • Supporting champion services
  • Integrating into global value chains
  • Encouraging import substitution
  • Promoting exports, research and development (R&D), and innovation
  • Emphasizing quality and design
• Global value chain integration
  • Strengthening micro, small, and medium-sized enterprises (MSMEs)
  • Supporting local industries
• Investment attractiveness
  • Improving ease of doing business
  • Marketing 'Brand Uttar Pradesh'
  • Providing fiscal incentives
• Sustainability
  • Prioritizing environmental sustainability
  • Fostering balanced regional growth
  • Promoting a circular economy
  • Ensuring environmental protection
  • Facilitating employment generation

Key measures proposed under these 5 pillars

Enabling land bank creation

• The 2022 UP Industrial policy aims to establish a land bank by encouraging the consolidation of non-agricultural, barren, and uncultivable land for industrial purposes. In order to attract industries to invest in Uttar Pradesh, the state government will assist industrial ventures in acquiring barren Gram Samaj land and other eligible government land for lease at one percent of the circle rate. This lease agreement can extend up to 50 years for the initiation of an industrial project, with the possibility of further extensions based on the existing government policy. The circle rate represents the minimum price at which a property can be registered for sale or transfer.

Promoting industrial parks and clusters

• The policy also envisions the creation of land banks and integrated manufacturing clusters along expressways and freight corridors in Uttar Pradesh. Specific parks and clusters catering to different sectors, such as medical devices, textiles, toys, food processing, and IT, will be developed through diverse models, including public-private partnerships (PPP).

Promoting private industrial parks

• Developers of private industrial parks covering an area of 20 acres or more in Bundelkhand and Poorvanchal regions, and 30 acres or more in Madhyanchal and Paschimanchal regions, will receive incentives from the UP state government. These incentives include a capital subsidy of 25 percent on eligible fixed capital investment (excluding land cost), with a maximum cap of INR 400 million (US$48.32 million) in Madhyanchal and Paschimanchal, and INR 450 million (US$54.36 million) in Bundelkhand or Poorvanchal. Additionally, a 25 percent capital subsidy on the cost of building hostel/dormitory housing for workers in the industrial park, excluding land cost, will be provided, with a maximum subsidy limit of INR 250 million (US$30.2 million). Furthermore, developers will enjoy a 100 percent exemption on stamp duty for land purchases.

For private industrial parks of more than 100 acres developed anywhere in UP, the state government will extend the following incentives:

• A capital subsidy equivalent to 25 percent of the eligible fixed capital investment (excluding land cost), capped at a maximum of INR 800 million (US$96.64 million).
• A capital subsidy of 25 percent for the construction of hostel/dormitory housing (excluding land cost) for industrial park workers, up to a maximum of INR 500 million (US$60.4 million).
• Complete exemption from stamp duty for land purchases by developers.
• Support from the UP government for the development of external infrastructure such as roads and electrical facilities.

Fast-tack land allotment
Additionally, the new industrial policy aims to expedite the land allocation process for eligible private sector projects and industrial public sector undertakings (PSUs) of any state or central government. The fast-track land allotment is available for:

• Projects falling under the 'Super Mega and above' category as per their detailed project report (DPR) and the definitions outlined in the industrial policy.
• Projects classified as 'Mega and above' in accordance with their DPR and the criteria specified in the policy. This includes projects with 100 percent foreign direct investment (FDI) and companies and their holding or subsidiary companies listed in the Fortune Global 500, Economic Times 200, or Forbes Global-2000/Asia best 200 companies for the last three consecutive years.
• Large or above category projects that are industrial PSUs of any state or central government with a majority government holding.