Mi Capital
Mi CAPITAL comprises of a team of experts who work together to serve clients on a broad range of Investment Banking and Corporate Finance issues and structured solutions.
Phone: +97145655163/64
Url:
#406, Level 4, Citadel Tower, Al Abraj Street, Business Bay
Dubai, Dubai 80676

#406, Level 4, Citadel Tower,
Al Abraj Street, Business Bay

We Help Businesses
Innovate & Grow.

Rajasthan Investment Promotion Scheme – 2019

January/14/2021

Business Management consultant in Dubai

BACKGROUND

Among many stereotypes about India as a nation, one of the important ones is that the country is not investor friendly. Often, we hear that India lags behind as compared to its counterparts in terms of being an investor friendly for manufacturing or service industries. High taxes, high-interest rates, red-tapism, and policies remaining to be paper tigers instead of actual implementation on grounds are counted upon as factors that are a major hindrance to the nation’s economic growth. Breaking the stereotype, with significant policy shifts over the last few years India has been able to be one of the leading developing countries in the world and pave the way forward for global investment domestically. While digitalization is promoted across all sectors of the economy, ‘Make In India’ has been a milestone initiative by the Government of India. This major national Programme helped the country embark on a journey of self-reliance latently but the pandemic has led to re strengthening it further through a number of other initiatives such as “Vocal For Local” and “Atmanirbhar Bharat”. With this as the backdrop, it has an increasing need of the state governments too in the country to facilitate investors through a welcoming outlook. With greater competition among the Indian states to attract investors for the overall development, there is a growing need for the largest geographical state in the country, Rajasthan, to develop an investor-friendly landscape.

INTRODUCTION

The Government of Rajasthan launched a State Flagship Programme ‘The Rajasthan Investment Promotion Scheme, 2019 (RIPS-2019)’ which came into effect on 17th December 2019 and shall remain in force up to 31st March 2026. The scheme aims to generate employment opportunities and promote rapid, sustainable and balanced economic growth in the state of Rajasthan. While people from Rajasthan have taken the name of the state to greater heights, this scheme is a call upon Rajasthani’s as well as the global investors, for instance, those looking forward to shifting their production from China, to make a comeback for the development of the state. Given the shrink in jobs globally in the times of pandemic, there is certainly a shift in priorities. Therefore, the incentivizing mechanism to the core sectors of the economy combined with the thought given to ‘not-so-prominent’ makes RIPS an allinclusive Programme to address the needs and concerns of the investors.

APPLICABILITY OF SCHEME

Being a one-stop solution to all kinds of challenges that investors may face, the prima facie premise of the scheme makes it a comprehensive solution in terms of its applicability. As mentioned above (in the figure), the RIPS scheme is applicable to new or existing enterprises looking forward to setting up new units or expanding in the manufacturing or service sector. For those enterprises who do not fall under any of the sectors, they would be covered under Customized Package (as discussed in the later part of this article).

EXCEPTIONS TO THE SCHEME

The activities not covered by the RIPS Scheme are:

✓ Investment for manufacturing tobacco, tobacco products and pan masala.
✓ Investment made in cow beef processing units.
✓ Investment made in retail/trading activities.
✓ Any activity which is prohibited by Central/State laws.

BENEFITS OF THE SCHEME

With multiple benefits, the scheme focuses upon growth in investment in Rajasthan as well as employment generation in the state.

Type of Benefits Sectors

General Benefits All Sectors – Manufacturing or Service Enterprise.
Special Additional Benefits Thrust Sectors*, including:

✓ Benefits to MSME sectors
✓ Sector-wise benefits to Manufacturing Enterprise.
✓ Sector-wise benefits to Service Enterprise.
✓ Benefits for Social Infrastructure.
✓ Benefits to Enterprises in Backward and Most Backward Areas.
✓ Customized Package.
✓ Capital Subsidy on Zero Liquid discharge-based treatment plant.

*Thrust Sector Includes the Following Sectors –

✓ Agro-Processing Sector
✓ Bio-Technology Sector
✓ Ceramic and Glass Sector
✓ Dairy Sector
✓ Defence Sector
✓ DMIC Area (Delhi-Mumbai
Industrial Corridor)
✓ Electric Vehicle (EV)
✓ Food Processing Sector
✓ Solar Equipment’s Sector
✓ Medical Device Manufacturing Sector
✓ Leather, Footwear and Accessories
Sector, Gems & Jewellery Sector
✓ Mineral Sector
✓ Handicraft Sector
✓ Industrial Gases Sector
✓ M- Sand Sector
✓ Textile Sector and Apparel Sector
✓ Start-ups
✓ Wind Turbine Manufacturing Sector
✓ Auto-Component Sector,
✓ Electronic System Design Manufacturing
(ESDM) Sector,
✓ Chemical Sector,
✓ Petrochemical Sector,
✓ Petroleum Ancillary and Pharmaceutical
Sector
✓ MSME Sector

General Benefits

Investment Subsidy of 75% of State Tax due & deposited, for seven years.
Employment Generation Subsidy in the form of reimbursement of 50% of employer’s contribution towards
employees EPF and ESI, for seven years:

Provided that the Employment Generation Subsidy in the form of reimbursement of 75% of employer’s
contribution towards EPF and ESI shall be granted

✓ For employees belonging to Women, Schedule Caste (SC), Schedule Tribe (ST), Person with disability
(PWD); and
✓ For all employees if the enterprise is providing more than 75% direct employment to persons domiciled in
Rajasthan.

Exemption from payment of 100% of Electricity Duty for seven years
Exemption from payment of 100% of Land Tax for seven years;
Exemption from payment of 100% of Market Fee (Mandi Fee) for seven years;

Exemption from payment of 100% of Stamp Duty:

✓ On purchase or lease/sub-lease of land and construction or improvement on such land; and
✓ On purchase or lease/sub-lease of floor area/space in any constructed commercial building for setting up
of enterprise in IT Sector or Apparel Sector or Industry 4.0

Exemption from payment of 100% of conversion charges payable for change of land use and conversion of
land.

Additional benefits to Thrust Sectors

Capital Subsidy: On investment made (Mainly on capital goods procured), or Interest Subsidy: On interest
rates and payment.

Investment Subsidy: On state taxes.

Employment Generation Subsidy: On EPF and ESI.

The thrust sectors include various activities that promote sustainable or inclusive development such as electric vehicles, solar equipment, biotechnology, and wind turbine manufacturing. As evident from a global shift in perspective, it is not possible to rely on conventional sources of energy such as coal. Therefore, through the additional benefits for the thrust sectors, the state government is facilitating the reliance on renewable sources of energy. The MSME sector covered under the scheme is also directed towards sustainable development in
terms of water conservation and green subsidy.

SERVICE SECTOR

The following enterprises are covered under the service sector:

The general benefits of the manufacturing sector (as listed in the scheme) are applicable to the service sector as well. The RIPS Scheme, being an all-inclusive scheme, gives emphasis on all sectors of the economy including the backward and most backward areas.

POWER TO GRANT CUSTOMIZED PACKAGE

Despite extensive coverage under the aforementioned sectors, if any sector is left out then a customized package can be granted (as shown below).

Being the all-in-one solution provider, the RIPS Scheme makes it easier for investors to get easy and fast approvals through one screening committee rather than passing through various government departments. With single-window clearance, the scheme certainly helps investors with timely approvals instead of being caught into red-tapism. The RIPS lays a red carpet for global investors as well as the people from the state to be active participants in the holistic and integrated development of the state.

CONCLUSION

With one of the lowest income tax rates (15% for New Manufacturing Units) in the world accompanied by benefits under the RIPS, make Rajasthan an attractive destination for investors to start or expand their business. In fact, the state government has given thought to several sectors in the RIPS including, MSME,
Service Sectors, Start-ups. With single-window clearance for permissions to be taken from 18 departments permissions, simplified online process, single committee decision either at the district or state level and the complete online tax compliances are some important factors that make Rajasthan a land of investment for all.

ABOUT MI CAPITAL

MI CAPITAL and MI CONSULTING group comprises of a team of experts who work together to serve clients on
a broad range of advisory services including Corporate Finance, Transaction Support Services, Debt Advisory,
M&A and Private Equity Advisory Services, Economic Substance Regulation (ESR) Advisory Service, Value
Added Tax (VAT) Advisory Services, Accounting Services, Company Formation Services. Our team has decades
of combined experience and a track record of successfully delivering solutions in diversified market
conditions. Our presence in the region and deep relationships with the eco system allows us to provide our
clients with efficient business solutions. Our Advisory board consist of senior profile people with decades of experience in financial services industry with presence or reach in multiple countries providing strategic value addition to our clients.

 

Recent Posts

Testimonial

Testimonial