v Procedures for setting up
and Industrial Unit v
Incorporation
Licensing/ Registration
Land
Construction
Power
Water
Telecom
Financing
Incentives & Agencies
Incorporation :
The law under which a company is incorporated in India is the Companies Act 1956,
which extends to the whole of India.
The time taken for incorporation of a company is usually four
to six weeks. The first step is name clearance by the Registrar of Companies (at Jaipur
for a company with its registered office in the State of Rajasthan). For such approval, a
formal application has to be made because the law requires that a company will not be
registered with any undesirable name or any name identical with an existing company. Once
the proposed name of the company has been approved, an application has to be made to the
Registrar for incorporation of company. The documents required to be presented to the
Registrar for incorporation of the company include a printed copy of the memorandum of
association and articles of association (chapter and bylaws) signed by each subscriber.
There is a registration fee which varies with the amount of authorised capital.
The certificate of incorporation is given after the Registrar
is satisfied that all the requirements have been complied with.
The company becomes a legal entity from the date it is
granted a certificate of incorporation, which is a one-page document.
Licensing/Registration
:
While the new industrial policy has done away with pre-investment approvals for a
large majority of industries (Ref. Appendix A), SSI units need to be registered with the
Director of Industries of the concerned State Govt. to avail of various concessions and
facilities. Medium/Large units in industries exempted from licensing and meeting the
prescribed location criteria need to file a memorandum in the prescribed format with the
Secretariat for Industrial Approvals (SIA) in the Ministry of Industry of New Delhi. Units
not covered by the exemption from industrial licensing have to apply to the SIA for a
licence.
Applications for units in Export Processing Zones have to be
made to the respective development Commissioners in the zone.
Certain categories of industries require No Objection
Certificate (NOC) for the site clearance from environmental angle. This involves
clearances from the Rajasthan State Prevention and Control of Pollution Board (RSPCB) and
the District Collector. The NOC is issued by the Secretary. Environment after receipt of
these two clearances.
NOC is also required for adequacy of pollution control
measures. Application for this NOC has to be submitted to RSPCB at Jaipur.The Board
usually takes about three months in granting the NOC, which will usually specify certain
pollution control measures to be taken by the unit. Once the unit has been set up, an
application has to be made for 'consent' which will be granted after the Board has
satisfied itself as to implementation of the pollution control measures. Consent has to be
renewed each year.
Land :
Land for setting up a new industrial unit is available in industrial Areas
developed by RIICO, at concessional rates (ranging between Rs.15/sq.m and Rs.250/sq.m).
The sanctioning authority is the Regional Manager of RIICO and firm allotment letter and
possession of land can be has within a week's time of full payment for the land.
Upto 5% of the area of the industrial plot is permitted to be
used for construction of houses for essential staff.
In areas other than designated industrial areas, land can be
purchased from private parties or request can be made for allotment of Government land. In
case of a large industrial unit, BIP/RIICO may be requested to assist in acquisition of
land outside the industrial area. The State Government has notified a time bound procedure
for approval of applications for conversion of agricultural land for non-agricultural
purposes in rural areas. The land conversion fee is Rs.1/per sq.m. for industrial
purposes. BIP provides assistance to entrepreneurs for land conversion.
Zoning and land use regulations and environmental legislation
regulate location of industrial units in such areas. The application for
conversion/allotment of land is to be filed with the concerned District Collector.
Conversion/registration of land transactions can be done in about 30 days if the proposal
conforms to locational regulations.
Construction :
Construction can start after the registration of land transaction and after
obtaining necessary sanctions for construction activity from local municipal authorities.
Certified copies of building plans and land ownership documents would be required for
obtaining a construction licence. Normal time frame for such an approval is about 4 weeks.
Various construction agencies in the private sector
undertaken construction activities on a turn-key basis in the State. These agencies have
the requisite expertise and experience in modern methods of construction.
Power :
Application for obtaining a power connection has to be submitted to the Assistant
Engineer in the local office of the Rajasthan State Electricity Board (RSEB). RSEB would
require necessary documents regarding ownership of plot, industrial licence/registration
(if applicable) and load requirement. The sanctioning authority for power connection
varies from the Assistant Engineer at the local RSEB office to the chief Engineer located
at Jaipur depending on the load requirement.
The current power tariffs for various categories of
requirement are as below:(as on 31.1.96)
1) Category Connected Load Rate
(Rs. per KWH) Small Industries Upto 15 H.P. 18-25 H.P 1.82-1.92
2) Medium Industries
a) Above 25 H.P. upto 100 H.P. 2.14
b) Above 100 H.P. but maximum demand less than KVA 2.20
3) High Tension Maximum demand more
than 125 KVA 2.32
4) Bulk Supply for fixed load 2.26
Incentive offered for new industrial investment are as below:
Expenses of remunerative service line laid for high tension consumer will be borne
by RSEB. However, in the beginning this amount will be taken as interest free loan from
the consumer and then adjusted against the monthly bills; Tariff rebate of 1.5% to 10% are
available to industries taking electric supply at voltage ranging between 33 KV and 220
KV; Wheeling of power through RSEB grid permitted for capital power plants located at a
distance from consumption point; Automatic permission granted in case of DG sets up to 500
KVA to be used for isolated operation; Over riding priority given to H.T. industrial
connection; Exemption of electricity duty for captive power units; A subsidy of 25% of the
cost of D.G. set or Rs. 1,5 lakhs whichever is lower for purchase of D.G. sets.
Water :
Satisfactory facilities for supply of water for essential purposes in the
industrial Areas has been ensured.
The application for sanction of water connection has to be
made to the Regional Manager of RIICO under whose jurisdiction the industrial Area falls.
Water supply for industrial purposes is usually obtained by digging a deep bore well.
There are numerous small and large agencies located near the industrial areas which
provide such services.
Telecom :
The telecommunication network in India is managed by the Central Department of
Telecommunication. Applications for obtaining telephone, telex and facsimile connections
have to be made to the District Manager (Telephones). It is possible to get immediate
sanction for a telephone connection on payment of Rs.15,000 in areas where the exchange
has capacity for handling additional lines. Investors are advised to check telecom
connection availability at prospective project locations, with the offices of Department
of Telecommunications or BIP, early in the site selection process.
Financing :
Term finance is available from national and State level financial institutions.The
normal requirement of debt to equity ratio for term financing ranges between 1:1 and
1.5:1, although higher debt may be allowed for capital intensive project. Promoter's
contribution requirement ranges between 30-40% of the total project cost, though for
capital intensive projects the norms are relaxed. Maximum term financing provided to a
unit by RIICO and RFC is Rs.25million and Rs.15million , respectively. Commercial banks
may be approached if there is a small shortfall in requirement of term debt. Larger
projects have to be taken to all India financial institutions, viz. Industrial Development
Bank of India (IDBI) and Industrial Credit and Investment Corporation of India Ltd. (both
headquarters at Bombay) and Industrial Finance Corporation of India (IFCI, headquarters at
New Delhi).
The financial institutions have a common approach to
financing and until recently were working within a system of automatic sharing of loans
after appraisal by the lead institution. Recently, the institutions have started working
more independently and entrepreneurs may approach any one of them irrespective of industry
and proposed location of project. IDBI, ICICI and IFCI have a branch office in Jaipur.
The following other types of financial assistance is
available from RIICO :
Equity contribution through direct participation in the share capital. Seed Capital
assistance for projects with investment below Rs.30 million. Seed Capital assistance may
be availed upto 10% of project cost subject to a maximum of Rs.1.5 million and is
available in the form of a soft loan which does not carry interest for the first five
years (RFC provides the seed Capital in case of SSI units). The purpose of this scheme is
to supplement the resources of deserving entrepreneurs to meet the norms for promoter's
contribution.
Incentives
& Agencies :
Application for sanction of incentives have to be made to the respective agency
providing the incentive. However, investors should confirm their eligibility for the
incentives with BIP, RICCO, RFC or the Directorate of industries at their offices in
Jaipur or in Bikaner House, New Delhi.
The State Government has set up various agencies to promote
and assist industrial development. These include various apex level agencies like the
Bureau of Industrial Promotion (BIP). Directorate of Industries, Rajasthan State
Industrial Development and Investment Corporation Ltd. (RIICO) and Rajasthan Financial
Corporation (RFC) as well as various sectoral development agencies such as Rajasthan
Handloom Development Corporation, Craft Development Centre, Rajasthan State Mineral
Development Corporation, Rajasthan Small Industries Corporation etc. A brief profile of
the apex level agencies is given below.
The State Government has set up the Bureau of Industrial
Promotion (BIP) at the state level to co-ordinate with different agencies and to provide
all facilities of 'Single Window Service' to primarily large and medium scale industries.
Services provided by BIP include :
Disseminating of information relating to investment potential in the State.
Interfacing between the industrialists and the approval agencies. Making available project
reports etc. Creating a comprehensive industries related data-bank Acting as intermediary
between suppliers of technology and entrepreneurs Advising on various sources of finance
and approaching the financing agencies. Locating prospective partners willing to join
hands for enterprise.
Directorate of Industries is mainly concerned with the
development and promotion of SSIs, salt areas, handicrafts, handlooms and powerlooms. It
administers the State Government schemes in respect of various concessions, facilities and
assistance for setting up industrial units in the above sectors. The Directorate has field
offices at all the district centres called the District Industries Centres (DICs), which
serve as the nodal agency for assistance to SSIs.
Rajasthan State Industrial Development and Investment
Corporation Ltd. (RIICO) set up in 1969, has developmental, financial and promotional
functions. RIICO has developed 202 Industrial Areas spread all over Rajasthan , which
provide infrastructural support for industrial units located in these areas. RIICO
provides financial assistance in the form of term loans to the tune of Rs.25 million for a
single project.
Rajasthan Financial Corporation (RFC), set up by the State
Government in 1955, provides financial assistance to new industrial units being set up in
Rajasthan. RFC, operating out of 37 territorial branches and 9 regional offices spread all
over the State, grants financial assistance by way of loans (upto Rs.15 million to a
single borrower), underwriting , deferred payment guarantee etc. It also acts as an agent
of the State Government for operating certain special incentive schemes of the State and
Central Government. The major beneficiary of RFC assistance is the SSI sector.
Both RIICO and RFC also engage in joint financing for
projects with loan requirements more than their respective sanction limits. Loans to ever
larger projects may also be granted in joint participation with commercial banks and/or
central level financial institutions BIP,RIICO and RFC jointly organise industrial
promotion campaigns within and outside the State. Such a campaign is held on a regular
basis on every second Friday of the month at New Delhi.
Rajasthan A
Profile :
Geography & Demography
Government &
Administration
Overall Economic
Situation
Attraction for
Industrial Development
Industrial
Development
Natural Resources
Human Resources
Investment
Oppertunities
Industrial Infrastructure
Transportation
Power
Water
Telecommunication
Banking, Accounting
& Allied Service
Social Structure
Investment Climate
Regulatory
Environment
Labour & Industrial
Relation
Facilities & Incentives
Setting Up and Industrial Unit
Procedures
Nationality Policy Environments
Details
