Highlights of ‘UP FDI/FCI, Fortune Global 500 & Fortune India 500 Companies Investment Promotion Policy 2023’

In a first-ever initiative of its kind in India, the State Government of Uttar Pradesh in its attempt to entice global investments launched a dedicated policy to incentivise Foreign Capital Investments (including FDI), Fortune Global 500 and Fortune India 500 companies’ investing in the State.

• Eligibility Criteria

  Following manufacturing and service units will be eligible for incentives-

  • Projects with Foreign Capital Investment (FCI) of atleast ₹100 crores Here, Foreign Capital Investment means, investment made by the Foreign Company in form of equity through preference shares, as well as debentures, external commercial borrowings, standby letters of credit, letters of guarantee, and other debt securities. Additionally, other modes approved for borrowing, trade credit, and standard obligations under RBI Circular No. FED/2018-19/67, dated 26.03.2019 (as amended), will be considered significant for calculating foreign investment of ₹100 crore. Accordingly, FCI made by the Foreign Company including a minimum of 10% in equity and the remaining through debt and other instruments totaling an investment of ₹100 crore shall be considered eligible under this policy and included in the calculation of capital investment.
  • Projects with Capital Investment of more than ₹100 crores by companies included in the updated list of Fortune Global-500 and Fortune India-500 published till the date of application, subject to a Negative list (viz. Tobacco, Alcohol, Iron & Steel, Cement, Beverages, Logistics, etc.)

• Key Incentives

  Attractive incentive package offered to investments –

• Front end Land Subsidy –
  • Subsidised land allotment @25% in Paschimanchal and Madhyanchal and @20% in Bundelkhand and Purvanchal by IDAs. Subsidy of 75% & 80% respectively will later be reimbursed to IDAs by State Govt
  • Industrial Development Authorities (IDA) to allot an area equivalent to 50% of gram sabha land that has been made available to them free of cost to eligible projects at acquisition cost only.

• Capital Subsidy
  • Provided on ECI excluding the land cost*, with an annual ceiling of ₹ 100 crore in 7 equal annual instalments at the following rates:–
  • 25 percent of the eligible capital investment in Gautam Buddha Nagar and Ghaziabad
  • 30 percent of the eligible capital investment in Paschimchal (excluding Gautam Buddha Nagar and Ghaziabad) and Madhyanchal
  • 35 percent of the eligible capital investment in Bundelkhand and Purvanchal

• *Note:If the proposed unit is not being established on the land of industrial development authorities, the cost of the land shall be included in the Eligible Capital Investment (ECI).

• SGST related incentives:
  • Net SGST refund or SGST refund on capital goods

  Option1- Net SGST Reimbursement:

  • At the rate of 100%, which will be equal to the maximum limit of eligible capital investment (excluding land cost).
  • However, the amount to be received as capital subsidy will be deducted from the eligible capital investment for calculating the maximum limit.
  • This incentive will be provided for a period of 10 years subject to the 10% annual ceiling of the eligible capital investment (ECI).

  Option2-SGST refund on capital goods:

  • If the company faces an invertible tax structure, due to which it is neither able to utilise the ITC (Input Tax Credit) on capital goods for payment of output tax nor able to obtain a refund of the same, in that case, the state government will refund the input SGST paid on capital goods within the standard investment period, to the extent input tax credit is admissible under UP-GST Act-2017. The company shall have to reverse the credit of input tax from the SGST credit ledger to the extent refunded. The refund shall be provided from commercial production in five (5) equal annual instalments from the date of commercial production.

• Stamp Duty & Registration
  • 100% exemption / reimbursement of Stamp Duty & Registration Fees will be provided

• Exemption of electricity duty
  • 100 percent exemption in electricity duty will be admissible for 5 years.

• Skill Development Subsidy
  • Under this scheme, the Govt of UP will reimburse the cost of training a maximum of 500 persons to the extent of ₹ 5,000 per person per month for a period of 05 years for each admissible project

• Green Industry Incentives
  • A capital subsidy (one time) for setting Effluent Treatment Plant (ETP) at the plant premises shall be provided at the rate of 50% of the cost of setting up such facility or ₹ 2.5 crore, whichever is lower. The said subsidy will be provided in lump sum on the commencement of operation of the effluent treatment plant in premises of the unit

• Industrial Housing
  • 10% of the cost of development of workers housing/dormitory and related collective facility within a radius of 10 km of the premises of the unit or ₹10 crore, whichever is lower, will be provided in 7 equal annual instalments

• Logistics Subsidy
  • Firms shifting their existing plants from their international or domestic locations to Uttar Pradesh will be provided 50 percent reimbursement of transportation cost up to a maximum of ₹ 2 crore per unit on import of manufacturing equipment. This incentive amount will be provided in lump sum after the commencement of commercial operations

• Reimbursement of Patent Registration Fees
  • Patent Registration fees shall be reimbursed (One-time) at the rate of 75% of the expenses subject to maximum Rs 10 lakh for acquiring domestic patents and subject to maximum Rs 20 lakh for acquiring international patent in one-instalment

• R&D Support incentives
  • Subsidy for setting up R&D Centre or Grant for setting up Centre of Excellence (CoE)

    Option1-Standalone R&D Centre

  • The Government will reimburse 25% of the cost of setting-up such Standalone R&D Centre subject to a maximum of ₹10 Crore to eligible projects (with Min. investment of Rs 20 Cr). The subsidy will be provided in instalments of 50% on approval of the project, next 25% after 3 years of approval and last 25% on achievement of the committed results in 5 years.

  Option2-Centres of Excellence

  • Financial grant to Industrial Units @50 percent of the project cost up to an overall ceiling of Rs 10 crore per project.