Karnataka government mulls higher incentives for cos that create more jobs

The state government is planning to shower extra incentives on companies that generate more jobs.

This is one of the proposals before the government that is drafting a new Karnataka Employment Policy. This will require the existing industrial policy to be tweaked.

If the proposal comes through, then industries that create jobs over and above the minimum employment requirement will get additional sops.

The minimum requirement for employment generation is based on the amount invested by a company.

According to sources, Chief Minister Basavaraj Bommai is keen on fixing a limit for industries: one job for every crore invested.

The present industrial policy requires seven jobs to be generated for every Rs 10 crore where the total investment is below Rs 1,000 crore. For total investments exceeding Rs 1,000 crore, the policy asks for 35 jobs per Rs 100 crore. The government is looking to tweak these provisions.

Bommai held a preliminary discussion on the new policy on Tuesday, with the government expected to finalise it soon.

The government is also mulling to provide wage subsidy of up to Rs 3,000 per employee per month for five years at garment units. There is also a proposal to provide a one-time grant of 40 per cent of the project cost or Rs 40 crore for individual legal entities or Special Purpose Vehicles (SPVs) that develop common infrastructure for the textile industry.

PLI scheme

The proposal to provide extra incentives to industries providing employment up and above the minimum requirement will be part of the revised Production Linked Incentive (PLI) scheme.

Three slabs are expected to be created for additional PLI, which will be based on employment generation. The government will also provide an additional 5 per cent of Value of Fixed Asset as subsidies to industries which provide more than 1.5 times the minimum employment required as per the policy.

In the textile and garment policy, the government was considering increasing the cap on incentives offered from 40-50 per cent of the Fixed Capital Investment (FCI) of a firm to 100 per cent of FCI.