Special schemes for developing Industries in Rural, Backward and Hilly areas (Incentives)
(a) Priority financing: Under this scheme, commercial banks provide loans on priority basis to industries falling under priority sector. Commercial banks are required to meet financing needs of priority sector by reserving specified amount of loanable funds for this sector. Besides commercial banks, co-operative banks, regional rural banks, KVIC and State Financial Corporation advance loans to small business operating in rural, backward and hilly areas on priority basis.
(b) Lower Interest rates and easy Repayment of Loans: Loans provided to priority sector attract lower interest rates along with easy instalments of loan repayment as compared to loans advanced to other sectors.
(c) Provision of land and industrial sheds: Government provides land and industrial sheds for industrial purpose at concessional rates.
(d) Establishment of Industrial Estates: These estates have all the facilities which are required by industrial units.
(e) Development of Infrastructure: Government has developed infrastructure like roads, transportation, communication, power and banking facilities. Power and water is supplied at a concessional rate of 50 percent or at no cost for certain initial years.
(f) Tax benefits: The central government has provided various tax benefits which include tax holidays for 5 to 10 years. Besides, the concerned State Government provides various tax benefits like no Value added Tax (VAT), no octroi duty and other local taxes for specified period.