State Of The Economy 2017

Here For Good

Despite the excise tax exemptions ending in a couple of years, Baddi is still seen as a hospitable cluster

Vishal Koul

 

As the large room-size printers in Sanjay Bhasin’s factory in Baddi keep churning out medicine labels like clockwork, he explains how different coloured inks are mixed to produce the final text and bar codes. His company Parkash Hitack Industries employs 10-15 workers to make labels for its 50-odd customers. Bhasin vividly remembers the day prime minister Narendra Modi announced the ban on the old Rs.500 and Rs.1,000 notes. “I had paid salaries on 8th of November, and the next morning workers said we can’t accept old notes,” he recalls. He admits that he found it difficult to muster enough cash to pay his workers. But he ensured that he helped them in other possible ways. “I asked the local grocer to give them rice and essentials. I even spoke to their landlords and convinced them that I will pay him later,” he says relievedly. As for his business, demonetisation has resulted in longer debtor days. “Our payments are getting delayed. We used to get them in 50 days, now it takes 90 days,” shares Bhasin. 

Baddi-Barotiwala-Nalagarh is the largest industrial area in Himachal Pradesh, which is spread across the foothills of the Himalayas. While some industrial units started in Baddi between 80s and 90s due to uninterrupted power, discounted land rates, and the tranquil atmosphere, the actual industrial explosion took place in 2003. It was only then that the former prime minister Atal Bihari Vajpayee had granted exemption to SMEs from paying excise duty for ten years from the date of the commencement of their business and an exemption on paying income tax for five years. This led to the formation of three industrial areas in Solan district of Himachal Pradesh. A total investment of Rs.10,680 crore has been made in Solan between July 2003 and December 2014. 

Exit Mode?
The exemption is quickly becoming a thing of the past for industrial clusters like Baddi. Having made the most of the concessions, some pharma and FMCG companies have already established their plants in newer tax-holiday destinations like Sikkim and Assam. Larger pharma companies like Cipla, Wockhardt, Zydus Cadila and Dr. Reddy’s have started their new manufacturing bases either in Sikkim or Assam. However, Shailesh Agar

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