New Delhi: Even as key Northeast states like Tripura and Meghalaya are gearing up for polls next year and the BJP keenly eyeing an opportunity to create space for itself there, the Centre is struggling to find ways to give tax holidays to the hill states in the Northeast industrial policy which is under preparation, owing to the implementation of the GST regime.
According to highly-placed sources, all north-eastern states have repeatedly been requesting the Centre to provide them with tax holidays in the new policy, especially for setting up small scale industries. However in the post-GST regime, the government is finding it hard to come up with a solution to their demand.
The main problem being faced by policymakers, sources said, is that with GST being an overarching monolithic indirect tax, post its implementation, there is no scope left for giving any subsidy to any sector which was the case during the pre-GST days when subsidies, waivers and tax holidays were possible.
Top sources confirmed that even though the Northeast industrial policy is in the works for the past almost six months, it is the vexed issue of states from that region seeking tax holidays for various sectors, which is stalling its formulation and efforts are on to arrive at a solution without wasting any further time.
The previous Northeast industrial policy had ended in March 2017 after it had come into force in 2007.
Sources added that while the Cabinet note for the new Northeast industrial policy is being finalised, the tax holiday issue nee-ds to be resolved before moving ahead with it.
Also with states like Tripura and Meghalaya heading for assembly polls in 2018 and BJP chief Amit Shah having already made it clear that the two states are its main focus, the saffron party has already started efforts to stitch up alliances with smaller parties in both the states.
Having formed governments in Assam and Manipur, a buoyed BJP is keen to make inroads in Left-dominated Tripura and Congress-ruled Meghalaya.
In this context, the Centre is keen to fast track the north-east industrial policy, but the impediment in the form of how to provide fiscal incentives to industries in the region is acting as a roadblock in the process.
